MFN Update, Part 2: The Impact
US: Limited impact so far; ex-US: Storm clouds on the horizon
TLDR
United States: As far as the US market is concerned, MFN seems to be having minimal impact so far. This may change if GLOBE / GUARD are implemented.
Other countries: MFN is contributing to ex-US drug launch delays and withdrawals. It’s unclear whether this reflects a new steady state or temporary uncertainty around MFN.
Note: This is Part 2 of a 3-part MFN series, building on the MFN framework (Part 1) and its uneven consequences across drugs. Part 3 will cover implications for value and evidence strategies.
US Impact: Limited So Far
The Trump Administration has estimated that MFN will reduce US drug spending by $529B over the next decade. But so far there is little evidence backing up this claim.
Bilateral manufacturer agreements (voluntary) and GENEROUS (voluntary) have largely focused on Medicaid, where drug prices are already low and may not be impacted much by MFN.
Manufacturers are also offering ‘discounted’ drugs through TrumpRx, but these prices may not differ much from what insurers pay already. Some expect TrumpRx to have minimal impact given its focus on uninsured and cash-paying individuals.
GLOBE and GUARD (mandatory) in Medicare would have a much bigger effect, but neither model is finalized and both would start as smaller pilots. Some manufacturers may also be exempted from GLOBE / GUARD via bilateral agreements.
On the whole, MFN does not seem to be having much impact on the US market yet. This has been echoed by manufacturers and others in the industry (see below).1
Ex-US Impact: Storm Clouds on the Horizon
I remember one European ISPOR panel in 2023 with Peter Kolchinsky (RA Capital). During the session he said the following (paraphrased):
“I invest in innovative pharmaceuticals. Before making investments, I forecast revenues for drugs. These days, I treat Europe as a rounding error. I zero out European sales in my forecast models. I’m focused on the US market”
If the European market was being ‘downgraded’ by investors (and, by extension, manufacturers) in 2023, this trend has only continued in recent years.
Drug prices remain much lower in European countries, and country-specific Health Technology Assessments (HTA) are time- and resource-intensive. The EU Joint Clinical Assessment (JCA) has added another substantial step in this process. Countries like Germany and Italy are seeking even lower drug prices, prompting industry backlash.
MFN is exacerbating this divergence between US and ex-US markets, and manufacturers may ultimately decide it’s safer to delay or withdraw ex-US access than risk US revenues. The early data seems to be pointing in this direction.
For example, Reuters reported that new drug launches in Europe were ~35% lower in the 10 months after MFN was announced. A subset of these data are shown below.
Pharmaceutical Technology has also reported more drug withdrawals following MFN. One high-profile example was Amgen’s withdrawal of Repatha from Denmark, widely believed to be driven by MFN dynamics.
One pattern to watch is the types of drugs being delayed or withdrawn. Following our Warped Curve logic, these impacts should concentrate among incremental therapies rather than breakthroughs - but only time will tell if this hypothesis holds.
To be clear, these delays and withdrawals may have multiple causes. Manufacturers may be skipping EU launches due to the added requirements of JCA. Some may be waiting on the sidelines until there is more clarity around MFN.
That said, these data feel like early signals that MFN will shrink ex-US access.
Industry statements support these conclusions, with select quotes below from manufacturers and others in the industry.2 Similar sentiments were also echoed in a recent survey of EUCOPE members.
The Takeaway
If ex-US prices are not meaningfully increased, MFN will force manufacturers to make a choice: 1) sacrifice US revenues, or 2) sacrifice ex-US revenues. It’s too soon to tell, but early evidence suggests manufacturers will protect US revenues at the expense of ex-US markets.3
In Part 3, we’ll explore what this all means for biopharma value and evidence strategies.
Quote Sources (MFN Impact on the US Market):
Quote Sources (MFN Impact on ex-US Market Access):
This trade-off is particularly acute for manufacturers that depend heavily on US revenues. Manufacturers with more limited US exposure, such as Chinese biotechs, may not face the same constraints. It’s possible that gaps left by Western delays / withdrawals could be filled by China and other players. A topic for another day!