How Can the Pharma Industry Prepare for Enforcement of the MFN Order?

Peter Rubin, executive director of No Patient Left Behind, spoke with Pharmaceutical Executive about President Trump’s Most-Favored Nation (MFN) order and the widespread impact it could have on the industry. While the order seeks to reduce drug costs in the United States by enforcing a rule based on foreign prices, it’s likely that this rule could force pharma companies, large and small, to adjust the way they approach innovation. According to Rubin, the ruling is likely to impact more than just pricing. He also believes that it will be hard to even find a fair price for the drugs using the MFN order as determining a drug’s true value is more difficult that it first appears.

Pharmaceutical Executive: How can the pharma industry prepare for enforcement of the MFN order?
Peter Rubin: When you think about the biopharma industry, it’s important to think about it as an entire ecosystem. You have the specialist investors that fund seed stage and small bio-pharmas that comprise two-thirds of the drugs before FDA. There’s the large pharmas that are very successful at bringing new drugs to market successfully.

The industry is not a monolith, it’s an ecosystem where everybody plays an important role. Specialist investors and small bio-pharmas have done a good job of raising their hands and warning of the impact of imposing foreign price controls based on ex-US health technology entities that’s going to impact US competitiveness and impact our ability to bring new drugs to market five to 10 years from now.

As we talk to people over the course of the year, I’ve told people is that this is really a 16-quarter presidency. Each quarter will have its own volatility and you should expect that. Just because deal with MFN in the first quarter doesn’t mean that it’s not going to pop up in a whole new way in the second quarter. Even if you resolve it in the third, it’s going pop up between now and the rest of the 16 quarters. It’s hard to get a sense of what’s actually going to happen.

PE: How is oncology R&D already being impacted by existing regulatory concerns?
Rubin: It’s a one-two-punch with MFN and the Inflation Reduction Act (IRA) with the small molecule penalty. That’s already caused a lot of retreat in the small molecule oncology. Prior to the IRA’s passage, half of the molecules that were approved in oncology were small molecules. As of the IRA and the pill penalty, a lot of investors, large pharmas, and everybody inbetween switching to large molecule solutions. Unfortunately, small and large molecules are just as difficult to innovate, but small molecules are easier and less expensive to manufacture. They don’t require physician administration (in most cases), they’re interchangeable at the pharmacy, and they’re easily genericized.

Many of the large molecules aren’t covered by the IRA’s $2,000 out-of-pocket cap. They also often aren’t covered by Medicare. From a societal and environmental perspective, oncology and small molecule drugs have been severely impacted by the IRA’s pill penalty. If you throw imposing foreign price controls (via the MFN process) on top of that, you’re going to see another negative impact on oncology R&D for both small and large molecules.