MFN Deals Move Beyond Big Pharma - What it Means For Biotech Startups
The White House’s agreements with nine additional manufacturers signal that pricing pressure is extending deeper into the biopharmaceutical sector.
On August 31, the White House announced most-favored-nation drug-pricing agreements with nine additional manufacturers: Alcon, Astellas Pharma, BeOne Medicines, BridgeBio, CSL, Kyowa Kirin, Sun Pharma, Teva Pharmaceuticals and UCB.
Under MFN pricing, U.S. prices are linked to lower prices paid in other developed countries. According to the White House fact sheet, the agreements will give state Medicaid programs access to MFN prices and apply MFN pricing to new medicines launched by the participating companies.
The deals bring the total number of participating manufacturers to 26, representing 89% of the branded-drug market, according to the White House. Axios reported that the agreements were reached despite concerns within the industry that pricing concessions could disproportionately affect smaller companies. The nine manufacturers also pledged at least $19.6 billion in near-term U.S. manufacturing investment, while several agreed to contribute active pharmaceutical ingredients to the national strategic reserve.
What the announcement signals
For smaller biotech startups, the significance lies less in the immediate Medicaid impact than in the direction of federal policy:
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MFN agreements are expanding from global pharmaceutical companies to midsize and specialty manufacturers.
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Pricing commitments are increasingly connected to tariffs, domestic manufacturing and supply-chain policy.
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Future launch pricing - not only prices for existing products - is becoming part of the negotiations.
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Commercial assumptions used in investment, licensing and acquisition decisions may need to be revised.
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Companies with a single product or narrow pipeline may face greater risk than diversified manufacturers.
A new factor in startup valuation
Most early-stage startups do not yet sell medicines and therefore will not be immediately affected by Medicaid pricing concessions. Their investors and potential partners, however, value pipeline assets based partly on expected future revenue.
If an asset’s eventual U.S. price could be constrained by prices in other countries, buyers may lower revenue projections or apply a larger policy-risk discount. That could translate into smaller upfront licensing payments, more contingent milestones or reduced acquisition valuations.
The effects may be especially pronounced for rare-disease and specialty-drug developers. These companies frequently concentrate their resources on one lead program and a limited patient population. Unlike a global pharmaceutical company, they cannot readily offset reduced revenue from one product with gains elsewhere in a broad portfolio.
The new agreements illustrate that the issue is no longer limited to the largest manufacturers. BridgeBio, for example, reported approximately $502 million in 2025 revenue and has one principal commercial brand. Fierce Pharma noted that it is considerably smaller than many other companies in the latest group.
Licensing strategies may change
Startups often license foreign commercialization rights to finance U.S. development. Yet an overseas partner may independently negotiate a low price that later becomes relevant to a U.S. MFN calculation.
Prospective partners and investors may therefore ask for:
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Greater visibility into international net prices.
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Consultation rights over foreign pricing and launch sequencing.
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Contract provisions allocating the cost of future MFN rebates.
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Flexibility to delay or reconsider launches in reference countries.
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Change-in-law provisions covering new pricing mandates or tariffs.
These demands could make licensing agreements more complex and harder to complete. They also create tension between preserving access in international markets and protecting the value of the U.S. opportunity.
Manufacturing becomes part of the financing equation
The $19.6 billion investment commitment reinforces the administration’s effort to connect pricing relief with domestic production. Larger manufacturers can negotiate using planned factories, existing U.S. facilities and major capital programs.
Most startups have no comparable bargaining leverage. They typically depend on contract manufacturers and may lack the capital to establish domestic production. If tariff relief or favorable treatment increasingly depends on U.S. manufacturing commitments, investors will need to account for higher production costs and additional capital requirements much earlier.
There may also be an opportunity for U.S.-based contract manufacturers and regional biomanufacturing hubs. Greater demand for domestic capacity could benefit the supporting ecosystem, although increased competition for facilities, materials and skilled workers could raise costs for emerging companies.
Important details remain unclear
The individual agreements have not been released publicly. STAT reported that their precise discounts, Medicare implications and enforcement terms remain uncertain. It is also unclear how much additional savings the Medicaid commitments will produce, because Medicaid already receives substantial mandatory rebates.
That uncertainty makes the announcement a signal rather than a complete policy roadmap. Still, startups should begin incorporating MFN exposure, international licensing, tariffs and manufacturing location into development and financing plans.
MichBio will continue monitoring the agreements and related federal proposals, working with BIO, PhRMA and Michigan’s life sciences community to assess their implications for startup formation, investment, partnering and patient access.
