Most Favoured Nation Pricing in the US

What is MFN?

The move toward Most Favoured Nation (MFN) pricing reforms in the United States (US) represents one of the most significant shifts in global pharmaceutical policy in recent memory. By linking US reimbursement levels to the lowest prices paid by comparable countries, MFN aims to reduce domestic drug spending. Yet the consequences extend far beyond US borders. Pharmaceutical companies must align their US pricing for all new drug applications with “the lowest price in an OECD country with a gross domestic product (GDP) per capita of at least 60% of the US GDP per capita”^[1]; many markets that have traditionally served as international reference points, particularly in Europe, but also Australia, Canada and the United Kingdom (UK), meet this threshold and now face a more complex and uncertain pricing environment.

As the US accelerates implementation of MFN reforms, other regions potentially risk price increases and/or delayed, or reduced access to new innovative medicinal products. The European Union (EU) is known for slow regulatory adaptation, a challenge highlighted in recent European Commission assessments of pharmaceutical legislation reform^{[2, 3]}. This mismatch in policy speed may have profound implications for global market access, launch sequencing, and patient equity; especially for manufacturers of orphan drugs or cell and gene therapies which typically demand a higher price and therefore encounter a lengthy journey to patient access.

A New Global Pricing Paradigm

MFN pricing represents a fundamental departure from the historical approach to pharmaceutical reimbursement. Traditionally, the US has allowed free pricing at launch, creating a commercially attractive environment that supports early revenue generation. This revenue has often subsidised lower prices in more tightly regulated markets.

MFN disrupts this model by tying US prices to the lowest levels among peer nations. The concept was first formalised in the US through the 2020 MFN Interim Final Rule and has since influenced ongoing policy discussions, including Medicare drug price negotiation under the Inflation Reduction Act (IRA)^[4].

Manufacturers can enter into voluntary agreements with state Medicaid programmes to provide MFN pricing known as GENEROUS, a new international reference pricing (IRP) model initiated through the Center for Medicare and Medicaid Services (CMS) Innovation (CMMI). As of December 2025, two further IRP models were announced - GLOBE and GUARD - to test new rebate formulas for certain Part B (GLOBE) and Part D (GUARD) drugs in randomly selected geographic areas, would require mandatory participation from manufacturers^[5-7].

This shift has global implications, particularly for countries that rely on early access to innovative therapies and that serve as reference points in international pricing frameworks. If manufacturers fear that low prices in Europe or other reference markets will directly reduce US reimbursement, they may delay launches or avoid certain markets entirely.

The EU’s Slow Regulatory Machinery: A Growing Vulnerability

The EU’s regulatory environment is characterised by decentralisation, heterogeneity, and slow implementation timelines. Even when the European Commission introduces reforms, such as the ongoing revision of the EU pharmaceutical legislation, member states often take years to translate them into national practice^{[8, 9]}. The European Medicines Agency (EMA) has acknowledged persistent delays in access across member states, with time‑to‑market varying significantly^[3]. The ongoing revision of general pharmaceutical law in the EU has access and affordability at its heart. It is predicted to indirectly force medicinal products to be launched in all national markets. This could be achieved by decreasing intellectual property rights and regulatory exclusivities, for example.

In the context of MFN, such delays become a strategic liability. If the US rapidly adjusts its pricing rules, manufacturers may respond by:

• Delaying or even withdrawing launches in Europe to avoid setting low reference prices that could influence US reimbursement

• Prioritising high‑income European markets while deprioritising smaller or lower‑income member states

• Pushing for confidential discounts rather than public list‑price reductions, further complicating transparency efforts

• Prioritising US-centric clinical development programmes where the views of US payers dominate clinical trial design (e.g. relevant endpoints, patient populations, or subpopulation analysis).

Due to both MFN pricing and US import tariffs, the EU’s traditional role as a global price anchor may weaken, with consequences for affordability and access across the region.

Recent analysis provided by the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE) shows that the EU27 pharmaceutical industry achieved a record trade surplus of 195 billion Euros in 2024, with the US accounting for 38.3% of total EU27 pharmaceutical exports (121 billion Euros)^[10]. These reforms may result in delayed or withdrawn product launches in the EU27, especially in lower-priced countries, with 82% of surveyed companies considering this likely in the long run^[10].

