The Great European Drug Drought: What MFN Means for America

As CANN and ADAP Advocacy shared in a joint statement against Connecticut's HB 6870, we warned legislators against "the base, ethical and economic cheapness of sacrificing tomorrow's lives for today's pennies." The European pharmaceutical access crisis provides concrete evidence of what America could experience under Most Favored Nation (MFN) price negotiations, where patients wait up to 989 days for approved treatments while pharmaceutical innovation migrates to Asia.

The data from Europe reveals a system in distress: only 29% of innovative medicines are fully available through EU reimbursement, down from 42% five years ago. This decline translates into life-threatening delays for patients, with those in Malta waiting nearly three years for new treatments while Germans wait four months, creating a geographic lottery where your passport determines your access to life-saving care.

Engineering a Pharmaceutical Desert

European International Reference Pricing mechanisms create precisely the downward spiral that current MFN executive orders would import to America. Twenty-six of 28 EU states use reference pricing systems, where countries systematically reference each other's prices in an interconnected web that drives pharmaceutical companies out of markets entirely.

The cascade effect reveals how a single policy decision triggers global consequences. Belgium references prices in the Netherlands, Germany, France, and the UK, taking the average to set maximum reimbursement rates. When Lithuania references Belgium's price and negotiates an even lower rate, those reductions automatically flow back through every system that references Lithuanian pricing, and round and round it goes. Research demonstrates that a 10% price reduction in Switzerland forces dozens of countries that reference Swiss prices to demand similar cuts, creating €495.2 million in additional global losses from that single initial reduction.

This interconnected pricing web forces pharmaceutical companies into difficult strategic positions that directly harm patients. For example, when a breakthrough hepatitis C cure could command €50,000+ per treatment in wealthy countries like Germany and France, but Poland negotiates for €15,000, companies face a choice: launch in Poland and watch Germany demand the same low price, or delay the Polish launch to protect higher-value markets. Pharmaceutical companies are compelled to act in the interest of their shareholders, and patients with hepatitis C develop cirrhosis or die waiting while companies and governments play pricing chess across borders.

Countries systematically exploit this system through 'free-riding' behavior, with wealthier nations deliberately referencing poorer countries' prices to secure discounts below their economic capacity. Nations reference varying numbers of other countries when setting drug prices, from as few as four countries (Netherlands) to all other EU countries (Belgium), creating a complex web where no country wants to be the highest price in anyone else's reference basket. One consequence of these pricing games is less investment: studies demonstrate that a 10% price drop in the EU correlates with a 14% decrease in venture capital biomedical funding, showing how European pricing policies directly undermine global pharmaceutical development.

Michiel Peters from the Global Coalition on Aging, who brings EU policy experience to his current advocacy role, warned in our interview that this system creates inevitable consequences: "What you're likely to see is just a smaller total amount of money going into biopharmaceutical research leading to a smaller pipeline of drugs in the future." European governments treat breakthrough medicines as commodities rather than recognizing their unique value, systematically destroying the economic foundation that makes pharmaceutical innovation possible.

Corporate Flight Accelerates Under Pricing Pressure

The reference pricing spiral has triggered an unprecedented corporate exodus from European markets, with major pharmaceutical companies choosing public confrontation over traditional behind-the-scenes negotiations. This shift has been accelerated by Trump Administration threats to implement MFN pricing that would tie U.S. prices to European levels, creating additional pressure for companies to establish pricing precedents that protect their American revenue streams.

Take, for instance, Bristol Myers Squibb's September 2025 announcement. The company declared it would launch Cobenfy at full U.S. pricing ($22,200 annually) in the UK, explicitly threatening to "walk away" if UK authorities refused to recognize the value of the first novel schizophrenia treatment in 70 years. This represents a fundamental shift from accepting European pricing terms to demanding recognition of the value of innovative treatments.

The UK's deteriorating investment climate illustrates how pricing pressures create economically unsustainable market conditions. Under the Voluntary Pricing Agreement, pharmaceutical companies must pay rebates to the NHS when industry sales exceed predetermined growth rates. These repayment rates have escalated beyond reason, from just 5.1% of revenue in 2021 to 26.5% in 2023. Companies must now return more than a quarter of their UK revenue to the government, making market participation economically untenable. Both AbbVie and Eli Lilly withdrew from the agreement entirely in January 2023, with Eli Lilly stating the scheme "has harmed innovation, with costs spiraling out of control."

The cumulative effect is a pharmaceutical industry in retreat. Novartis CEO Vas Narasimhan warned that "30 to 40 percent of cancer drugs are delayed or not launched on the European market at all," with this proportion expected to increase as pricing pressures intensify. The UK has fallen from 4th to 98th place in overall pharmaceutical trade balance since 2010, reflecting the systematic hollowing out of European pharmaceutical markets under aggressive pricing policies.

The Cost of Withheld Access

Behind these policy failures are people whose lives depend on accessing breakthrough treatments, but who find themselves trapped in bureaucratic systems that prioritize budget control over medical necessity. Take Estonian cancer patient Kadri Tennosaar for example. She required €20,000 for three months of Enhertu treatment for metastatic breast cancer. Despite the European Medicines Agency (EMA) approving Enhertu in January 2021, Estonia's government refused reimbursement, forcing her to seek treatment through charity. Her situation illustrates how European "universal healthcare" systems systematically exclude the treatments patients need most.

