Policy research + analysis Health economics + value

When Nations Compete: Why ‘Most Favoured Nation’ matters for medicine access in Australia

September 2025

When Nations Compete: Why ‘Most Favoured Nation’ matters for medicine access in Australia

Most Favoured Nation (MFN) pricing, a longstanding principle of international trade, has entered the pharmaceutical policy arena with renewed force. In 2025, the United States (US) revived and expanded its MFN policy to link medicine prices across key government programs to the lowest list price available in comparable countries. [1-3] The stated aim is to bring down domestic medicines costs. The likely result is something very different.

Our report When nations compete: Why ‘Most Favoured Nation’ matters for medicine access in Australia examines how MFN medicine pricing policies could reshape global pharmaceutical markets and threaten Australia’s model of affordable, equitable medicine access.

The impacts for Australia would be significant, not merely theoretical:

Delayed or withdrawn product launches

Pharmaceutical companies may hold back new medicines from Australia to avoid setting a low global benchmark.

Loss of confidential pricing

The separation between public list prices and negotiated net prices could collapse, eroding the PBS’s ability to manage affordability.

Global upward price pressure

Countries that achieve low prices become a liability, creating incentives to remove discounts and lift prices globally.

Weakened health technology assessment

Decisions risk being driven by global price exposure rather than domestic evidence of value.
We unpack the mechanics of MFN pricing, contrast the US and Australian healthcare systems, and explore the risks to the core tools of the Pharmaceutical Benefits Scheme (PBS), including confidential negotiations, value-based assessments, and managed entry agreements.

Structural differences between Australia’s PBS and the US pharmaceutical system

It is clear to us that Australia cannot afford to treat MFN as a distant policy experiment. If the US pursues aggressive MFN implementation, the ripple effects will be felt in our medicine supply, budgets, and patient outcomes. Our report details how policymakers, industry, and patient advocates must move now to:

Protect the PBS negotiation framework

Ensure Australia rewards value and innovation

Engage proactively in international forums

Strengthen domestic resilience

References
  1. U.S. Department of Health and Human Services, HHS, CMS Set Most-Favored-Nation Pricing Targets to End Global Freeloading on American Patients. 2025.
  2. Trump, D.J., Executive Order 13948—Lowering Drug Prices by Putting America First. 2020: The White House. 3.
  3. Biden, J., Regulatory freeze pending review. 2021: The White House.
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Renae Beardmore

Managing Director, Evohealth

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James
Taylor

Advisor, Evohealth

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