Novartis CEO Vas Narasimhan has issued a warning regarding the long-term implications of the U.S. drug pricing policy implemented under President Donald Trump, specifically the most favored nation (MFN) rule. Speaking to CNBC, Narasimhan described the policy as creating a 'very difficult situation' for both drugmakers and patients, with the reality of MFN expected to set in over the next 18 months [1]. The MFN policy ties U.S. drug prices to those in other wealthy countries, a move Trump has justified by criticizing 'foreign nations freeloading on American-financed innovation' [1].
Narasimhan emphasized that if European and Japanese governments do not quickly reform how they reward pharmaceutical innovation, access to novel medicines in these markets could be delayed, potentially leaving patients without timely access to new drugs [1]. He noted that while Novartis' current exposure to MFN is limited—impacting only about 5-10% of sales in the Medicaid segment—the longer-term effects could be significant if the policy persists [1].
Other major pharmaceutical companies, including Roche and AstraZeneca, have also raised concerns about Europe's fragmented markets, regulatory hurdles, and restrictive pricing policies, warning that these factors could result in European countries missing out on new drug launches unless changes are made [1]. Narasimhan pointed to recent actions by the German government, which proposed steeper discounts on patented drugs as part of broader cost-cutting measures, as moving 'in the wrong direction' and exacerbating the risks posed by MFN [1].
Despite some 'good early discussions' with European governments, Narasimhan believes there is still insufficient recognition of the potential impact of MFN, urging policymakers to take the issue more seriously as the policy is unlikely to be reversed in the United States [1].
CONCLUSION
Novartis and other pharmaceutical leaders are sounding alarms about the potential for delayed access to new medicines in Europe and Japan due to the U.S. MFN drug pricing policy. While the immediate financial impact on Novartis is limited, the company warns that without policy changes abroad, the long-term consequences for patients and the industry could be substantial.