Don’t Turn Reconciliation into an Innovation Disaster for U.S. – “Most Favored Nation” Policy Would Impose Foreign Price Controls on U.S. Consumers and Innovators

By SBE Council at 4 May, 2025, 11:40 am

FOR IMMEDIATE RELEASE

Washington, D.C. - In response to learning that lawmakers on Capitol Hill may be considering the inclusion of "Most Favored Nation" (MFN) price controls on drugs covered under Medicaid as a "pay for" in budget reconciliation rather than considering meaningful improvements to Medicaid, Small Business & Entrepreneurship Council (SBE Council) President & CEO Karen Kerrigan issued the following statement:

"U.S. innovators, competitiveness, and healthcare consumers all lose under an MFN pay-for scheme. A ploy to essentially import the price controls of freeloading foreign nations is a race to the innovative bottom. Price controls and socialism have no place in a policy ecosystem where the goals are innovative dominance and 'golden-era' opportunities for entrepreneurs and workers.

"Similar to the positive pro-investment policies that the Trump Administration and Congress are pursuing via budget reconciliation and other actions - such are tax relief and incentives, lifting regulatory barriers, and relieving American businesses and consumers from the anti-growth reigns of the Biden Administration - policies across-the-board must be consistent to enable robust innovation and investment across all sectors. That means strongly rebuking price controls and government micro-management of all business sectors. Congress needs to unwind the price controls that President Biden embedded in the Inflation Reduction Act. And, U.S. trade negotiators should be pushing other nations to lift drug price controls, fully open their markets, and full commit to protecting American intellectual property.

"When the government steps into the marketplace to embrace or impose price controls, incentives to invest in the price-controlled industry are reduced, and entrepreneurship, investment, innovation, supply and quality suffer accordingly. The costs aren't limited to lost businesses, investment and jobs, and in the case of pharmaceuticals, lost and shortened lives, and diminished health overall.

"Moreover, especially during this Small Business Week, it must be remembered that the biopharmaceutical industry is dominated by small businesses. 'Sticking it' to Pharma means sticking it to small businesses.

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"A December 2022 Vital Transformation study found that '55% of all therapies that the US originated were developed by small biopharma firms with less than $500 mil in annual revenue. Further, 45% were fully discovered by small biopharma firms on their own, without an academic or government transfer of IP.'

"A Congressional Budget Office study also notes the crucial role of smaller businesses: 'Small drug companies (those with annual revenues of less than $500 million) now account for more than 70 percent of the nearly 3,000 drugs in phase III clinical trials. They are also responsible for a growing share of drugs already on the market: Since 2009, about one-third of the new drugs approved by the Food and Drug Administration have been developed by pharmaceutical firms with annual revenues of less than $100 million. Large drug companies (those with annual revenues of $1 billion or more) still account for more than half of new drugs approved since 2009 and an even greater share of revenues, but they have only initiated about 20 percent of drugs currently in phase III clinical trials.'

"We strongly urge Congress to rebuff anti-growth efforts - such as MFN - that undermine U.S. competitiveness and that reward other countries for their freeloading and anti-innovation policies. We urge the Administration and Congress to push forward with policies that unlock and unleash American investment and innovation, and to pursue meaningful Medicaid reforms that improve the efficiency, fairness, and delivery of the program."

RELATED CONTENT: Importing Price Controls - Making a Bad Situation Far Worse, Small Business Insider, April 2025.

CONTACT:

KAREN KERRIGAN, kkerrigan@sbecouncil.org

RAYMOND KEATING: rkeating@sbecouncil.org

SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For more than 30 years, SBE Council has advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth.

Visit www.sbecouncil.org for additional information. X: @SBECouncil

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