Part 1: How to influence national systems to help mitigate MFN headwinds
The UK example demonstrate that national system reform is achievable. But it requires the use of a new playbook.
America’s Most Favoured Nation (MFN) medicines pricing policy is primarily seen as a tool to reduce the cost of medicines in the US, but this is only half the picture. As the recent Council of Economic Advisers report makes clear, MFN also aims to increase prices paid for medicines outside the US.
The international price referencing (IRP) being leveraged to achieve the first objective is naturally concerning industry, given the risk of lower HTA-linked European prices pulling down higher US prices. But the second objective, to raise ex-US prices, could be a partial antidote.
If industry can reshape ex-US markets, working with national governments and payers referenced by MFN to improve pricing and reimbursement conditions, then downward US price pressure coming from IRP can be limited. Those attempting to do this will find a natural ally and supporter in the US, for whom this is a stated policy objective. The first mover, responding to the pincer movement of industry pressure and US geopolitical weight, has been the UK: and this provides an interesting blueprint for other nations.
The UK-US pharma deal improved the UK medicines pricing environment
The UK-US bilateral pharmaceutical arrangement is an example of what a system-level negotiation can look like, and what it costs. Under the agreement, the UK secured zero tariffs on British pharmaceutical exports to the US for at least three years, and exemption from section 301 investigations, making it the only country with such preferential access to the American market. In return, the UK committed to a meaningful reform of its domestic pricing environment, amounting to significant additional medicines spend.
- NICE's cost-effectiveness threshold, unchanged for over two decades, has been raised from £20,000–£30,000 per QALY to £25,000–£35,000 per QALY. This increase in the effective price ceiling means a higher net price can be referenced by the US, mitigating MFN impact. The cost is estimated by DHSC at £1.5bn over three years, implying an annual cost of around £2.5bn by 2036. Together with changes to the NICE valuation methodology, prices for new launches could increase by up to 25%.
- Clawback rates on branded medicines have also been capped at a maximum of 15%, down from 22.9% in 2025, and locked in until the end of the current rebate scheme in 2028. This ensures that the UK Government cannot give with one hand and take with the other: spend-linked clawbacks cannot erode the price uplifts anticipated from the changes to NICE methods. Industry will continue to pay an additional 1% on top, to support the UK’s Innovation Fund which provides additional capacity for clinical trials infrastructure, medicines manufacturing, and horizon scanning.
- Perhaps most significantly, the UK committed to doubling its spending on new medicines as a proportion of GDP from 0.3% in 2026 to 0.6% by 2036, with intermediate milestones along the way. This has been broadly welcomed by industry, but leaves open many critical unanswered questions. Early analysis suggests the NICE methods changes and the elimination of spend-linked clawbacks may get around half the way to the 0.6% GDP target: a further debate is brewing as to whether the remainder is achieved through major improvements in the adoption and uptake of new medicines, or whether further action on prices is needed.
The UK deal could be applied to other countries
Despite these unanswered questions, the UK example demonstrates that national system reform is achievable. But it required the use of a new playbook: one in which certain companies could leverage new power dynamics arising from the US administration’s active role in domestic UK politics, and where a quiet decline in UK investment and launch sequencing was replaced with noisy and politically-damaging withdrawals from the UK market.
On the first: the insertion of the US administration into UK political decision-making swung the balance of power towards companies with a strong US identity but European influence, as well as AstraZeneca and GlaxoSmithKine as the two major UK-headquartered players. By contrast, those without close links to the White House, such as the major UK trade body and ex-US geographical groupings, found it more challenging to influence this process.
And this new power dynamic heralded a much more assertive stance from the key industry players. UK divestment decisions – by AstraZeneca, Merck, and Lilly – were publicised to achieve maximum political damage to a Government emphasising the need for economic growth and job creation; the subsequent public consideration given by AstraZeneca to delist from the London Stock Exchange further emphasised the economic threat posed by the gravitational pull of the US. The aligned incentives between the US administration and the industry, and the mutually reinforcing levers of influence that this alignment created, therefore resulted in an inexorable case for system change.
These assertive tactics from the US administration (which has been explicit that it views the UK deal as a template) and industry can generate a powerful case for national health system reforms. But, even if successful, the UK experience also suggests that reforms will take time to be implemented. There remains a need for companies to consider asset level strategies to support their net prices too. We will discuss this in a second blog coming soon.
About the authors
Robert Kettell is one of the UK’s leading experts in pharmaceutical pricing and market access. Most recently, Robert was Director of Medicines Negotiation at NHS England where he led a series of sensitive and technical negotiations. Before that, he was the lead negotiator for the UK Government on the last two voluntary scheme deals which determine the pricing and reimbursement for branded medicines in the UK.
James Lee is leading Newmarket’s MFN offering alongside Robert, developing practical solutions for clients and presenting this at private and industry events. He is supported by a background in strategy consulting across medical affairs, government affairs, and market access.
Blake Dark is a globally connected commercial expert in pharma and health technologies. Until November 2022, Blake was the NHS’s chief negotiator with the pharmaceutical industry, interim Chief Commercial Officer and member of NHS England’s Executive Committee. Prior to joining the NHS, Blake spent 25 years at Sanofi in various senior global and local roles.
We welcome continuing the conversation to hear your thoughts on the system level changes needed to mitigate MFN headwinds, and how these can be successfully communicated to national systems.