When US policymakers propose copying drug prices from other countries, they offer a simple solution: If other countries secure lower drug prices, why shouldn't the US adopt those prices? This seemingly straightforward soundbite masks the complexity beneath. In addition to prices, would we also be importing the values, priorities, and tradeoffs of foreign governments?
On April 15, President Trump issued an Executive Order directing that Medicare develop new payment models aimed at "obtaining better value" for drugs. A subsequent Order directed the implementation of a "Most-Favored-Nation" (MFN) reference pricing policy to benchmark US drug prices against the lowest paid by other developed countries.
Foreign drug prices are not the result of simple negotiations. They reflect the result of complex price setting systems designed to keep prices low and as such, referencing those prices also means importing each country's healthcare delivery system, costs, values, and priorities. If the goal is obtaining better value for US consumers, we must understand the complexities that lie below the surface on pricing. Here, we discuss these issues and provide examples to demonstrate why a copy-and-paste of foreign drug prices is more complex than it seems.
Do Foreign Drug Policies and Priorities Create Challenges for US Decisions?
Other governments, as the major (or only) purchaser for their respective country, negotiate prices, often using health technology assessment (HTA) to determine "good value" from their perspective.
The United Kingdom (UK) is one example. After regulators approve a drug as safe and effective, the medication undergoes a separate economic assessment. If the price the company proposed is accepted and recommended by the government HTA office, the UK National Health Service covers the drug, making it available to patients. However, drugs not making it through this process receive no coverage, consequently seeing little use.
If we copy UK prices (and those of other countries), we copy the prices of drugs that make it through the UK's (and other countries') HTA processes. But some safe and effective alternatives do not make it through. Some drugs get pricing in some countries, others do not, and vice versa. Some things get left on the cutting room floor.
Across European countries, only 63% of drugs receiving regulatory approval also receive reimbursement coverage. The remaining safe and effective treatments are rejected. For treatments of rare conditions, these rates are even higher. What happens under MFN to drugs not making it through any country's process? Does the US price remain as is? Might they land on the cutting room floor, even though they have value to US patients?
Understanding What We're Copying and Pasting.
Benchmarking prices negotiated by other countries to achieve price reductions in the US could be justifiable, if we are confident the drug-pricing mechanism is standardized, logical, sound, and relevant to US patients. But we know it is not. That's why experts have long cautioned that what is considered "good value" in one country is often not "good value" in another.
Problems arise when directly transferring economic assessments due to the underlying assumptions often a part of HTA, like cost-effectiveness analyses. Population demographics, genetics, disease burden, and health behaviors vary significantly across the globe. We can't ignore other critical factors, including selection of which costs and outcome(s) are compared, and differing standards of care and care delivery systems.
Under MFN, the copied prices reflect not only negotiated drug prices but also costs of care in those countries. Consider hip fracture hospitalizations. Even after adjusting for exchange rates and purchasing power, costs in France, Germany, and Sweden are less than half of those in the US. What is considered good value looks entirely different when considering US office visits, specialist care, disability payments, or rehabilitation services.
Beyond costs, the standards of care, clinical practice guidelines, and provider workflows differ. Take, for example, atopic dermatitis, where the standard of care is topical steroids in some countries and systemic immunosuppressants in others. Likewise, rehabilitation care after hip replacement is twice as common in the US as in other countries. Ignoring these differences risks importing faulty assumptions about US care.
Since countries referenced in the MFN policy rely on a mixed bag of assumptions based on local costs and care practices, importing drug prices negotiated in other countries is not only technically inappropriate, but fails to account for US healthcare practices. By copying drug prices from other countries, we risk copying different "operating systems," which may import far more than policymakers intend.
Are Their HTAs Processes Compatible with US Patient Values?
Prices resulting from a country's HTA process reflect a country's values and norms. The analyses driving foreign pricing decisions tend to narrowly focus on clinical-trial data, such as biomarkers, often neglecting what matters most to patients. Non-health outcomes of value to US patients, like the ability to stay in the workforce or desire to impose less burden on family, are often not considered. It, again, can mean that economic assessments used by other countries reflect priorities that do not align with the outcomes important to US patients and their families.
Similarly, the majority of government price-setting authorities rely heavily on the quality-adjusted life year (QALY) as the measure of health in economic analyses despite its serious drawbacks. QALY estimates rely on assumptions about what constitutes "ideal" health and quality of life. It's often done without consulting patients or comes from a population that does not include people with the target disease or even people from that specific country.
Unfortunately, use of the QALY can devalue the health of groups already suffering from below-average health, including rural communities, communities of color, older adults, and those with disabilities or chronic conditions. For instance, a treatment for a child with a disability could receive a lower QALY score simply because the child's disability prevents him from ever attaining "ideal health."
Government-backed research from the European Union demonstrated that the QALY is not a reliable or effective metric. Yet, it continues to be endorsed by government bodies outside the US, the same governments we look to copy.
For these reasons, concerned US citizens and others have sought to reduce the use of QALYs and policymakers have taken note. QALYs are prohibited in both the Affordable Care Act and the Inflation Reduction Act. In 2024, the House of Representatives passed the "QALY ban" to extend these prohibitions; the bill has been reintroduced in the current Congressional session. Furthermore, the current Trump administration has committed to preserving key rules at the Department of Health and Human Services, which include language limiting use of QALYs.
Copying and pasting foreign prices may not be compatible with US policy nor the values and norms of the public.
If the US Adopts Foreign Pricing, is the US Also Willing to Accept the Tradeoffs?
Every policy has consequences. If the US copies drug prices from other countries, we must go beyond headlines and consider the often-ignored tradeoffs.
Delayed access to new medications is common in other countries. As a tangible example, when CAR-T therapies became available for leukemias and lymphomas, US health plans provided coverage. In some countries we'd be copying, access was denied until public and professional pressure, along with establishment of special Cancer Drug Funds, made them available --sometimes years later. In other countries, coverage was restricted to narrow patient subgroups based on disease severity or geography.
It's not just cancer. Consider macular degeneration, a progressive form of vision loss. Until public outcry, U.K. patients were required to have considerable vision loss in one eye prior to being eligible for treatment to save the other, "good" eye despite evidence that delays in treatment often result in worse outcomes.
Different countries have different public priorities, incentives, and tradeoffs. For example, the US Orphan Drug and Cures Act prioritizes treatments for rare diseases. In contrast, the Netherlands, Austria, and Spain don't offer special considerations for these vulnerable populations. When gene therapies for spinal muscular atrophy, a devastating disease in infants, became available, these medications were widely reimbursed by Medicaid and US commercial health plans. Other countries rejected or restricted treatment based on genetic subtypes or age. Adopting an MFN policy imports foreign values and priorities, and may override decades of advancement for many conditions, including rare diseases.
Learning from other countries makes sense. Copying and pasting the values, priorities, costs, standards of care, and healthcare delivery systems of the lowest-price countries does not.
Let's ensure our decision-making is backed by evidence, rigor, and outcomes that matter to patients, based on the values of US citizens. The seemingly straightforward soundbite, "If other countries can secure lower prices, why shouldn't we?" can mean more complex adoption of the values and access (or lack thereof) to treatments as prioritized by other countries.
The American consumer wants and deserves affordability. But American families should expect that their values be reflected in drug-pricing decisions and negotiations, not the values and priorities of other countries. Let's take the time to consider these underlying complexities.
Jennifer Graff, PharmD, is Founder of Innov8 Health Policy.
Eleanor M. Perfetto, PhD, is Professor Emerita at the University of Maryland and serves on the Board of the Brain Injury Association of America.
