The Price Reckoning Series Part 3: The Global Repercussion

Lance Grady, EVP Managing Partner, Global HEOR & Access Strategy 
Richard Macauley, SVP, International Access Strategy 
Ross Maclean, EVP, Partner, Global HEOR & Access Strategy 

How MFN Is Redefining Global Drug Pricing, Market Access, and the Future of Innovation

This is the third article in our Pricing Reckoning series. Article 1, The Price Convergence, explored how U.S. pricing reforms — from the Inflation Reduction Act (IRA) to the Most-Favored-Nation (MFN) framework — have made drug pricing the central axis of access strategy. Article 2, The Access Rewiring, examined how these same pressures are driving manufacturers to redesign patient access through direct-to-patient and direct-to-business models. Now, we look outward: how U.S. policy decisions are reshaping global launch strategy, HTA value frameworks, and the balance between innovation and affordability worldwide. 

The Global Pricing Forum

Global variation in drug pricing is now a topic of public debate, and the topic was a central theme of sessions and conversations at the 30th ISPOR in Glasgow this week.  The biopharma industry has long highlighted the issue: through higher pricing, the U.S. effectively subsidizes global R&D and innovation in bringing new medicines to patients. Indeed, prices of branded drugs in the U.S. are around three times higher than the OECD average – though that disparity may differ by therapy area.   

The potential risks and benefits of MFN on the U.S. pharmaceutical market have been much debated.  The purpose of this article is to discuss the implications of MFN on ex-U.S. markets with a focus on the impact on commercial planning, drug reimbursement prices, HTA submissions, and the decision points that lie ahead for life sciences.  

The United States has long been the engine of global biopharmaceutical innovation. Pricing pressures and limitations on market exclusivity governed by the IRA in the U.S. may redistribute the incentives that have sustained that leadership. Moreover, as MFN reframes how U.S. prices are benchmarked internationally, its effects extend beyond domestic markets to every country linked through reference pricing or health-technology assessment systems.  

With the announcement of the GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model by CMS, the long-awaited guidance for MFN implementation to beneficiaries equips stakeholders with more detail to advance policy and commercial planning globally. Importantly, the particular focus on engagement with U.S. State Medicaid programs, calibrates the potential impact of MFN both domestically and globally. The GENEROUS Request For Applications (RFA) outlines a voluntary program for manufacturers to enter into supplemental rebate agreements with states to introduce lower MFN drug prices for Medicaid beneficiaries.  

While this does not eliminate any additional negotiations manufacturers may engage in with the Trump Administration, the specific focus on State Medicaid may minimize the global impact. The Administration's stopping short of advancing MFN for Medicare is a recognition of the regulatory and legislative entanglement of drug pricing policy within the Medicare program. As such, global market strategies, particularly for those towards the eight identified countries (United Kingdom, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland) in the GENEROUS model, require a reset with an understanding of how to quantify the impact of MFN pricing in the U.S.  

We identify three broad, international market implications and potential scenarios that MFN may trigger:

1. General observations regarding the implications of MFN on Access Strategy and value demonstration

Although MFN is framed as a mechanism to drive U.S. drug prices downward toward international levels, in practice, the market’s gravitational pull may flow the other way. Given the economic weight of the U.S. market, manufacturers may consider elevating ex-U.S. prices to preserve the pricing corridor that sustains their global portfolios. The result could be an upward drift in prices across developed markets, with secondary ripple effects in middle- and lower-income countries through international reference pricing systems. Conversely, given that the MFN via the GENEROUS Model is primarily applicable to US State Medicaid programs, this may neutralize its impact, requiring manufacturers to assess market opportunities in those markets. 

As such, if the United Kingdom or Germany market may be of higher priority than U.S. Medicaid markets, manufacturers may employ precautionary approaches and engage each market uniquely via a more traditional market sequencing approach. Manufacturers would essentially choose not to disclose proprietary drug pricing data from international markets and not participate in the GENEROUS Model. Regardless of the direction of influence by MFN, international reference pricing for global markets persists, and non-viable markets, or markets with limited commercial opportunity, will continue to exist. Lower product prices may translate into higher (better) value for patients and society.  However, at some point, the lower price will become non-viable for the manufacturer, raising the possibility of market exit or a decision not to launch. 

2. Global commercial sequencing and market assessments

Market and indication sequencing is the cornerstone for global commercial planning. Evidence and, now, pricing are more transparent, and global policymakers and regulators are continuing to learn from one another. MFN and the GENEROUS Model add more variables to the equation, but the fundamental opportunities and risks remain and must be weighed against the global political climate. Tailored market sequencing may also delay patient access. As price pressures and price transparency increase, meticulous planning and sequencing of clinical development and commercialization could contribute to delays in access, equating to an impact on health management and potentially patient outcomes. Manufacturers must also consider in-market decisions as the HTA-informed price is rarely the final, contractually agreed-upon net price for a payer.   