Regarding investment in the EU27 region, 42% of surveyed companies said they were likely to put planned EU27 investments on hold in the short-term (1-3 years), increasing again in the long-term (5-10 years) once strategies have been adjusted. The pharmaceutical industry reportedly invested 32.8 billion Euros in R&D in 2023, with EUCOPE members directing 40% of their R&D expenditures to the EU27 and 60% to the US^[10]. The new trade policies may lead to a decrease in global R&D expenditures, potentially affecting innovation and economic contributions in the EU27^[10].

Implications for Australia, Canada and the UK

Australia

Australia’s Pharmaceutical Benefits Scheme (PBS) is known for rigorous price negotiations and mandatory price reductions. The Australian Department of Health has emphasised ongoing efforts to manage rising costs associated with high‑cost medicines. If Australian prices influence US MFN calculations, manufacturers may adopt more cautious launch strategies. Based on recent payer discussions conducted by Solaris Pricing & Market Access, MFN has not yet influenced manufacturers withdrawing or delaying launch in the Australian market, nor has it affected Pharmaceutical Benefits Advisory Committee (PBAC) decision making. The evolving landscape in the UK (NICE threshold increases and UK-US trade deals) could impact Australia as another Health Technology Assessment (HTA)-focussed market. If companies highlight a higher UK willingness‑to‑pay benchmark during talks with PBAC and PBS this could lead to heightened pressure to accept higher prices, narrower reimbursement criteria or longer delays, rather than applying current implicit thresholds. Australian Government ministers have stated publicly that the PBS “is not up for negotiation,” suggesting a potential clash between domestic affordability and external expectations to shoulder a larger share of global drug revenues^[11].

Across all three markets, MFN could exacerbate existing access delays and intensify the tension between affordability and availability.

Canada

Canada’s Patented Medicine Prices Review Board (PMPRB) introduced new reforms which make the market more attractive for manufacturers, including updated reference country baskets and new economic factors^[12]. The price for pharmaceuticals in Canada has previously been the median of 11 other reference price countries, however under the new reforms Canadian prices will now be in-line with the highest international reference price^[13]. If a product is not available in any of the 11 other countries when it comes onto the Canadian market, the company can price the drug at whatever level it wants until the annual price review. These changes make Canada an attractive early‑launch market, but MFN could prompt further price increases which might make prescription drugs unaffordable for many Canadians and limit expansion of the pharmacare programme^[13].

United Kingdom

The UK’s pricing and access environment is shaped by health technology evaluations, the Voluntary Scheme for Branded Medicines Pricing and Access (VPAG) and negotiations with the National Health Service (NHS), all of which exert downward pressure on prices^[14]. As a cost-effectiveness driven market, there is scrutiny of high‑cost therapies. There was concern during 2025 that if the relatively low pharmaceutical prices in the UK become a reference point for US MFN calculations, manufacturers may delay UK launches or negotiate more aggressively for confidential discounts. However, in December 2025, the Office of the United States Trade Representative and the UK Government announced an agreement in principle regarding the pricing of pharmaceutical products^[15]. This includes an agreement on 0% tariffs on UK pharmaceutical exports to the US and assurance that UK pharmaceutical pricing practices will not be targeted under Section 301 of the Trade Act of 1974. Furthermore, it was announced that a cumulative 25% increase in the UK’s investment in innovative drugs will be delivered through increases in the UK’s thresholds for valuing cost-effectiveness of new drugs (raised from £20,000-£30,000 to £25,000-£35,000 per QALY (Quality-Adjusted Life Year))^[16], in addition to reduced clawback payments on sales of innovative drugs^[15].

Equity of Access: A Growing Concern

MFN’s global impact raises profound questions about equity. If manufacturers increasingly prioritise markets that offer higher prices or faster regulatory pathways, patients in slower or lower‑priced markets may wait years longer for new treatments.

This could widen disparities between Western and Eastern Europe, where access gaps are already pronounced^[17], as countries are deprioritised during early launch sequences. There are also inequities within countries as budget constraints force payers to restrict access or impose stricter eligibility criteria.

Recent industry research exploring how pharmaceutical companies are embedding equitable access into their strategies, structures, and operations in low- and middle-income countries (LMICs) suggests that companies are transitioning to more integrated, sustainable access models as part of their core commercial strategy^[18]. ​LMICs, home to over 80% of the global population, are increasingly central to the pharmaceutical industry's growth and innovation.​ Access in these markets is now seen as both a moral imperative and a strategic necessity. ​

The risk is that MFN, while designed to improve affordability for US patients, may inadvertently reduce access for patients elsewhere – how will industry balance a strong commercial imperative to ensure access in LMICs while also ensuring commercial viability under MFN?

