Vital Transformation understands the implications of new medical procedures, technologies and policies. We measure their impact on current clinical practices in close collaboration with health care professionals, researchers, and regulators. Through our web platform and client network, we are able to communicate our findings with international decision makers and stakeholders.
OUR RESEARCH
Most Favored Nation (MFN) Reference Pricing in Medicare: Impacts on jobs, innovation, and state budgets
- 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.
Our clients include many of the world’s leading health care organisations.