The global sequencing strategy, which already incorporates the Joint Clinical Assessments (JCA) framework, now adds MFN considerations for certain markets. Yet a drug’s final economic assessment of value and budget impact (affordability) is conducted on a country-by-country basis, with each country potentially using its own approach (and its own reference data), creating additional layers and timelines to manage and potentially contributing to delays in access. 

In HTA markets, the PICO statement is the starting point for value assessment: Patient (population) > Intervention > Comparator > Outcome.  It is unclear how an MFN price may change elements of the PICO; patients may not get access to comparator drugs if the comparator drug firm decides not to launch in that market; and class-level comparisons may have flawed or out-of-date prices to impute into any cost effectiveness assessment (CEA). 

Finally, the aggregation of global revenue curves and the precise sequencing of commercial decision points based upon sound evidentiary planning, pricing strategy, and predictive modeling now considers the balance of the U.S. Medicaid market, and Direct to Patient Markets. This is in addition to the ongoing valuations brought about by CMS Negotiation as stakeholders assess IPAY26 formularies for repriced drugs in the Medicare Part D program and anticipate the release of the MFP for the 15 Part D drugs for IPAY27. The complexity of the U.S. insurance markets and the splicing of economics within each factor heavily into commercial planning to maximize global market opportunities. 

3. Specific scenarios that may play out in ex-US markets as US biopharma firms navigate the MFN implications.

Five potential scenarios that may arise, some of which are actively occurring, include the following:  

Scenario A: Companies drop Medicaid prices to the level of the adjusted net prices in the eight reference countries, in line with the intention of the GENEROUS model. However, given the relative size and importance of the U.S. market, this may not be commercially feasible for many companies, who may instead manage it by focusing on their ex-U.S. pricing strategy. 

Scenario B: Rather than reducing U.S. prices, manufacturers instead focus on increasing ex-U.S. net prices. However, given the very limited willingness and ability of ex-U.S. payers to pay more, this may instead result in manufacturing or sequencing launch in markets included in MFN calculations. The political pressure in ex-U.S. markets, facing a potential shortage of access to innovative healthcare technologies, may drive payer reforms to increase healthcare expenditure on new treatments. 

Scenario C: It is important, nevertheless, to recognize that increasing net prices in ex-U.S. markets does not always result in a proportionate increase in pharmaceutical expenditure. For example, several markets have market-wide pharmaceutical expenditure caps, with rebates paid by industry on payments above an agreed limit (for example, VPAG in the UK). Further, various simple and complex financial agreements tied to specific drug reimbursement are common (such as price-volume and pay-for-performance agreements), with rebates tied to utilization or real-world patient performance. Proliferation of such agreements may be one way to allow for hiking ex-U.S. net prices in a payer-acceptable manner.    

Scenario D: Sharing of ex-U.S. net prices proves to be impossible for companies (including if different companies have U.S. and ex-U.S. commercialization rights). In such a situation, ex-U.S. list prices may be accepted as reference points for the GENEROUS model. This may still allow for maintaining substantial U.S. vs. ex-U.S. net price differentials, with increasing ex-US list prices masking much lower net prices paid. Separating the commercial entities managing ex-U.S. and U.S. jurisdictions could be a strategy to mitigate MFN implications. 

Scenario E: A manufacturer considers the downside of disclosing proprietary pricing data from ex-U.S. markets to CMS, and after careful consideration, advances forward in global commercialization, foregoing participation in the voluntary GENEROUS Model for U.S. Medicaid markets.  

Why Globally Integrated Policy, Evidence, Pricing, and Access Strategy is Essential 

Beyond pricing and market commercialization strategies, MFN is also influencing trade diplomacy. Several governments are negotiating tariff relief or industrial-investment commitments in exchange for closer alignment with U.S. pricing expectations—a signal that industrial and pricing policy are converging. Ensuring that global commercial and pricing decisions also consider the implications of tariffs will help manufacturers make final decisions on participation in the voluntary MFN GENEROUS Model.  

The global pricing landscape is shifting in real time. MFN has transformed U.S. policy into a global coordination experiment, forcing manufacturers and payers alike to reconcile affordability with innovation. The impact of CMS price negotiations as part of the IRA legislation signals a diversification of the global commercial footprint and the maximization of pricing where feasible in international markets.  However, where there is a wide disparity between the US and international market pricing, incremental to an MFN strategy, strategies used to manage price disparities within markets, for example, with different indications, could include the following, e.g., dual-branding, different dosage forms, modes of administration, or joint-ventures/alliances/licensing agreements.  

The rate of change in drug pricing and reimbursement policy necessitates tighter integration between U.S. and global functions. Launch sequencing, global evidence generation, and tariff policy will need to be planned in concert, requiring a sharper focus and seamless integration with HEOR and pricing & market access teams to maximize the opportunity to ensure innovative medicines continue to reach patients.  

To discuss how Precision AQ Access Consulting can support you as you navigate payer environments and maximize pricing and reimbursement opportunities, contact us today.