How are the US MFN and German MFG likely to impact pharmaceutical companies’ launch strategies?

Pharmaceutical pricing is a focus of numerous governments throughout the world. Methods can include regulating distribution changes, reference pricing (either internal or external), promotion of generics, and tariff or tax exemptions.¹ The goal of all these varying methods is to achieve cost containment – i.e., reduction in spending for pharmaceuticals or capping the possibility of increasing costs.

Another common area of focus for governments is encouraging investment within the domestic market. We have seen this play out in the pharmaceutical industry through incentive programmes to encourage research and development and clinical trials such as the Life Sciences Investment Programme launched in the UK.²

Germany has attempted to achieve cost containment and encourage investment in one policy the German Medical Research Act (Medizinforschungsgesetz, MFG).³ This policy offers a confidential discounted price if the company meets the required amount of local research and development activities within Germany and they agree to a 9% discount on their negotiated net price.^3,4

The US administration has focused on cost containment in the Most Favoured Nations (MFN) Executive Order, while domestic investment is a target through broader tariffs on international imports. MFN directs CMS to pay no more than the lowest price paid by other developed nations.⁵

While both MFG and MFN have the same goal, the conflicting approach to achieving this means manufacturers need to consider carefully how these policies could influence expected price and what this might mean in terms of launch timing and broader strategy approaches globally.

Identifying a target price: Does additional value matter?

Both the US and Germany use benchmarking or referencing pricing to identify target prices for an asset. However, as with the policies, how these are implemented are very different.

The US plans to identify a market basket of countries for which to reference the lowest price (where the price benchmark is yet to be defined) and adopt that as a straight price. Germany will consider other prices globally, but will largely consider clinical comparators internally and determine if the new therapy offers additional clinical benefit. This benefit is then quantified as additional value to determine the final price.

MFN does not consider the additional benefit, but instead pegs US prices to outcomes of other nations’ pricing decisions (which may not reflect US-specific value or health economics). Meanwhile, Germany considers the additional value to the German population, in the context of the cost of similar drugs within the same market.

Barriers and challenges exist for either approach.

• Many countries do not share their true net prices; MFN could be undermined by manufacturers if they are unable or unwilling to provide net pricing. This could lead to the US government implementing mechanisms to compel manufacturers to share confidential prices. If this happens, does this erode any value in confidential pricing in other markets?
• If a therapy only has generics as comparators, the price could be very limited, even if there is a high perceived additional clinical benefit. This could lead to manufacturers considering pausing or not launching in Germany, or any other country, if there is concern the true value is not going to be recognised and additionally affect more valuable markets.
• Removing price transparency is a different direction for Germany traditionally, and so policymakers intend on reviewing the policy (the “Sunset Clause”) in 2028 to ensure it is achieving the intended outcome (additional investment in Germany and better access at lower prices). The novel aspect of this approach and required review could indicate that MFG may change in future depending on the outcome of the review.
• Not all manufacturers or assets will be eligible for MFN or MFG. Manufacturers may increase investment in Germany in order to achieve eligibility for MFG while manufacturers may focus on innovative drugs to avoid MFN consideration. This will depend on manufacturers’ pipeline and other priorities, but are likely to be considered by eligible manufacturers.

Because MFN and MFG structurally affect prices so differently, these policies, and others similar, could affect traditional launch sequencing plans for a manufacturer.

What do these policies mean for launch strategy?

Traditionally, the US has been one of the first launch countries due to the free-pricing market and large population. Germany is also commonly one of the early launch markets as well, particularly in Europe because of the size and initial free pricing in the first six months of launch.

MFN could encourage manufacturers to launch first in the US and have more discretion when selecting follow on countries, which may lead to other countries losing access or receiving products later than would occur in a non-MFN world. This is because companies may avoid launching in smaller lower paying markets to prevent the US price being affected. Nuanced launch strategies may mitigate the impact to smaller markets, but the impact should be closely considered to prevent widening of health inequalities.

