Most Favored Nations Just Another Harmful Price Control

It sounds too good to be true: a simple policy trick that can bring down the cost of medications. That’s how the Trump administration has sold the MFN (Most Favored Nation) drug pricing model, which tethers American prices to “cheaper” prices abroad.

Unfortunately for patients and taxpayers, MFN is too good to be true. Importing price controls from Europe will only succeed in distorting the medical marketplace and resulting in fewer new drugs being developed. MFN is aimed at reducing households’ drug expenses by aligning U.S. prices with foreign markets, but risks unintended, yet foreseen, negative consequences such as reduced incentives for developing new medications. As is the case with many government programs, the goal at the heart of the President’s MFN plan is a noble one. But instituting government-set price controls will only end up harming patients.

A new report published on September 30, 2025, by Vital Transformation confirmed that applying MFN pricing to Medicare would cost the U.S. 2 million jobs—wiping out 40 percent of the workforce that supports the biopharma industry over ten years. The economic impact would be substantial, with up to $351 billion in federal tax revenue lost and $260 billion in state tax revenue lost. MFN would hit some of the most populated states—California, Florida, Texas, and New York—the hardest in lost revenues.

The Centers for Medicare & Medicaid Services (CMS) agrees that a MFN policy will create unneeded complications for patients. According to the agency, “If MFN participants choose not to provide MFN Model drugs or prescribe alternative therapies instead, beneficiaries may experience access to care impacts by having to find alternative care providers locally, having to travel to seek care from an excluded provider, receiving an alternative therapy that may have lower efficacy or greater risks, or postponing or forgoing treatment. There is significant uncertainty with these potential effects of the MFN Model.”

The Trump administration already failed to institute a similar MFN policy in November 2020, also aimed at reducing Medicare spending. Published by CMS, the rule would have applied to Medicare Part B drugs and set an international pricing benchmark. Had the regulation gone into effect, the U.S. price for high-cost drugs would be based on the lowest price paid by comparable peer countries. It faced immediate legal challenges in the District of Maryland (Association of Community Cancer Centers v. Azar), Northern District of California (Biotechnology Innovation Organization v. Azar), and Southern District of New York (Regeneron Pharmaceuticals v. U.S. Department of Health and Human Services), and for good reason. The proposal violated the Administrative Procedure Act’s requirement for public participation in rulemaking, and posed significant First, Fifth, and Eighth Amendment concerns . The Biden administration withdrew the rule in January 2021, only to enact its own destructive drug price controls through the Inflation Reduction Act. As a direct result of the IRA’s Medicare drug price “negotiations,” small-molecule drug development plummeted by 70 percent. Drug companies across the board  responded by reducing research and pulling medications from the market. Instead of rejecting failed Biden-era policies, President Trump is doubling down on them through his MFN proposal.

Implementing MFN may provide short-term cost savings, but the risk of long-term damage to drug research and development is simply not worth it. Shortages from government policies will ultimately fail to reduce overall costs and only succeed in inflicting misery on patients. Instead of pursuing MFN or “negotiations,” Congress and the administration should prioritize reforming Medicaid and Medicare by addressing waste, fraud, abuse, and improper payments. Additionally, lawmakers should empower patients to spend their Medicare and Medicaid dollars as they see fit instead of the current, inflationary third party-payer system. These reforms would be a far less bitter pill to swallow than price controls.