Congressional enactment of the “most favored nation” drug pricing policy urged by President Donald Trump in his State of the Union message would gravely harm American innovation, competitiveness, and national security in the emerging pharmaceutical technology race with China by crippling the market incentive system that has reliably propelled U.S. global leadership in this vital sector for decades.
MFN policies are price-control schemes that establish caps on the costs of prescription drugs sold in the United States based on the lowest prices pharmaceutical companies charge for these medicines in other developed countries. Despite convincing evidence of the harmful economic consequences of such price controls, American politicians have demonstrated increasing interest in this type of dysfunctional market intervention over the past several years.