Alternatively, we could observe raised prices in other markets to offset the impact of MFN. This could lead to difficulty for patients accessing medicines, even if available in that country. Alternatively, we may see increased instances of confidential discount agreements with higher public prices while keeping the agreed net price lower (similar to the MFG 9% confidential discount), which creates potential conflict with the net pricing disclosure requirements of the MFN Executive Order. Whether this is a realistic strategy depends on the imposed obligations and enforcement by the United States to force disclosure of confidential prices with other sovereign nations. We have seen previously how concerns regarding the influence of reference pricing resulted in reduced access. In Germany (a commonly referenced price in other markets), after the free pricing period, some companies left the German market due to concerns they will not receive ‘added benefit’ and be given a lower price, which could impact other reference pricing globally. The MFG offers manufacturers an alternative option to stay in the market with a confidential price.

A manufacturer is eligible for the MFG benefit only if the domestic investment requirement is demonstrated within Germany, so this should be considered when determining how to launch or how long to stay in the German market. It will not necessarily be applicable to all manufacturers, but the initiative demonstrates a price lever being used, which may encourage more manufacturers to consider how to be eligible to select key markets going forward.

In the US, tariffs are being used to apply pressure on companies to increase their domestic manufacturing strategies separate to any MFN implementation. Therefore, manufacturers should consider if a strategic decision to minimise MFN impact will be offset by tariffs and how this might influence overall pricing. (Note: the recent Pfizer and Astra Zeneca deals demonstrate a potential route to reduce or prevent tariffs by covering MFN prices within CMS (specifically Medicaid), committing to lower prices directly to Americans, and domestic investment to obtain a hold on tariff implementation).

Market Access strategy should now consider global manufacturing strategy and how this might offer advantages if the investment criteria is met.

A case study: Mounjaro, navigating both MFG and MFN

An example of a company navigating both policies is Eli Lilly with Mounjaro (tirzepatide).

In Germany, Mounjaro was launched for type 2 diabetes and underwent the AMNOG benefit assessment. It was deemed to offer “no additional benefit” over existing therapies in most cases and “hint for a minor additional benefit” in one subpopulation,⁶ which normally would land it a relatively low price. Rather than accept a low publicly visible price (or withdraw the product as some have done in the past), Lilly chose the MFG’s confidential price option. Lilly’s significant R&D presence in Germany made it eligible for this scheme, and by August 2025 they became the first company to invoke the new MFG provisions for an innovative drug.⁷ This meant Lilly agreed to whatever discount was negotiated plus an extra 9% off, in exchange for keeping that final price hidden from publication.

As a result, Germany gets Mounjaro at a discount (helping cost containment), German patients keep access to the drug, and Lilly avoids a publicly low reference price that could undercut its obesity indication pricing and prices in other countries. This was exactly the outcome the German law intended – and it shows the law’s value in a scenario where a drug’s value proposition differs by indication.

To address concerns that Mounjaro might be affected by MFN, Lilly adjusted their public price in the UK, a common country used when carrying out international pricing comparisons. To offset the low NHS price being used as the “Most Favoured Nation price”, Lilly re-negotiated with the NHS to increase the list price of Mounjaro. In order to prevent patient harm due to lack of access they simultaneously agreed for confidential rebates with the NHS to offset the price increase. The target of this is to lift the floor of the MFN-referenced countries.

Private patients in the UK (paying out-of-pocket for weight loss, a big use-case for tirzepatide) did face much higher costs – up to £330 per month – which drew some criticism and media attention. However, it’s noted that some private providers might negotiate their own discounts or patients may switch to alternatives. From Lilly’s perspective, they mitigated a huge US pricing risk (a very low UK price no longer exists to pull down US CMS’s target) at the cost of some negative press in the UK.⁸

This case illustrates how a pharma company could leverage a confidential pricing option in one country and pre-emptively adjust prices in another to mitigate the impact of US policy – all to achieve the same goal of protecting its global pricing integrity while maintaining market access.

What does this mean for market access strategy?

