CMS is pushing a harmful MFN policy that threatens U.S. leadership in biopharmaceutical innovation and puts future treatments for patients at risk.
MFN price controls tie drug prices to those set by foreign governments, a move that would distort investment decisions and discourage high-risk research and development. Now CMS has put forth two proposals, GLOBE and GUARD, that would tie what Medicare pays for drugs to those same prices.
Why it matters:
Biopharmaceutical innovation depends on long‑term, high‑risk investment. It takes more than a decade—and billions of dollars—to develop a new medicine.
Broad, mandatory MFN policies would undermine the financial incentives that make this innovation possible. Biopharmaceutical companies invest 33% of their revenues back into research, but a University of Chicago analysis estimates that applying MFN to Medicare and Medicaid would cut biopharmaceutical R&D investment by nearly 50%. That scale of reduction would have real consequences for patients, potentially resulting in 500 fewer treatments over the next decade—slowing or eliminating breakthroughs for people with life‑threatening and chronic conditions still waiting for new options.
We’re already seeing the negative impacts of price controls under the Inflation Reduction Act—and importing MFN would only exacerbate those effects.
Since the IRA was introduced:
- Investments in early-stage small molecule medicines have fallen nearly 70% and the number of clinical trials for new uses of existing small molecule medicines has dropped by nearly 45%.
- Due to the law's changes to Part D, the IRA has coincided with higher costs and fewer choices for seniors who faced a projected 32% increase in premiums and a 22% decrease in plan choice in the stand-alone prescription drug plan market for 2026.
The bottom line
MFN price controls are the wrong approach for American patients. Instead, policymakers should focus on fixing flaws in our health care system that allow 50 cents of every dollar spent on medicines to go to entities that play no role in their development and end foreign freeriding.
That means:
- Reining in middlemen who drive up costs.
- Cracking down on tax-exempt hospitals who abuse the 340B hospital markup program.
- Making foreign countries pay their fair share for innovative medicines.
Matthew Norawong
Matthew is a senior manager on PhRMA’s Public Affairs team focusing on Medicare, Medicaid, importation and more. Prior to coming to PhRMA, he previously worked as a health policy analyst for National Journal’s Network Science Initiative, primarily supporting companies in the life sciences industry. Matthew completed his undergraduate studies in political science at the University of Washington and subsequently earned a Master of Public Health from the George Washington University. A native of the Pacific Northwest, Matthew currently resides in Washington, DC. Outside of the office, Matthew is an avid runner and enjoys playing bass guitar with his indie rock band.
Matthew Norawong