Advanced Therapies: A Particularly Vulnerable Segment

High‑cost advanced medicinal products such as cell and gene therapies are central to the future of pharmaceutical innovation. These products often involve complex manufacturing, small patient populations, and substantial R&D investment. Their pricing models rely heavily on early access to high‑value markets.

MFN introduces several risks for this category including delayed launches in lower‑priced markets as manufacturers seek to protect US pricing, reduced availability in smaller markets where commercial returns may not justify the risk of influencing US benchmarks, and more contentious negotiations as payers push back against high prices while manufacturers seek to maintain global pricing integrity. This might ultimately lead to delays in reaching pricing agreements.

Recent analyses highlight that rare‑disease therapies already face significant access disparities across Europe, with time‑to‑reimbursement varying widely^{[10, 19]}. MFN could widen these gaps further.

Are Budget Holders Prepared?

Payers and health systems outside the US must now confront a more volatile global pricing environment with several looming challenges:

• Sustaining reimbursement for high‑cost therapies when manufacturers may be less willing to offer deep discounts. Payer research indicates that markets which expect to be ranked as having the lowest list prices by the US (e.g. Italy) are discussing how confidential discounting will impact the attractiveness of the market. In Italy, AIFA is introducing a new clawback system which requires manufacturers to pay back or offer rebates if revenues for a drug (including gene therapies) exceed the agreed target. There will likely be a move away from discounts with manufacturers instead pushing to set up more complex schemes such as outcomes-based agreements or specific caps (e.g. price-volume agreements) to protect premium net prices.

• Managing clinical and financial risk, particularly for one‑time gene therapies with uncertain long‑term outcomes. Joint procurement at the EU level has primarily been touted as a solution to problems with drug shortages and vulnerabilities with single-country sourced products, typically for cheaper generics, could now be expanded to include high-cost pharmaceuticals where price negotiations could ensure more equal access across the bloc^[20].

• Adapting to shifting launch strategies, requiring new approaches to horizon scanning and budget forecasting. One example of such adaptations is the recent MFG policy (Medizinforschungsgesetz) in Germany which offers a confidential discounted price if the company meets the required amount of local research and development activities within Germany and agree to a 9% discount on their negotiated net price^[21]. This confidentiality is potentially protective, ensuring Germany remains a key market in the manufacturers launch strategy.

• Strengthening HTA processes, ensuring they remain robust even as manufacturers adjust evidence packages and pricing expectations.

What’s Next: Time to Reflect on Strategy

MFN pricing reforms in the US are reshaping the global pharmaceutical landscape. For the EU, Australia, Canada, and the UK, the implications are far‑reaching, with delayed launches, more complex negotiations, and heightened pressure on already constrained budgets. Advanced therapies with high price tags face significant risks with potential consequences for patient equity and innovation incentives.

As the US moves quickly, this creates opportunities for companies to adapt their launch sequencing and build global net pricing structures, design value‑based agreements, incorporate strong value components, and restructure how evidence, access, and value are aligned across markets. Navigating MFN will require an integrated understanding of how HTA expectations, payer behaviour, and confidential discounting mechanisms interact across markets.

At Solaris, our Pricing & Market Access team works with an extensive payer network to help manufacturers anticipate these interdependencies and align pricing strategy, evidence generation, and stakeholder engagement to navigate this shifting landscape with clarity. Thoughtful planning, grounded in robust payer insights and a thorough understanding of the payer landscape, will be critical to maintaining both commercial viability and equitable access of global pharmaceutical launches.

References

1. U.S. Department of Health and Human Services. HHS, CMS Set Most-Favored-Nation Pricing Targets to End Global Freeloading on American Patients. 2025  10 February 2026]; Available from: https://www.hhs.gov/press-room/cms-mfn-lower-us-drug-prices.html.

2. European Union. Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down Union procedures for the authorisation and supervision of medicinal products for human use and establishing rules governing the European Medicines Agency, amending Regulation (EC) No 1394/2007 and Regulation (EU) No 536/2014 and repealing Regulation (EC) No 726/2004, Regulation (EC) No 141/2000 and Regulation (EC) No 1901/2006. Document 52023PC0193 2023  10 Feb 2026]; Available from: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52023PC0193.

