Ron Lanton, Esq
Partner
Lanton Law

Pharmaceutical Executive continued its MFN-centered webinar series on Wednesday, October 8, 2025. While the first episode focused on the setting that created the need for President Trump’s executive order, this episode featured discussions about the industry’s reaction and negotiation tactics, along with potential legal challenges. Ron Lanton, Esq, partner at Lanton Law, moderated the episode, which featured the following panelists:

• Melanie Whittington, PhD, managing director and the head of the Center for Pharmacoeconomics, MEDACorp
• Stephen Forster, JD, partner at Jones Day’s Health Care & Life Sciences Practice
• Peter Rubin, executive director at No Patient Left Behind

How is the MFN executive order having a direct impact on pharma?

Lanton began the conversation with a question about the current status of the MFN order and how the industry has reacted to it. Pfizer recently announced a deal with the White House to both reduce drug prices and to participate in a government-run, DTC pharmaceutical website. While the details of the deal are not fully public, it was revealed that Pfizer will be exempt from tariffs for three years if it keeps up its end.

Using this as a starting point, Lanton asked Whittington for her thoughts on the deal and the apparent tradeoffs within it.

Melanie Whittington, PhD
Managing director and head
Center for Pharmacoeconomics
MEDACorp

Whittington: I love the word tradeoffs. I'm health economist (or a pharmacoeconomist), and tradeoffs are the only thing I really get excited about. It shows you how big and valuable the biopharmaceutical innovation ecosystem is, and that any country should want biopharmaceutical innovation investment and development in their nation for a variety of macroeconomic factors. This includes things like jobs and infrastructure, but also for health reasons, access to the drugs that end up getting marketed, access to clinical trials, things like that. There's so much going on in the last few months, and it’s crazy to think that that the order was only announced in May. No one really knows everything, but it's clear that this trade-off exposes macro level factors that are at play besides just the transactional price of the drug.

Do prices differ between countries? Absolutely, the economic spillovers do too. It shows also that innovators (such as companies are developing new drugs) are incentivized to work in supportive, profitable environments. And the US is a profitable, important market that has been a leader in biopharma innovation due to market-based pricing over the patent protection period. And innovation is in places where there is money to be made. That could be in a certain disease area, drug type, or even, in this case, a certain country. So, it exposes that it's not just the differential in the price of a single drug, but also these economic spillovers that are the tradeoffs that can't be removed in the conversation.

From there, the conversation turned to statutory authority and broader reforms. Lanton asked Rubin to go into detail about how the MFN order fits into the broader drug pricing reform efforts and how it might interact with previous attempts, such as the Inflation Reduction Act (IRA).

Peter Rubin
Executive director
No Patient Left Behind

Rubin: It's important to remember when you think about MFN and performance price controls, that, in practice, manufacturers or innovators overseas can't do much with prices that are essentially set by the foreign governments. There's very little room to negotiate as an innovative manufacturer, so the only way to comply with MFN is to lower US prices arbitrarily. That does not necessarily reflect the ability to bring incentives needed to bring drugs to market over time, particularly thinking about a portfolio of drugs, of which 99-out-of-100 fail.

When you think about the combination of importing foreign price controls along with the implementation of the Inflation Reduction Act’s pill penalty, you have a one-two-punch that's particularly negative towards new oncology R&D, because prior to the IRA, half of the drugs approved by the FDA were small molecules (pills) and the other half were large molecules (shots). Unfortunately, the combination of the IRA and importing foreign price controls, I’m worried that the US’s current situation where our survival rates are so much higher from cancer than they are overseas will suffer. Layering MFN on top of the pill penalty basically means that promising drugs, particularly in oncology, will never reach clinical trials with fewer breakthroughs.

That's particularly bad if you think about it from a patient perspective. It’s also bad from an IRA perspective, because it’s incentivizing biologics shots over pills. Not only are pills and shots just as hard to innovate, but shots will also often require physician administration. They're usually more expensive to manufacture and are harder to genericize. They're not interchangeable at the pharmacy.

Later, Lanton brought the potential legal challenges that the MFN order and its follow-up actions could face. He asked Forster to speculate on the possibilities.

Stephen Forster, JD
Partner
Jones Day’s Health Care & Life Sciences Practice

Forster: It's a little hard given that I haven't seen some of these proposals, but I suspect what we would see is litigation that was similar to the 2020 litigation from a constitutional perspective. Well, I should say that if they go to rulemaking, maybe they go to an APA challenge and on procedural grounds. I don't see that right now, given what we have in front of us, but in 2020 there were claims related to separation of powers and other constitutional things. You might see those, but I think as we go forward, depending on what's in these proposals, what you may see is a lot of challenges to HHS Secretary Kennedy’s authority to follow or to implement those particular types of demonstrations or payment models.

I would suspect that you would attack those using excessive authority or not within the statutory parameters. They would have to be very cautious to dot their I's cross their T's to make sure that whatever they're doing is specifically within the statutory authority. For example, under the Social Security Act, you have the ability to test models specifically for Medicare, Medicaid, and the CHIP program. You can't go beyond that, but they’ll have to. Similarly, under CMMI, it's specific to government payers and government programs, so they're going to be limited.

What are some of the challenges with this model? Just to quickly touch on it, it's going to be whether they have no ability to enforce against commercial plans. How are they going to do that? That's a big question. What is that going to look like? In almost every contract I've ever worked on, I would have put a clause in it covering a change in laws.

How is this all going to roll out? The government is going to say, here's this new price. But, you have formularies, tiering, steps, and all this other stuff that must be negotiated. Can I give you a price tomorrow? It's not a reality in the world that we live. You will primarily see constitutional challenges and then challenges to HHS Secretary's authority to impose these particular types of pricing models.