Vital Transformation is preparing a new analysis about the potential implications of Most Favored Nation (MFN) drug pricing policies for the U.S. oncology ecosystem, focusing on how international reference pricing could reshape provider economics, patient access, and innovation incentives. The analysis models the effect of benchmarking U.S. prices for cancer medicines against lower prices in selected peer countries and estimates substantial reimbursement reductions across multiple therapies.

• The Most Favored Nation (MFN) policy uses the lowest international adjusted price for medicines across a select basket of countries to set drug prices in the U.S. market (the “MFN Price”).​
• Assuming the top 50 drugs by spending in each of Medicare Parts B and D are impacted by an 85% gross price reduction due to MFN, which would also then spillover into Medicaid, 340B, and hospital ASP’s, we would expect to see the following impacts between 2025 - 2034:​
  • A loss of 1.98 to 2.22 million jobs, representing 40% of current U.S. jobs in the biopharmaceutical industry, with 472,000 being employed directly and 1.7 million being employed indirectly.​
  • The largest job losses would occur in California, Florida, Texas, and New York.​
  • A loss of $600 billion in federal tax revenue and over $450 billion state tax revenue.​
  • A loss of up to $2.4 trillion in earnings generated by the biopharma sector.​
• Spillover impacts of MFN into Medicaid, 340B and ASP +6 payments represent more than 600,000 of the total jobs lost.​
• A sensitivity analysis restricting the impacts of MFN to roughly half of the net price reduction was also calculated finding the loss of nearly 1.03 million jobs, assuming spillover effects.​
• MFN will lead to an annual reduction in ASP payments to hospitals from $2 billion to $700 million; losses of this size would lead to the closure of many community and rural treatment centers.​
• With an 85% reduction in the gross U.S. prices due to MFN, we would also expect to see the following reductions in U.S. Biopharma Key Performance Indicators:​
  • The disappearance of nearly all VC funding for early and late-stage companies.​
  • A 48% reduction in authorized biopharma patents.​
• MFN will increase the risks to U.S. economic security by incentivizing the competitiveness and growth of China’s biopharma sector. ​

Key takeaways

If MFN were adopted in Medicare and Medicaid, based upon our preliminary estimate it could lead to 1.3 million fewer jobs over ten years.

$2.8 trillion in lost earnings over 10 years due to MFN being applied to Medicare, resulting in $700 billion in reduced tax revenue.

By undermining the U.S. economic environment, MFN risks accelerating the movement of U.S. biopharma research and development to China.