A Complex Chess Game With Invisible Chess Pieces

We periodically see news headlines about President Donald Trump’s deals with drug and biotech companies, as well as Department of Health and Human Services announcements on proposed drug-price control mechanisms. Confidentiality surrounding the agreements and lack of clarity on the implementation of the GENEROUS (Medicaid), GLOBE (Medicare Part B), and GUARD (Medicare Part D) proposals make the situation hard to read. Add in the implications for the viability of ex-US drug launches, and the whole picture is best characterized as a complex chess game with invisible chess pieces.

Agreements

Most favored nation (MFN) drug-pricing agreements have been announced for 26 pharmaceutical companies. Under threat of tariffs, these companies have agreed to reduced pricing for some Medicaid drugs, new US domestic investments, contributions toward the Strategic Active Pharmaceutical Ingredients Reserve, and the availability of selected drugs through direct-to-consumer channels. Details on the three-year agreements are scant, but they presumably protect the signatory companies from the GLOBE and GUARD demonstration models.

MFN Proposals

Efforts to get congressional endorsement of the GENEROUS, GLOBE and GUARD proposals have so far failed due to a lack of support among Republicans. With the midterm elections nearing, it is becoming less likely that these proposals will be voted into law. If Republicans lose the majority in both houses, passage is even less likely. Both Republicans and Democrats are in favor of drug-pricing legislation, and both parties have considered MFN-style approaches; however, they hate each other even more than the drug industry, thus making a bipartisan initiative unlikely.

Price Increases Abroad

The premise of Trump’s MFN pricing approach has always been that other countries don’t pay enough and are free-riding on US patients who fund the bulk of research investments for new drugs. Under this approach, pharmaceutical companies would simply raise prices in other countries to spread the funding burden more fairly across the globe.

Trump is correct in calling out the free riding by other countries. Drug companies have complained for decades about the monopolistic behaviors of foreign governments. Over the years, the standard response from the International Trade Administration to drug companies complaining has been that it cannot do anything unless American companies are discriminated against.

The only country that has made some concessions toward increased drug prices has been the United Kingdom. Although this is a great first step, it falls drastically short of making up for the damage caused by not adjusting an already tough cost-effectiveness regimen over 27 years of inflation. Besides the UK, no country has made overtures toward any price increases, and none are expected. Most governments are not properly budgeting for the impact of aging populations, unhealthy lifestyles and public demand for innovative drug solutions for the many devastating diseases that our society is still managing. Budget shortfalls are typically handled through forced price reductions.

What Is the Impact on New Drug Launches?

Reuters reported a 35% drop in European new drug launches since May 2025.¹ France has reported a sharp drop in participation in its early-access pathway that offers patient access to drugs before formal approval. Several companies have put launches on hold while awaiting more clarity on MFN pricing policies. A recent report shows that in Switzerland, one of the MFN-referencing countries, 7 of 22 new innovative drugs were not submitted for inclusion in the Swiss reimbursement list.²

What Are the Future Expectations?

The world is waiting. Drug companies are waiting to see what the future of MFN holds and what it means for their drug development portfolios. They are waiting to make launch decisions for European Medicines Agency-approved drugs while the patent clock is ticking. Venture capital firms are waiting to see whether drug industry investments should be traded for opportunities in other areas. Patients are waiting for new solutions for devastating diseases.

The Bureau of Labor Statistics reported a 3.1% drop in drug prices over the past 12 months.³ The White House declared victory; others say the drop is at least partly caused by a sharp decline in GLP-1 prices. Management by chaos may have delivered some short-term wins. However, Trump deals are expiring after three years, and midterm elections are likely to complicate the passage of new legislation.

The MFN principle may be here to stay, but a lot of uncertainty remains. The only winners may be those who support drug companies and investment firms with frantic scenario analyses.

Ed Schoonveld is a value and access adviser for Schoonveld Advisory, LLC, and author of “The Price of Global Health.” He can be reached at [email protected]

References

1. Fick M, Satija B, Patton D. Drugmakers delay some European launches with a wary eye on Trump's pricing policies." Reuters. March 31, 2026. Accessed September 8, 2026. https://www.reuters.com/business/healthcare-pharmaceuticals/drugmakers-delay-some-european-launches-with-wary-eye-trumps-pricing-policies-2026-03-31/
2. Kaesebier M. Drugmakers curb Swiss reimbursement applications over US pricing concerns. Reuters. August 13, 2026. Accessed September 8, 2026. https://www.reuters.com/legal/litigation/drugmakers-curb-swiss-reimbursement-applications-over-us-pricing-concerns-2026-08-13/
3. Thompson S, Cocco F, Rowland S. Prescription drug prices record sharpest drop in more than 60 years. Washington Post. August 13, 2026. Accessed September 8, 2026. https://www.washingtonpost.com/business/2026/08/13/prescription-drug-prices-record-sharpest-drop-more-than-60-years/