President Trump has made no secret of his desire to employ Most Favored Nation (MFN) pricing for American pharmaceuticals to reign in drug costs. But tying the U.S. to prices in Europe would restrict Americans’ access to new medicines—just as it has in Europe. Rather than importing Europe’s failed ideas, President Trump and Congress should focus on the domestic policies driving U.S. drug prices up.
MFN is effectively an extreme version of Europe’s pharmaceutical reference-pricing system, in which countries cap drug prices based on the prices in other European nations. The difference with MFN is that, instead of using averages or formulas, the U.S. price would be pegged to the lowest price in any reference country.
Given the similarity in policy, Europe’s results offer a clear warning. While European countries achieved modest short-term cost savings, price caps predictably caused delays in launching new medicines and undermined pharmaceutical research—reducing access to innovative treatments in numerous countries.
Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.