Some may argue that MFN is unlikely to be implemented in practice, however, the current government has demonstrated a commitment to reduce drug prices and now two major manufacturers have voluntarily agreed to MFN for targeted patient populations. Therefore, prudent manufacturers should consider mitigation strategies if it is implemented as suggested currently:

1. Embrace a global (and cross-functional) pricing strategy: Market access teams need to consider more weighted, integrated global pricing policies, rather than the local to global approaches. Pricing decisions for individual countries now have an even greater consequence that in the past, even if it is only of a targeted population in other key countries. Any significant price cut in one market may now reverberate globally – either through direct reference pricing (as in the traditional system) or through MFN’s enforced parity. Likewise, any attempt to secure a higher price in a major market might require offering concessions (discounts, investment) elsewhere. Companies should establish internal “Price Harmonisation” task forces that include market access, regulatory, supply chain, and government affairs roles to evaluate how a pricing or launch decision in Country A will affect business in Countries B, C, and D. This also means sharing information internally: local affiliates should aim to understand the global implications of deals they strike. For example, a country manager in a smaller European market should be aware if accepting a low price could suddenly become the benchmark for the US. They might need authority to push back or seek alternative arrangements (like a confidential contract or a delayed launch) for the greater good. Essentially, think globally, act globally, even while negotiating locally.

2. Reassess launch sequencing and market prioritisation: The traditional playbook of “US first, EU5 soon after, then rest of world” may need revision. Under MFN, the US could remain the most common country for first launch (to maximise benefit of free pricing before any external referencing kicks in). The bigger change is likely to be seen in the sequence of follow-on markets. Companies may choose to delay launches in traditionally lower-price markets (some Southern/Eastern European countries, for instance) until after the US price is well established or until they can negotiate special terms. In some cases, firms might decide not to launch at all in a market that would yield an untenably low reference price, especially if that market is not large. Conversely, Germany might remain a high priority because MFG could provide a pathway to mitigate the downside of a low price (through confidentiality). Each upcoming product should get a bespoke launch plan in this new and dynamic environment.

3. Invest in value demonstration (or differentiate by population): If the US had its own robust value assessment (which historically it hasn’t for Centers for Medicare and Medicaid, “CMS”), added clinical benefit could justify higher prices, but MFN bypasses that. Germany’s system still rewards added benefit with higher pricing tiers. So, for Germany and similar systems, it’s crucial to demonstrate as much clinical added value as possible during the HTA process to avoid the “no benefit” outcome that triggers the lowest price scenario. This might mean investing more in comparative trials, real-world evidence, or subgroup analyses that could show a benefit in certain patient populations. If a drug can secure a “moderate” or “major” added benefit rating by Germany’s G-BA, the manufacturer could obtain a stronger pricing power (possibly negating any need for the confidential route). On the flip side, for a product likely to get a “no added benefit” rating, the company should aim to anticipate that early and decide if the MFG path is viable (do we have R&D in Germany to qualify? If not, is it worth establishing some?). In the US, even though MFN doesn’t consider value, note that the Inflation Reduction Act’s negotiation process will soon consider clinical benefit and unmet need for selected drugs – so, showing value remains important for US policy reasons too. In short, robust value demonstration could counteract blunt pricing tools by giving negotiators a reason to exempt or treat your product differently (e.g., carve-outs, innovative contracting, etc.).

4. Leverage confidential discounts and differential pricing: As discussed, one mechanism to try to reconcile these conflicting policies is for companies to separate the “visible” price from the “net” price through confidential agreements. Manufacturers should consider expanding the use of managed entry agreements, confidential rebates, and private market deals across many countries. For instance, if a company needs to raise a list price in Country X (to satisfy MFN considerations), it could concurrently negotiate a rebate with payers in X, so that their effective expenditure stays the same. Additionally, engagement with private sector channels: as Lilly did with UK private clinics, negotiating arrangements to not lose that segment entirely after a price hike.

