Why Executive MFN Deals Aren't Enough: Q&A with Joe Cunningham

In a conversation with Pharmaceutical Executive, former U.S. Representative Joe Cunningham (D-SC), and spokesperson for the Pharmaceutical Reform Alliance, discussed the limitations of the new Most-Favored-Nation (MFN) executive agreements and the case for making such pricing reforms permanent through legislation.

Cunningham emphasized that executive agreements carry no lasting force, warning that a future administration could unwind them entirely. He noted that the current MFN order applies only to Medicaid, leaving out the commercial market that covers roughly 80% of Americans, and argued that pricing complexities like rebates and bundled contracts are not an excuse to avoid reform but rather how companies obscure where savings should occur.

Turning to the political landscape, Cunningham pointed to polling showing drug pricing as a top affordability concern heading into the midterms, with strong bipartisan support for holding pharmaceutical companies accountable. He pushed back on industry claims that MFN pricing would stifle innovation, citing data that top drugmakers spend the majority of revenue on stock buybacks, dividends, and marketing rather than R&D.

Cunningham also addressed the Strategic Active Pharmaceutical Ingredients Reserve, arguing that voluntary corporate stockpiling efforts do little to lower costs at the pharmacy counter. He instead pointed to codifying MFN pricing and shortening patent protections to speed generic competition as the most direct paths to reducing what Americans pay, both measures with broad public support.

A transcript of Cunningham's conversation with Pharmaceutical Executive can be found below.

Pharmaceutical Executive: What do the new MFN pricing agreements actually lock in?
Joe Cunningham: These executive agreements are just that, and they're worth only the paper that they're written on, and a new administration could come in and completely overhaul it. So, that's why it's important for any type of lasting change that's going to lower the cost of prescription drugs, or put more money back in people's pockets, it has to be done through legislation. It has to be codified into law because executive orders just do not last. They last only until the term is over, and that's it. So, look, we applaud this as a first step, but we know that if we're going to have meaningful and lasting change, then it's got to be done through Congress.

PE: How do current MFN agreements account for structured pricing complexities, and where are the enforcement gaps?
Cunningham: We've seen the recent executive order on the Most-Favored-Nation and how it covers Medicaid, but what it omits is the majority of that, which is in the commercial sector, which is about 80% of Americans. So, that's obviously a gaping hole that needs to be fixed, but again, going back to these executive orders, they're worth only the paper that they're written on.

While we understand pricing can be complicated and our healthcare system can be complicated, this is still something we can figure out, though. While we're regulating whether it be AI, or social media, or other sectors of the economy, we can't simply just throw our hands up in the air and say that everything is shifting and we can't figure out how to capture the prices and identify where they need to be, I think that’s oftentimes where companies try to muddy the waters with these different practices.

But at the end of the day, the fact remains that Americans are paying three times more on average for the same exact drug that is being consumed or enjoyed in other parts of the world, in other developed nations. So we can we can codify this, we can bring this into line, it just needs to take the work ofCongress and the president.

PE:. Looking at where Congress stands now, what's the realistic path to making MFN pricing permanent and is the political will there to do it?
Cunningham:As midterms are approaching, the single biggest issue is affordability and one of the cornerstones of the affordability crisis is the cost of prescription drugs. It's a monthly reminder to Americans of how much they're paying and where savings can be had and I think it's a home run.

We've seen that in the polling data that three-quarters of voters say that pharmaceutical company profits are a major factor in high drug prices, 71% say that executive compensation is a major factor that shows where Americans view the problem and where it's stemming from, which has been greed.

So this is an issue that's bipartisan, and if I'm running in any type of district, whether it be a swing district or a more partisan district, the numbers support that this is a just a home run of an issue to wrap your arms around, so if it's that big of a win in politics, it should be that big of a win in policy as well. So it just needs to be translated from the ballot box to the appropriate committees in Congress.

It should be low-hanging fruit for anybody running for office, anybody in office. 90% of voters blame pharmaceutical companies for high health care costs, 76% say a candidate's position on lowering drug prices matters more to them now than it did a year ago, and that holds across party lines: 80% of Democrats, 75% of Republicans, and 71% of Independents.

PE: Is there a version of MFN legislation that addresses the innovation concern without gouging the pricing mechanism?
Cunningham: We've seen that to be a common argument and a common scapegoat by pharmaceutical companies, but the truth is, it runs head-on into reality and the facts. What the facts show is that the top 10 drugmakers spend over 80 cents of every revenue dollar on something other than research, whether it be stock buybacks, shareholder dividends, things like that. All you got to do is watch a football game on Saturday to realize where the majority of their money is going with advertising and marketing, which is unique to our country here.

So again, it should not be that complicated, and I think Americans are waking up to the fact that, well, the money doesn't go to R&D, and even if it did, we should not be subsidizing the lower costs for prescription drugs that other people in other developed nations enjoy. But again, the facts suggest something much, much different.

PE: Will the Active Pharmaceutical Ingredient reserve included in these new MFN deals help lower drug prices?
Cunningham: At the end of the day, how does that put money back in the pockets of consumers and customers? The truth is, when you go to check out and purchase your prescription drugs, your price is not going to change because of any efforts like that. Codifying the Most Favored Nation is probably the most direct path to lowering the cost of prescription drugs.

We also need to shorten the patent protections in United States of America to make sure that generic drugs can come to the market sooner. And look, that's backed up by public sentiment as well. 85% of Americans support that because it results in lower costs of prescription drugs, which is again the end goal of this. So these other efforts may be a distraction, or it may be well-intended, but at the end of the day, there's only a couple measures that can really get to the heart of the matter and cut out the corporate greed and put more money back in Americans’ pockets.