Is Participation in MFN Voluntary?

President Trump’s Most-Favored Nation (MFN) initiative continues to impact the industry. Most recently, the deadline passed for mid-sized pharma and biotech companies to make deals with the administration or face serious tariffs on imported goods.

The deal is designed to both reduce prices that Americans pay for pharmaceuticals while also promoting an increase in domestic manufacturing. Since it was first announced, experts in the industry have spoken both in favor and against the deal. While the initial wave of deals focused on major pharma companies who can easily adjust strategies, launch new manufacturing projects, and absorb costs, the latest headlines focused on mid-sized pharma companies, who are less likely to be able to absorb new costs.

Pharmaceutical Executive spoke with John Stanford, executive director at Incubate, about the current status of MFN and how its impacting the industry. He focused not just on the unique impact on mid-sized pharmas, but also how these deals may force companies to adjust plans for future launches or drug research.

Pharmaceutical Executive: Is participation in MFN voluntary?
John Stanford: I think of these deals a bit like the Godfather movies — an offer you can’t refuse. When you consider the leverage the Trump administration proposed alongside these terms, the picture becomes clear. There were the arduous Section 232 tariffs, which weren’t even fully detailed but which companies understood could be highly impactful. There were also the proposed GLOBE and GUARD frameworks, which effectively function as mandatory international reference pricing. Taken together, the message was that there was no real alternative to signing a deal. So yes, these agreements are technically voluntary — but they were certainly obtained under significant pressure, which is why the industry has expressed concern about the precedent they set.

Interestingly, this is similar to what we saw with the so-called voluntary negotiation under the IRA. In that case, Democrats used the tax system — specifically a theoretical 95% excise tax on revenues — as their leverage. Whether you are looking at MFN or the IRA, neither was truly voluntary, regardless of the nomenclature being used.