3. European Commission. Commission welcomes political agreement on major reform of EU pharmaceutical rules. 2025  10 Feb 2026]; Available from: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_3015.

4. CMS. Medicare Inflation Rebate Program. 2026  10 Feb 2026]; Available from: https://www.cms.gov/priorities/medicare-prescription-drug-affordability/overview/medicare-inflation-rebate-program.

5. CMS. GLOBE (Global Benchmark for Efficient Drug Pricing) Model. 2025  10 Feb 2026]; Available from: https://www.cms.gov/priorities/innovation/innovation-models/globe.

6. CMS. GUARD (Guarding U.S. Medicare Against Rising Drug Costs) Model. 2025  10 Feb 2026]; Available from: https://www.cms.gov/priorities/innovation/innovation-models/guard.

7. CMS. GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model. 2025  10 Feb 2026]; Available from: https://www.cms.gov/priorities/innovation/innovation-models/generous.

8. Perehudoff, K., et al., Impact of the European Union on access to medicines in low- and middle-income countries: A scoping review. The Lancet Regional Health – Europe, 2021. 9.

9. EFPIA, E.F.o.P.I.a.A. New data shows no shift in access to medicines for millions of Europeans. 2025  10 Feb 2026]; Available from: https://www.efpia.eu/news-events/the-efpia-view/statements-press-releases/new-data-shows-no-shift-in-access-to-medicines-for-millions-of-europeans/.

10. Copenhagen Economics, Economic Contribution of EUCOPE'S Membership and Trade Implications Following U.S. Policy Measures, in European Confederation of Pharmaceutical Entrepreneurs (EUCOPE). 2026.

11. iPharmaCenter. NICE’s New £35k/QALY Era: Ripple Effects for Australia’s PBS and Other HTA Markets | NICE Cost Effectiveness Threshold | iPharmaCenter. 2025  10 Feb 2026]; Available from: https://www.ipharmacenter.com/post/nice-s-new-35k-qaly-era-ripple-effects-for-australia-s-pbs-and-other-hta-markets-ipharmacenter#google_vignette.

12. Government of Canada. Patented Medicine Prices Review Board: Consultations. 2025; Available from: https://www.canada.ca/en/patented-medicine-prices-review/services/consultations.html.

13. News@York. Canada’s new drug pricing guidelines are industry-friendly. 2025  10 Feb 2026]; Available from: https://www.yorku.ca/news/2025/07/28/canadas-new-drug-pricing-guidelines-are-industry-friendly/.

14. UK Parliament. How are medicines prices set in the UK? 2025  19 Feb 2026]; Available from: https://commonslibrary.parliament.uk/how-are-medicines-prices-set-in-the-uk/.

15. GoodLifeSci. What the U.S.–UK Drug Pricing Agreement Reveals About How MFN Drug Policy Could Impact the UK and EU. 2025  10 Feb 2026]; Available from: https://goodlifesci.sidley.com/2025/12/10/what-the-us-uk-drug-pricing-agreement-reveals-about-how-mfn-drug-policy-could-impact-the-uk-and-eu/.

16. NICE. Changes to NICE’s cost-effectiveness thresholds confirmed. 2025  10 Feb 2026]; Available from: https://www.nice.org.uk/news/articles/changes-to-nice-s-cost-effectiveness-thresholds-confirmed.

17. OECD. Health inequality and universal health coverage. 2023  10 Feb 2026]; Available from: https://www.oecd.org/en/topics/health-inequality-and-universal-health-coverage.html.

18. Jayasundra, R.S., J. The new model for equitable access in LMICs - From initiative to integrated ecosystems. 2025; Available from: https://www.simon-kucher.com/en/insights/new-model-equitable-access-lmics-initiative-integrated-ecosystems.

19. Pakter, P., Rare disease care in Europe – Gaping unmet needs. Rare, 2024. 2: p. 100018.

20. Politico. Pharma sounds alarm over EU plans to procure novel medicines. 2025  10 Feb 2026]; Available from: https://www.politico.eu/article/pharma-sounds-alarm-over-eu-plans-to-procure-novel-medicines/.

21. PharmaPhorum. How are the US MFN and German MFG likely to impact pharmaceutical companies’ launch strategies? 2025  10 Feb 2026]; Available from: https://pharmaphorum.com/market-access/how-are-us-mfn-and-german-mfg-likely-impact-pharmaceutical-companies-launch.