How MFN Executive Order Could Affect International Drug Costs
Ron Lanton, Partner, Lanton Law, weighs in on the potential international trade, pricing, and access implications of tying US drug costs to those in other developed countries under the Most Favored Nation executive order.
PC: Although ways to decrease healthcare costs are certainly encouraged by pharma supply chain stakeholders, what potential long-term repercussions (if any) could President Trump's MFN executive order have on the industry?
Lanton: The executive order mandates that pharmaceutical companies match or beat the lowest price paid by certain countries—such as Canada, Germany, or France—or face regulatory penalties. Tying US drug prices to international benchmarks could trigger large-scale trade disputes.
Here’s what I mean: the countries whose prices would serve as the benchmark might be pressured to raise those prices, which could cause friction with trade partners and potentially violate global treaties. At the same time, reduced profits in the US market could push pharma companies to compensate by raising prices elsewhere.
Countries with universal healthcare systems or limited healthcare budgets—many of which haven't been central to the policy debate—may experience reduced access to essential medicines. Altogether, this could result in the U.S. effectively exporting its high-cost drug model, potentially leading to an unintended global affordability crisis.
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