Romania has developed an even more troubling solution: systematic reliance on court orders for cancer treatment access. Over 1,000 people received medications through legal action in 2023, with courts consistently ruling in favor of patients seeking approved treatments. This judicial intervention effectively acknowledges that Romania's formal reimbursement system fails to provide medically necessary care, forcing dying patients into litigation to access drugs their doctors have prescribed and European regulators have approved.

The system's fundamental contradictions become clear when European patients living under universal healthcare systems resort to American-style fundraising for medical care. As Peters observed in our interview, "European patients will still start a GoFundMe to get an innovative treatment in the US because…if you're dying of a rare disease you're not going to wait 600 days." That 600-day figure represents the average time from regulatory approval to patient availability across EU countries. That’s nearly three years for treatments already deemed safe and effective by European regulators. For patients with aggressive cancers or degenerative diseases, these delays often mean death.

America's IRA Lessons Preview MFN's Future

The Inflation Reduction Act's differential treatment of small molecules versus biologics provides real-time evidence of how pricing policies reshape innovation incentives, offering a preview of MFN's likely effects. Investment in small molecules has declined 70% since September 2021, with the University of Chicago projecting this will result in 188 fewer small molecule treatments over 20 years, leading to 116 million life-years lost.

Small molecules remain particularly critical for neurological diseases like Alzheimer's and Parkinson's, which require blood-brain barrier penetration that biologics cannot achieve. The National Pharmaceutical Council found that 77% of investors report the IRA's "pill penalty" creates a disincentive for small molecule investing, with venture capital flowing overwhelmingly toward biologics. This shift away from small molecules threatens entire categories of medical innovation precisely when aging populations need breakthrough treatments for neurological conditions most.

Meanwhile, China has emerged as the global innovation leader. China's pharmaceutical contribution to the global R&D pipeline has increased from 4% in 2013 to 28% in 2023, surpassing Europe and ranking second only to the United States. From 2019-2023, China led globally with 256 new drug approvals, ahead of the US (243) and EU (191). The funding patterns confirm this shift. China accounts for over 75% of all biotech VC/PE funding in Asia-Pacific since 2019, with late-stage expansion rounds increasing 1.5x from 2019-2024. This demonstrates the systematic migration of pharmaceutical investment toward Asian markets as Western pricing policies make innovation economically unviable in traditional centers of drug development.

MFN: Importing Europe's Failures Through Executive Order

Current MFN executive orders, which have attracted bipartisan Congressional support, would import these European failures directly into American Medicare and Medicaid programs. The fundamental premise, that forcing pharmaceutical companies to accept European prices will reduce costs without affecting innovation, ignores overwhelming evidence of investment withdrawal and patient access failures across Europe.

The United States market accounts for 64% to 78% of worldwide pharmaceutical profits, making the European model economically impossible to replicate without devastating consequences for future drug development. As our previous analysis pointed out, "Europe won't catch up. Neither will China. No other country is prepared to step into the innovation gap the United States represents." Eliminating American profit margins means eliminating the economic foundation that funds global pharmaceutical research.

The projected consequences align with European experience. The CMS Office of the Actuary projected that 9%-19% of drugs would be inaccessible under the 2020 MFN proposal because manufacturers would not sell products at MFN prices, with the American Society of Clinical Oncology's analysis indicating that up to 19% of Medicare beneficiaries would lose access to care. These projections mirror current European realities, where patients routinely face treatment delays, denials, and geographic access barriers under government-controlled pricing systems.

Innovation is Access

For people living with HIV, cancer, rare diseases, and other life-threatening conditions, access to novel treatments represents the difference between survival and suffering. European pricing policies demonstrate that short-term cost savings achieved through price controls create long-term access barriers that cost far more in human suffering and economic burden than the original pharmaceutical investments.

The European experience reveals a brutal truth: government-controlled pricing systematically eliminates the treatments patients need most. Estonian cancer patients rely on charity. Romanian patients require court orders. European patients start GoFundMe campaigns to access treatments readily available in America. These policies have transformed medical innovation into a geographic lottery where your passport determines your survival prospects.

U.S. MFN policies follow the same flawed logic, promising immediate savings while systematically destroying the economic foundation that makes future cures possible. The 70% collapse in small molecule research since the IRA, combined with China's emergence as the global innovation leader, proves that pricing policies have consequences extending far beyond budget spreadsheets into the fundamental question of which countries will develop tomorrow's treatments, if they are developed at all.

Europe's pharmaceutical desert offers a preview of America's future under MFN: innovation migrating eastward, patients waiting years for approved treatments, and governments prioritizing short-term savings over long-term survival. America faces a hard choice: maintain our position as the country where breakthrough treatments emerge and are accessed first, or follow Europe's path toward innovation rationing and access lotteries. That future remains avoidable, but only if we choose innovation over rationing, access over austerity, and tomorrow's cures over today's pennies.