To date, there are two different levers in play under Trump’s “Most Favored Nation”, 1. A drug-pricing MFN plan that would peg U.S. prices for certain brand medicines to the lowest price in peer countries, and, 2. A trade MFN/tariff framework with the EU that caps tariffs on branded drugs at 15% while exempting generics at MFN rates that are effectively zero starting September 1, 2025 – Let’s break down what the key factors are for each.
Lever 1: Most Favored Nation: Drug-Pricing
- Executive Order signed May 12, 2025, that directs the HHS to pursue “Most-Favored-Nation” pricing—i.e., get Americans the lowest price available in other developed nations—and to stand up direct-to-consumer pathways if manufacturers cooperate.
Lever 2: Most Favored Nation Trade and Tariffs with the EU: What’s Been Agreed to?
- On August 21, 2025, the U.S. and EU announced a trade framework: the U.S. will apply the higher of 15% or the normal MFN tariff on most EU goods; but NOT for “generic pharmaceuticals and their ingredients and chemical precursors,” the U.S. will apply only the MFN tariff.
- Markets appear relieved that Europe is capped at 15%, but the administration has floated much larger sectoral tariffs in other forums; timing and scope for non-EU products remain fluid.
What’s The Impact?
- Potential price cuts for select brands if MFN sticks in rulemaking or negotiated commitments.
- Global ripple effects! Because the U.S. market is so large, industry may raise ex-U.S. prices or delay launches in lower-price markets to protect global reference points—tightening access in Europe while cushioning U.S. cuts.
- Branded imports from the EU: A 15% tariff raises landed cost for branded imports from the EU unless manufacturers absorb it.
- Given the EU’s significant share of U.S. pharma imports, some upward pressure on brand acquisition costs is plausible, especially where supply chains are EU-centric.
- Generics & API from the EU: Effectively zero tariff means little direct tariff pass-through risk for EU-sourced generics/APIs.
- Keep in mind, the U.S. sources a big chunk of generic ingredients from India and Europe; and India is outside the EU deal and could be affected by future 232 outcomes.
- Pass-through to patients: Whether patients see higher prices depends on payer contracts and competitive dynamics.
- Will details like how customs “landing value” is defined matter for the real-world hit?
How Do the two MFN Levers Interact With Each Other?
- If drug-pricing MFN takes hold, it pulls U.S. brand prices down toward an ex-U.S. floor
- The EU tariff, by contrast, nudges certain import costs up, while leaving EU generics and APIs largely untouched
- Net effect on U.S. patient prices will hinge on implementation of the pricing EO, legal outcomes, and company strategies e.g. price resets vs. ex-U.S. list increases vs. launch sequencing
So, What Should You Watch for Next?
- Keep in mind: HHS and CMS rulemaking or guidance translating the EO into enforceable policy—and any lawsuits that follow.
- Tariff implementation details as the Sept 1 EU measures kick in; and the outcome of the Section 232 probe for non-EU pharma supply chains.
- What are some predictable manufacturer moves? Production reshoring, price adjustments outside the U.S., launch sequencing for rare-disease and oncology assets… etc. Can you think of any others?
Jess, Tell Me the “Bottom Line”!
- STATESIDE: If MFN pricing is implemented, we can all expect targeted price cuts on single-source brands over time; the EU tariff could raise costs on EU-made branded drugs – to the extent costs pass through – while generics remain largely insulated.
- EX-US: To offset U.S. MFN pressure, manufacturers may increase European prices or delay launches, risking access challenges.
Do you want to understand more on how you can strategically prepare for your Ex-US expansion amidst the MFN uncertainty? Let’s get together and talk through how we at Remap can help you. Contact Us