By Matthias Buente, Morris Hosseini and Filip Conic

The United States is tying drug prices to international benchmarks for the first time. Three new Most Favored Nation-style programs mandate that European prices should now feed back into US drug economics. For pharmaceutical companies launching products in Europe, this fundamentally raises the stakes of local pricing decisions.

International reference pricing comes to the US

In response to US drug prices that remain substantially above international levels even after rebates, and building on the Inflation Reduction Act (IRA) drug-price negotiation program, the current US administration has introduced three programs that, for the first time, bring international reference pricing into the US public healthcare system. The underlying premise of Most Favored Nation (MFN) pricing is simple: if a manufacturer sells a drug for less abroad, the United States – which is typically the main customer – should not pay more. Under these new models, manufacturers face rebate obligations when US prices exceed benchmarks derived from prices in up to 19 OECD reference countries, including all major European markets.

Three models, one clear message

The three models cover the main pillars of US public drug spending. The Global Benchmark for Efficient Drug Pricing Model (GLOBE) applies to physician-administered drugs under Medicare Part B, targeting sole-source drugs and biologics in seven therapeutic categories with annual spending above around USD 100 million per drug. Guarding U.S. Medicare Against Rising Drug Costs (GUARD) mirrors this structure for pharmacy-dispensed drugs under Medicare Part D, covering 17 therapeutic categories with annual spending above around USD 70 million per drug. Both are mandatory and would each initially apply to approximately 25% of Medicare beneficiaries, selected through geographic randomization. GLOBE is proposed to begin in October 2026, GUARD in January 2027. Both remain proposed rules; the public comment period closed in February 2026 and final rules have not yet been published. Both models extend the drug pricing framework introduced by the IRA in 2022, which followed a similar sequencing: its inflation rebate and price negotiation provisions began with Medicare Part D before being extended to Part B.

GENErating cost Reductions for U.S. Medicaid (GENEROUS) covers Medicaid. Unlike the Medicare models, participation is voluntary for both manufacturers and states. It is also the only model already in effect, with its performance period having begun in January 2026. As of early 2026, 33 state Medicaid agencies have signed participation agreements.

The calculation logic is simple: international prices set the benchmark, US prices are compared against it and manufacturers owe rebates if the gap is too large. GLOBE and GUARD reference 19 OECD countries, 14 of them in Europe. In practice, a low price in one reference market can influence what manufacturers owe in the United States. GENEROUS uses a smaller basket of eight countries and benchmarks against the second-lowest manufacturer-reported net price.

The gap is large. Centers for Medicare & Medicaid Services (CMS) estimates suggest that international benchmarks were on average 71× below 2024 US average sales prices for GLOBE drugs and around 49× below estimated Medicare Part D net prices for GUARD. The gap varies by therapeutic area, but selected fields such as cardiovascular disease and oncology appear to carry a particularly large US premium over non-US peers.

Some design questions remain open, including how international drug equivalents will be matched to US products. Stakeholders have also questioned whether CMS has the legal authority to implement mandatory models of this scope. Direct-to-consumer (DTC) models are emerging in parallel as another way to limit MFN exposure.

Europe is now part of the US pricing equation

While all three models draw their benchmarks from baskets dominated by Europe, the underlying mechanism differs in an important way. Under GLOBE and GUARD's default calculation, CMS selects the lowest adjusted country-level price as the benchmark. A single low-priced European market can therefore shape what a manufacturer owes in the United States, and once set, this benchmark is locked for the full five-year model period. GENEROUS, by contrast, uses the second-lowest country-specific net price, so one outlier in the reference basket can be absorbed. For manufacturers, the practical implication is the same: European pricing decisions can now directly determine US rebate exposure.

Some governments have begun responding to this dynamic. The United Kingdom finalized a bilateral pharmaceutical deal with the United States in April 2026, securing zero tariffs on British medicines in exchange for raising National Health Service net prices for new drugs by 25% and adjusting National Institute for Health and Care Excellence (NICE) cost-effectiveness thresholds. Other European governments, including Spain, are actively debating countermeasures, with officials calling for EU-level instruments to protect pharmaceutical investment and competitiveness.

The effects are not theoretical. In the initial ten months following the May 2025 MFN executive order, new drug launches in Europe fell by approximately 35%. The logic is straightforward: manufacturers are pausing or deprioritizing European markets to avoid setting low visible prices that could anchor their US benchmark for years.

