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.

Most Favored Nation, Least Favored Patients

President Trump's May 12th executive order establishing Most Favored Nation (MFN) pricing for prescription drugs promises dramatic savings. Still, it threatens to dismantle America's position as the global leader in medical innovation while importing discriminatory healthcare rationing through the back door. While the Administration claims the policy could generate $85.5 billion in Medicare savings over seven years, the evidence reveals a devil's bargain that risks sacrificing immediate access to life-saving and life-improving medications and the medical breakthroughs that keep America first in line for life-saving treatments.

Congress just allocated $75 billion in extra funding for ICE to detain and deport brown people while simultaneously implementing policies that could paralyze medical research. It seems Washington has unlimited money to remove people from the country, but life-saving drug innovation must be rationed through foreign price controls. This isn't limited to Republicans—Democrats tried similar price controls in 2019.

The executive order directs the U.S. Department of Health and Human Services to implement pricing tied to "the lowest price in an OECD country with a GDP per capita of at least 60 percent of the U.S. GDP per capita." Unlike Trump's blocked 2020 attempt, this version establishes a two-phase approach: voluntary compliance within 30 days, followed by escalating enforcement, including regulatory rulemaking, drug importation authorization, and even potential FDA approval revocations. So far, not much has been disclosed by the Administration or manufacturers as to how that process is going.

To casual observers, this may sound appealing on its surface. Americans do pay more for prescription drugs than patients in other developed countries in terms of gross costs. But MFN pricing operates as a Trojan horse that would fundamentally reshape American pharmaceutical markets while potentially circumventing federal prohibitions on quality-adjusted life year (QALY) metrics that systematically discriminate against vulnerable populations. Additionally, U.S. investments in pharmaceutical innovation help fund global access to medications in underserved countries—a moral leadership role we abandon when we adopt foreign rationing schemes.

The QALY Trap: How International Pricing Imports Discrimination

Countries used as MFN benchmarks systematically employ Quality-Adjusted Life Year (QALY) and similar assessments to determine drug coverage and pricing, creating an indirect pathway for importing these controversial metrics into U.S. healthcare despite explicit federal prohibitions. QALYs attempt to measure treatment value by calculating both quantity and quality of life gained, but they assign numerical scores to different health states—effectively putting a price tag on human life based on perceived disability or illness.

Consider two people needing treatment: Person A without a chronic condition and Person B living with cystic fibrosis. Under QALY calculations, because Person B may not achieve the same "quality" of life after treatment as Person A, treatment for Person B is automatically deemed "less valuable" than treatment for Person A—especially for therapies targeting chronic conditions. All under the frame of "cost-effectiveness."

The United Kingdom's National Institute for Health and Care Excellence (NICE) employs "cost-effectiveness" thresholds of £20,000-30,000 per QALY gained, meaning treatments costing more than roughly $25,000-$37,000 per "quality-adjusted" year of life are typically rejected. Canada's Agency for Drugs and Technologies in Health (CADTH) reduced its threshold to CAD$50,000 per QALY in late 2020. Australia's Pharmaceutical Benefits Advisory Committee (PBAC) routinely rejects drugs exceeding AUD$76,000 per QALY. When MFN pricing imports these countries' low drug prices, it inherently imports the discriminatory QALY calculations that produced them.

The discrimination is measurable. Between 2014-2018, zero rare disease treatments reviewed by the Institute for Clinical and Economic Review (ICER) received "high value" ratings under standard QALY thresholds. Canada required price reductions exceeding 70 percent for 71 percent of orphan drug approvals to meet "cost-effectiveness" standards. The United Kingdom systematically rejected multiple cancer drugs based purely on QALY calculations, prompting the creation of the Cancer Drugs Fund specifically to bypass NICE's thresholds.

A 2022 National Institute of Allergy and Infectious Disease-funded, ICER "cost-effectiveness" review explicitly utilizing QALYs concluded that breakthrough long-acting injectable HIV prevention "limits the additional price society should be willing to pay" because of pre-existing oral regimens. The value of increased adherence and reduced HIV transmissions, under this conclusion, was simply not worth the cost to "society."

As the Disability Rights Education & Defense Fund explains, "The QALY equation relies on a baseline of 'perfect health' that is calculated by society's conception of health and functioning." People with disabilities are automatically assigned lower quality-of-life scores, regardless of their lived experiences. The breakthrough cystic fibrosis treatment Trikafta, which significantly extends lives, is undervalued by QALY calculations because cystic fibrosis involves the functional “limitation” of “only” ensuring patients with cystic fibrosis will remain out of the hospital, not return to full lung function.

Current U.S. law explicitly prohibits federal programs from using QALYs in coverage decisions. The Affordable Care Act forbids Medicare from using QALYs or "similar measures that discount the value of a life because of a person's disability." Yet MFN pricing effectively endorses discriminatory "cost-effectiveness" standards because importing prices from countries like the United Kingdom and Canada inherently imports the QALY-based decisions that generated those prices.

