America's economy faces a looming threat -- not from abroad, but from misguided domestic policy.
For decades, U.S. inventors and startups have spearheaded global progress in biotechnology. And that leadership isn't a coincidence. American innovators lead because our market rewards risk-taking and investment, and our laws protect intellectual property rights. But now, a proposed drug pricing policy modeled on foreign price controls -- the so-called "Most Favored Nation" (MFN) approach -- risks undermining the very foundation that makes this leadership possible.
Under MFN pricing, the U.S. government would tie reimbursement rates for high-cost medicines to the artificially low prices paid in other developed countries. While this may sound fair in theory, in practice, it would import the same government-mandated price controls and weak patent protections that have allowed foreign nations to free ride on American-funded innovation for years.
The reality is stark: the U.S. accounts for more than half of global pharmaceutical R&D investment. Meanwhile, many OECD countries contribute far less, while paying less for medicines, too. These countries suppress prices by undercutting patent rights, invoking compulsory licenses, or using opaque government price-setting bodies. That means U.S. patients, taxpayers, and private investors are disproportionately shouldering the cost of funding a biotech ecosystem that benefits the entire globe.
The Trump administration understandably wants to address this inequity. In May, President Trump directed the Secretary of Commerce and the United States Trade Representative to take action against foreign countries "forcing American patients to pay for a disproportionate amount of global pharmaceutical research and development."
But the solution is not to replicate these failed models here at home. Doing so would strangle the funding pipeline that enables startups to pursue long-term, high-risk drug development.
That's not a hypothetical risk. According to the FDA, more than half of new drugs approved in the United States originate from startups and small companies. These firms often have no revenues, relying instead on venture capital to sustain years of research and development. That capital depends on the promise of a U.S. market that respects patent rights and rewards innovation. MFN pricing would upend that promise by tethering U.S. drug prices to the artificially low prices in countries that don't share our investment burden -- and in some cases, our values.
And this threat isn't limited to biotech. Undermining IP rights in the name of short-term cost savings sends a dangerous message across the entire innovation economy -- from energy and defense technology to artificial intelligence. It tells investors and inventors that patent protections can be overridden at will -- since price controls essentially override the period of market exclusivity that patents and other IP protections would normally provide. That's a message we can't afford to send.
Instead, our leaders could combat global free-riding by strengthening U.S. patent law, leveraging the U.S. Trade Representative's Special 301 process to hold foreign governments accountable for their violations of American intellectual property rights, and ensuring that startups have a seat at the table when setting trade and innovation policy. They could also negotiate new trade deals that require allies to spend a certain share of GDP on cutting-edge medicines -- in order to spread the global research burden more evenly.
Our leaders can make medicines more accessible -- through competition, transparency, and faster FDA approvals -- without gutting the economic engine that makes those medicines possible in the first place.
At a time when global competitors are racing to lead in biotechnology, the United States ought to protect, not surrender, its innovation advantage. That starts by standing up for the startups, scientists, and investors who are building the future -- right here at home.
Chris Israel serves as the Executive Director of the Alliance of U.S. Startups and Inventors for Jobs, and served as the first U.S. International IP Enforcement Coordinator from 2005-2008.