The pattern is visible in individual company decisions. Insmed postponed the launch in Europe and Japan of its anti-inflammatory drug Brinsupri, citing the need for clarity on MFN policies before committing to European pricing. Amgen withdrew its PCSK9 inhibitor lipid-lowering drug Repatha from Denmark, pointing to a changed commercial environment. In France, applications for the early access pathway dropped from 25 to ten in a single year, with manufacturers reportedly raising MFN-related concerns in virtually every pricing conversation since autumn 2025.

In our view, manufacturers are not withdrawing from Europe because of European market access shortcomings, but because MFN has made European prices a direct liability for their largest market.

How manufacturers should rethink European pricing

For manufacturers launching products in Europe, the objective is not simply to keep prices high. It is to understand where a low visible price could create disproportionate US exposure and where confidential rebates can limit that risk. The common thread across all response strategies is that European pricing can no longer be managed as an issue confined to Europe exclusively. It must be governed as part of a global corridor, where every visible price point has the potential to affect prices in the United States .

For products already on the market, manufacturers have two core options:

• Reprice where contractually and regulatorily feasible to reduce MFN exposure.
• Shift to more restrictive usage policies or, as a last resort, de-market products where repricing is not achievable and continued presence generates more rebate liability than commercial value.

For products approaching launch, the levers are broader:

• Generate targeted evidence against health technology assessment (HTA) requirements and invest in capabilities to anticipate population, intervention, comparator and outcome (PICO) definitions in Joint Clinical Assessments – especially for high-quality assets backed by strong science.
• Manage patient populations through narrower reimbursable labels or subpopulation restrictions where feasible, while recognizing that some markets, including Germany, generally do not allow reimbursement restrictions beyond the approved European Medicines Agency (EMA) label.
• Sequence or defer launches, shifting away from broad simultaneous European rollouts toward corridor-aware approaches that prioritize markets with confidential pricing and deprioritize markets where low visible prices could anchor a US benchmark.
• Use gross-to-net management, maintaining high visible list prices while negotiating lower net prices through confidential rebates. Italy and Spain already operate confidential net pricing models that generally allow high gross-to-net spreads; other markets have historically been more constrained, either for legal reasons, as in Germany, or because the practice was seen as ethically problematic, as in Sweden. In Germany, however, the Medical Research Act (MFG) has now paved the way for confidential reimbursement amounts, setting an important precedent.
• Overall, be prepared to fight for higher reimbursement levels in European markets, as it is becoming a prerequisite to retrieve full value in the core market of the US rather than an add-on to the US market value.

Each lever carries trade-offs around patient access and political acceptability, and no single one is sufficient in isolation. When planning new launches, pharmaceutical companies need to understand who the main beneficiaries are in the United States and how those drugs will be funded. For instance, a large share of Alzheimer's or Parkinson's patients are likely to be covered by Medicare Part B or Part D, making these products more exposed to the new policies. By contrast, immunology drugs are often relevant for a younger, employed population covered by private plans, which may limit the negative impact on drug economics.

A new discipline: global price corridor management

MFN pricing marks a structural break in how pharmaceutical companies should think about European market access. For the first time, every visible price point in Europe carries a direct and quantifiable price reference for the United States, the world's largest pharmaceutical market. The consequences are already materializing: European launches are being delayed or withdrawn, while others are being restructured not because of European regulatory shortcomings, but because of US rebate exposure. For manufacturers, the strategic imperative is clear. European pricing can no longer be optimized market by market or in the pan-European fashion. It must be governed within a global price corridor, where launch timing and confidential rebate structures are managed against benchmark lock-in timelines. Companies that build this discipline now, before final rules are published and benchmarks are locked, will retain strategic flexibility. Those that wait risk having their US economics defined by pricing decisions made in markets that represent a fraction of their global revenue.

Where Roland Berger can help

Roland Berger's expert Pharma & Healthcare team helps pharmaceutical manufacturers navigate the evolving MFN landscape by:

• Anticipating and simulating the potential impact on the current portfolio, then defining alternative scenarios and mitigation plans
• Closing anticipated profitability gaps through targeted performance programs
• Preparing upcoming launches under new market conditions, including pricing options by market and critical trade-offs around reimbursable populations and gross-to-net investment