Here’s Why President Trump’s MFN Drug Pricing Scheme Hurts Americans

Originally published on Substack. 

​Lower drug prices sound like compassion. They make for great headlines and even better press conferences. When politicians promise Americans relief at the pharmacy counter, it’s natural to want to believe them.

But in healthcare, what feels good in the short run often makes things worse in the long run. And nowhere is that truer than with Washington’s latest push for most-favored-nation (MFN) drug pricing.

I’ve spent years studying healthcare markets, drug innovation, and government intervention. The uncomfortable truth is this: MFN pricing doesn’t fix what’s broken in healthcare. It doubles down on it.

What the White House Just Did
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This week, Donald J. Trump announced new MFN pricing agreements with nine major pharmaceutical manufacturers, according to the White House fact sheet.

The companies include Amgen, Bristol Myers Squibb, Gilead Sciences, Merck, Novartis, and Sanofi, among others.
Under these deals:

• U.S. prices are tied to the lowest prices paid by other developed countries (MFN pricing)
• All state Medicaid programs gain access to MFN prices
• Deep discounts are offered through a new direct-purchase channel called TrumpRx
• Companies pledge $150 billion in U.S. manufacturing investment
• Foreign governments like the U.K. are pressured to raise prices so they “pay their fair share”

As Politico reports, the Trump Administration highlights dramatic examples of price cuts on drugs for diabetes, cancer, HIV, asthma, and multiple sclerosis.

On the surface, this looks like a win. But surface-level wins can be deceptive.

MFN Is a Government Fix to a Government-Created Problem

MFN pricing starts from a false premise: that high drug prices are caused by market failure.

They aren’t.

U.S. drug prices are high because government policy has distorted the healthcare market for decades—from the employer tax exclusion that disconnects patients from prices, to third-party payer dominance, to opaque rebates and mandates.

The Congressional Budget Office has documented how these distortions drive spending without improving care (CBO analysis).

MFN doesn’t fix any of this.

Instead, it imports foreign government price controls and enforces them through federal power. That may reduce prices on certain drugs today, but it creates costs that show up years later—when the drugs that never got developed simply don’t exist.

The Costs MFN Doesn’t Advertise

1. MFN Weakens Innovation Incentives

Drug development is slow, risky, and expensive. It takes 10–15 years and often $2.5 billion or more to bring a single drug to market, according to the Tufts Center for the Study of Drug Development and Pew Trusts.

Roughly 90% of compounds fail.

When government suppresses prices, expected returns fall—and so does investment. Research finds that a 50% price cut could reduce new drug development by about 30% over time.

That doesn’t hurt companies first. It hurts patients waiting for cures.

2. MFN Locks America Into Foreign Rationing Systems

Other countries pay less for drugs because they ration care, delay access, and impose hard price caps. Studies show patients in Europe often wait months or years longer for new therapies than Americans (FDA vs. EMA approval comparisons).

MFN ties U.S. prices—and innovation—to those systems. That’s not competition. That’s international price-setting by proxy.

3. MFN Expands Federal Control Over the Drug Market

Once Washington sets benchmark prices, politics inevitably follows:

Which countries count? Which drugs qualify? Which discounts are sufficient?

MFN shifts decision-making away from patients and innovators and toward federal agencies—creating a de facto national price-setting regime that crowds out competition.

4. MFN Distracts From Real Reform

Price controls are politically easy. Structural reform is hard.

MFN allows Washington to claim victory without addressing the real problems it created: distorted incentives, weak price signals, regulatory delays, and a broken payment system.

What Actually Lowers Drug Prices

If the goal is lower prices without sacrificing future cures, the solution is simple and well-understood in economics:
Increase supply. Increase competition. Increase innovation.

That’s the foundation of the Empower Patients framework and the work I’ve done with Americans for Tax Reform:

• Move the employer tax exclusion to workers through no-limit HSAs, restoring price transparency
• Block-grant Medicaid to states so innovation replaces federal micromanagement
• Streamline the FDA so life-saving drugs aren’t trapped in years of delay
• Unleash U.S. biotech production with stable R&D rules, predictable regulation, and fewer government distortions

Prices fall when abundance rises. That’s true in housing, energy, food—and healthcare.

Short-Term Relief vs. Long-Term Prosperity

MFN pricing appeals to frustration. It offers visible, immediate relief while hiding long-term damage.

But healthcare doesn’t improve by copying foreign price controls or centralizing decisions in Washington. It improves when patients control their care, innovators are free to innovate, and markets are allowed to work.

If we want affordable drugs today and cures tomorrow, the answer is clear: Less government. More markets. Empower patients. Let people prosper.

A Final Note

I write this newsletter because healthcare debates too often trade economics for emotion—and because the cost of getting this wrong is measured in lives.

If you found this analysis valuable, I hope you’ll subscribe if you haven’t already. And if you’re a paid subscriber, thank you. Your support allows me to keep digging into issues like MFN pricing, biotech innovation, China’s industrial strategy, and the real reforms that can actually lower costs and improve care.
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Check out my policy guide on healthcare with more insights and my latest co-authored book Empower Patients: Two Doctors’ Cure for Healthcare.