These metrics harm access today, not just in the future. Trikafta was selected by Colorado's Prescription Drug Affordability Board (PDAB) for "affordability review" last year. Only after more than a year of patient advocacy, industry data input, and provider testimony about the medication's effectiveness did the Board deem the drug "not-unaffordable"—despite not defining what “affordability” means or for whom. If the Board had determined the medication “unaffordable,” it could have then imposed a reimbursement cap – essentially reducing what plans, not patients, would pay for it and harming the financial stability of actors up and down the supply chain. Patients rightfully shared concerns about losing access under what amounts to political appointees saying, "your medication isn't worth paying for."

Back in Colorado, Trikafta patient Amanda Boone testified to the Board about her fear of losing the ability to be a mom to her child, returning to ongoing hospital stays, and the physical and mental health costs of living with cystic fibrosis before the life-altering medication. She was firey, brought to tears, and ultimately silenced by the Board for her honesty. Today, the Board is still considering data about medications driven by similar backdoor QALY insertions and by ICER’s Harvard equivalent, PORTAL – all funded by the state of Colorado.

QALYs and the mechanism of importing them, by way of MFN, aren’t just a future threat. They’re a threat on access to medications that exist today.

Human life is not a value equation that can be calculated by an analyst, actuary, or worse, a politician. In a time when populist rhetoric increasingly dehumanizes people across gender, race, and sexual identity, we cannot allow healthcare policy to embed systematic discrimination against people with disabilities, chronic conditions, or terminal illnesses. The intersections of humanity most burdened by diseases like HIV and hepatitis C deserve better than rationing schemes disguised as cost savings.

Innovation Exodus: The Cost of Being Second

MFN pricing threatens America's position as the global innovation leader in ways that extend far beyond budget calculations. National Bureau of Economic Research analysis demonstrates that cutting drug prices by 40-50% leads to 30-60% fewer R&D projects in early-stage development. With only three out of 10 pharmaceutical products generating returns exceeding average R&D costs of $802 million, aggressive pricing pressures could eliminate the margins that make drug development viable.

The historical precedent is sobering. European R&D investment exceeded U.S. levels by 24 percent in 1986, but after implementing price controls, European R&D fell to 15 percent below U.S. investment by 2004. By 2020, 47 percent of global new treatments originated from the United States versus 22 percent from Europe—a complete reversal from 25 years earlier.

The damage is already starting. Venture capital investment dropped from $36.7 billion in 2022 to $29.9 billion in 2023, and 166 of 785 U.S. venture-backed companies with drugs in development have not raised capital since 2021. Companies like Alnylam have already halted Phase 3 trials for Stargardt disease, explicitly citing pricing policy pressures as the reason.

What happens when the next breakthrough HIV cure emerges from Chinese research facilities while American companies struggle under price controls? What happens when Europeans develop the next generation of mRNA vaccines while U.S. biotech funding dries up?

Here's the reality: Europe won't catch up. Neither will China. No other country is prepared to step into the innovation gap the United States represents. There's no telling if or when any other country might be willing to make the types of investments we do today. Cutting off the funding source won't magically drive down today's costs—it will simply lead to fewer cures, more deaths, and more illnesses tomorrow. Fewer cancer cures, fewer investments in curing Alzheimer's, a world where we're further from our health goals, not closer.

We maintain the most critical advantage in the world: developing the most effective, safest medicines and being first in line for medical breakthroughs. MFN pricing gambles away that advantage for questionable savings.

Real Solutions: Fixing the Actual Problems

If President Trump genuinely wants to lower prices for consumers, he should target the obvious culprits driving up costs through market manipulation rather than importing foreign price controls and the threats to patients that come with them. Ohio demonstrated the path forward by eliminating CVS Caremark and OptumRx from Medicaid and creating a single state pharmacy benefit manager with pass-through pricing. The result: $140 million in savings over two years while actually paying pharmacies more. Kentucky achieved $282.7 million in savings between 2021-2022 through its single PBM model.

The scope of pharmacy benefit manager abuse is staggering. Federal Trade Commission findings reveal that PBMs generated $7.3 billion in excess revenue from specialty drug markups between 2017-2022, marking up some generic cancer drugs by almost 250 times acquisition cost. Major PBM formularies excluded 1,156 unique prescription medicines in 2022—a 961 percent increase since 2014—affecting an estimated 275,000 patients who required medication switches.

Real reform means addressing PBM spread pricing that allows middlemen to pocket the difference between what they pay pharmacies and charge insurers. It means demanding transparency from hospital systems that have consolidated into monopolies driving up costs while reducing services. It means eliminating 340B abuse where hospitals generate billions in profits while patients see no benefit. And it means holding insurance company executives accountable with real consequences when they systematically deny legitimate claims.

These solutions exist and work. Ohio saved $140 million. Kentucky saved $283 million. West Virginia cut insurance rate increases in half. None required importing discriminatory rationing schemes.

Choose Progress, Not Populism

MFN pricing offers a false choice between astronomical drug costs and innovation collapse, when the real choice is between gutting American medical leadership or fixing the broken systems that actually drive up costs. We can pursue aggressive reforms without sacrificing our position as the country where breakthrough treatments emerge first.

With 30 million Americans living with rare diseases depending on continued innovation and 95 percent of approximately 7,000 rare diseases still lacking treatments, we cannot afford policies that prioritize short-term budget savings over long-term survival. America's healthcare system needs reform, but MFN pricing represents a dangerous gamble that could leave us second in line when the next cancer breakthrough or HIV cure emerges. That's a risk no American should have to take.