Codifying MFN Drug Pricing Could Undermine Biopharma Innovation
As Congress considers whether to codify Most Favored Nation (MFN) drug pricing into statute, recent comments by CMS Administrator Dr. Mehmet Oz and industry reaction highlight serious concerns from the biopharmaceutical sector about the long-term implications for innovation, investment, and U.S. leadership in life sciences.
At the PhRMA industry forum this week, Dr. Oz reiterated the administration’s push to align U.S. drug prices with those in other developed countries - a core goal of MFN policy. According to Washington Post reporting on the event, Oz emphasized the desire to move past “global freeloading,” where Americans have historically paid more for the same medicines than patients abroad. “We should not be paying three times more [than other countries] for the exact same medication in the same box made in the same factory,” Dr. Oz said in a public comment tied to MFN pricing discussions.
According to various media reports, Dr. Oz also suggested that codifying MFN into statute could help avert even more aggressive - or “draconian” - pricing interventions in the future. The implication: if Congress does not formalize an MFN framework, pressure could build for broader price-setting authorities or expanded federal intervention down the road. That argument is being positioned as a stabilizing compromise - but industry leaders caution that embedding international reference pricing into law would itself represent a dramatic structural shift in U.S. drug policy.
Leaders across PhRMA and the Biotechnology Innovation Organization (BIO) have been vocal that MFN codification would amount to importing foreign price controls into the U.S. market - a move they warn could undercut incentives for breakthrough drug development. In statements issued during earlier phases of the policy debate, PhRMA President and CEO Stephen Ubl said, “Importing foreign prices from socialist countries would be a bad deal for American patients and workers… It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America.”
John F. Crowley, President and CEO of BIO, similarly criticized MFN, calling it “a deeply flawed proposal that would devastate our nation’s small- and mid-size biotech companies - the very companies that are the leading drivers of medical innovation in the United States.” He added that applying other countries’ methods for valuing medicines would risk stalling investment in U.S. biotech and could undermine national economic and security goals.
Industry analysts also caution that codifying international reference pricing represents a fundamental shift in how the U.S. values and reimburses medicines. MFN pricing - by setting U.S. prices to match those abroad - has implications for deal economics, asset valuation, and market access strategies across the biopharmaceutical ecosystem. This could ripple into mergers and acquisitions, licensing transactions, and R&D investment decisions, where future revenue expectations drive risk allocation.
Critics of MFN codification also point to the executive order that launched the current MFN initiative, noting that while it directs federal agencies to lower U.S. prices to the lowest prices in comparable OECD countries, the policy still lacks clarity on how benchmarks are derived and applied across diverse markets such as Medicare, Medicaid, and commercial payers.
From the industry’s perspective, the stakes are clear: broad statutory MFN pricing could reduce expected returns on complex biologics and specialty therapies, with potentially chilling effects on future innovation. As companies and stakeholders continue to engage with lawmakers, PhRMA and BIO, along with state partners like MichBio, are advocating for targeted reforms that address inefficiencies in the U.S. pricing system - such as greater transparency and reduced middlemen costs - without adopting international price controls that, in their view, could slow the pace of medical breakthroughs.
