As Washington rushes headfirst into another massive reconciliation bill, a troubling policy proposal threatens to undermine America's global leadership in medical innovation.
The Trump administration's renewed effort to garner Republican support for a "Most Favored Nation" (MFN) foreign reference pricing model in the Medicaid rebate formula would strike the American free market at its core.
Monday morning, the president set a 30-day deadline for drug manufacturers to set lower prices, which Big Pharma has called “a bad deal.” We’ll see what deal indeed it is that America’s negotiator-in-chief is able to make with Congress.
If conservative leaders sign off on importing ineffectual foreign price controls and giving foreign governments decision-making power over American industry, they risk setting off a series of catastrophic ripple effects that will devastate America’s domestic and global biopharmaceutical markets. These price controls, poorly veiled as an attempt to stop foreign freeloading, will only leave patients and consumers suffering in their wake.
MFN pricing models claim to secure the best deal for the American consumer by linking Medicaid drug prices to the lowest prices paid for medications by foreign governments. The current Medicaid drug rebate program, however, already ensures that American taxpayers receive the best deal in our domestic market.
Through the "best price" provision, pharmaceutical manufacturers are statutorily required to offer Medicaid the lowest price available to any purchaser, on top of a substantial mandatory rebate which often exceeds 50% of a drug's list price. While aggressive, this market-based approach has successfully contained costs for American consumers while preserving access to innovative treatments.
Implementing MFN pricing models, on the other hand, will directly tie Medicaid reimbursement to foreign drug prices dictated by government overreach. While it may seem reasonable to promote a policy that will allow U.S. patients to pay the same amount for the same medication as patients in other countries, prices in these countries are only lower due to invasive price controls with consequences that outweigh any benefit from a lower cost.
Price controls are a known enemy of the free market; they distort incentives and stifle research and development of revolutionary treatments.
Countries with government price controls on pharmaceuticals consistently have access to fewer innovative medicines than American patients do. Adopting foreign price controls would bring similar access limitations to vulnerable Americans who need these medications most.
Due to the elimination of the Medicaid prescription drug rebate cap in 2021, if Congress adopts MFN pricing for Medicaid, a number of medications are very likely to become subject to “negative prices” — effectively requiring manufacturers to pay the government to provide their products to Medicaid patients.
Without any return on investment, manufacturers are likely to cease their participation in the Medicaid program, which will in turn automatically exclude them from Medicare Part B. The result? Millions of American patients, including children, patients with rare diseases, and those with chronic health conditions, left without access to innovative treatment options.
Not only will MFN pricing create a host of new issues for the American healthcare supply chain, but it will also exacerbate existing issues in the broader healthcare system.
Medicaid rebate formulas are tied to drug prices in the 340B program, a well-intentioned federal safety net that is now a poster child for abuse by profiteering corporations. With lower Medicaid prices from MFN, 340B hospitals and other entities will receive even deeper discounts while still charging patients, employers, and taxpayers full price.
Furthermore, the biotechnology and pharmaceutical sectors represent crucial components of America's innovation economy, contributing trillions to GDP, supporting millions of high-quality jobs, and generating substantial tax revenue. MFN would jeopardize this economic engine at precisely the wrong moment.
China currently has the second fastest medicine pipeline in the world, with a 200.9% increase in drug development since 2019. If Congress moves to adopt MFN pricing, they may as well give the race to China and say goodbye to more than $100 billion in recent U.S. biopharmaceutical investments.
The real problem isn't American pricing — it's that foreign governments are imposing price controls that allow them to benefit from American innovation without paying their fair share. The solution is not to mimic their failed systems but to embrace commonsense reforms that will lower prices for American patients while ensuring that foreign countries can’t freeload off American innovation.
The choice is clear: either embrace market-based solutions that reform the system while preserving innovation or adopt European-style price controls that will devastate American leadership in medical research and ultimately harm the patients we seek to help.
Most favored nation pricing isn't "America First" — it's "America Last" in pharmaceutical innovation. Conservatives must reject this misguided approach and stand firm for free market principles that have made America the world's medicine chest.
Jared Whitley is a longtime politico who has worked in the US Senate, White House, and defense industry. He has an MBA from Hult business school in Dubai, and in 2024 he won the Top of the Rockies best columnist award. Read Jared Whitley's Reports — More Here.
© 2025 Newsmax. All rights reserved.