5. Align manufacturing and R&D footprint with market access strategy: A novel aspect of the current environment is how industrial policy (tariffs, local investment requirements) is entwining with pricing. Pharmaceutical firms should evaluate their global manufacturing and R&D footprint through the lens of market access. For example, if your portfolio has many drugs that will launch in Germany, having a robust R&D presence there (or at least some eligible projects to qualify for MFG) could become a competitive advantage – essentially part of the market access investment. Similarly, the US has signalled that investments in domestic production could be rewarded (e.g., Pfizer’s and AZ’s deal securing tariff relief by investing in the US). While these decisions (where to build a factory or site a trial) were historically driven by operational or scientific considerations, now the pricing outcome is a factor. Pharma companies might increase manufacturing in the US, not only because of supply chain resilience, but because it gives them leverage to argue against punitive tariffs or to fulfil criteria that get them political goodwill.

6. Smaller companies should be flexible to evolve with policy changes: While mid-size and large manufacturers have long adopted structured price-reference models and assessments to manage value capture for policies like MFN and MFG, many emerging biotech firms and smaller organisations have yet to fully develop such frameworks. As the implications of MFN and MFG become clearer, other countries are likely to reassess the impact of these policies on their healthcare systems and consider policies to incentivise to their benefit as well.

For early-stage companies, establishing a flexible conceptual model that evolves alongside policy changes and asset development is essential. Ideally, the model should be incorporated as part of the process for how assets are developed, positioned, and commercialised. Incorporating these policy changes into early decision-making enables smarter decisions in clinical development – decisions that are strategically aligned with commercial viability.

Overall, companies both large and small should consider broader policy implications beyond the US and Germany in their access strategy. This should include considering manufacturing strategies and how this could be leveraged to best support a launch in particular markets. Having a dynamic and global approach to local decisions should be prioritised to help identify opportunities to support launch and pricing strategies.

References

1. Lee KS, Kassab YW, Taha NA, Zainal ZA. Factors Impacting Pharmaceutical Prices and Affordability: Narrative Review. Pharmacy (Basel). 2020;9(1):1. Published 2020 Dec 23. doi:10.3390/pharmacy9010001
2. British Business Bank, “Life Sciences Investment Programme”.
3. Bundesministerium für Gesundheit (2024), “Medizinforschungsgesetz (MFG)”.
4. Pharmaceutical Technology, “All change in Germany – confidential pricing in, IRP out”.
5. White House (2025). *Executive Order on Most-Favored-Nation Pricing*.
6. Gemeinsamer Bundesausschuss (2024), Justification.
7. Pharmaceutical Technology (2025), “Lilly first to opt for confidential reimbursement price in Germany”.
8. BBC News (2025), “Price of Mounjaro to be discounted in UK pharmacies”.

About the authors

Kevin Patterson is a principal and US access solutions lead in LCP’s Health Analytics team. Patterson is a veteran healthcare executive with nearly three decades of leadership in strategic consulting and industry innovation. As a founding partner of Medical Marketing Economics, LLC (MME), he played a pivotal role as administrative partner and head of the Oncology Division, where he specialised in strategic positioning, indication prioritisation, and optimising market access. Widely regarded as an expert in value-based decision-making, he now serves as co-lead for LCP’s US access solutions. In this capacity, he helps shape the organisation's national operations and service offerings, while partnering with both emerging biotech firms and established pharmaceutical leaders to guide commercial strategy, access planning, and launch readiness in a rapidly evolving healthcare environment. His strategic insight and deep market experience continue to influence the way life sciences companies approach value, access, and innovation across the US healthcare system.

Dr Rebecca Sloan is a senior consultant in LCP’s Health Analytics team, with experience in supporting clients with diverse needs across market access and HEOR. Dr Sloan is both a qualified clinician and actuary, able to combine clinical experience with statistical expertise to deliver impactful insights. She has experience providing strategic advice to clients across a broad range of specialities. Her areas of interest include value-based healthcare and women’s health. Dr Sloan’s clinical specialties including acute medicine, anaesthetics, and intensive care. She originally studied Medicine at the University of Aberdeen before working as a junior doctor and trainee anaesthetist in Manchester and Aberdeen. Following this, she completed a Master’s in Actuarial Science from Heriot Watt University, Edinburgh and qualified as an actuary in 2020.