Contributor: Prioritizing Patient-Centered Value Over International Reference Pricing in US Drug Policy

The recurrent challenge of high prescription drug costs in the US has motivated lawmakers to explore various cost-control mechanisms. Following the implementation of the Inflation Reduction Act (IRA) drug negotiation provisions, recent drug pricing policy has turned to international strategies, most notably international reference pricing (IRP) models.

Background on Pharmaceutical Pricing Policies

IRP is a government price-control mechanism utilized worldwide, where a country determines or negotiates the price of a pharmaceutical product by comparing it to the official price of the same product in a "basket" of other reference countries. Most-favored-nation (MFN) pricing is a specific, often more aggressive, form of IRP. For example, a May 2025 executive order proposed implementing MFN pricing to ensure the US pays no more for high-cost small molecule and biologic treatments than the lowest price paid to manufacturers by a select group of high-income countries.¹

While these proposals offer potential cost containment for government programs, they carry significant drawbacks, including a failure to address differences in global health care systems and potential detrimental impacts on innovation. Notably, they risk obscuring a true understanding of value by attempting to define a drug's worth primarily based on a set price rather than on health outcomes or societal benefits.

This paper investigates the mechanisms and potential consequences of shifting US policy toward IRP. Based on insights and concerns raised by key stakeholders,² we believe the objective of US drug policy should be to prioritize patient access and value, rather than relying on list price alone.

Limitations, Access, and Value

Discussions with key stakeholders highlight 3 interconnected concerns regarding the adoption of IRP in the US: the misleading nature of international price comparisons, the risk to timely patient access,³ and the necessity of defining value beyond price alone.⁴

Limitations of International Price Comparisons

A central concern is the fundamental flaw in making direct price comparisons between the US and the MFN reference basket.⁵ Pricing comparisons are frequently misleading because they rely on list prices that publicly funded health systems in other countries rarely actually pay. Furthermore, differing reimbursement mechanisms across nations involve closed-system budgets, health technology assessments, and confidential rebates that are not reflected in the public data used for IRP. Consequently, IRP does not reflect actual transaction prices, making it a poor policy fit for the unique US drug pricing market. Moreover, early US market revenues frequently fund continued research and development, a cornerstone to our leadership in innovation and economic strength. Comparing US prices to those in countries with delayed access ignores this reality and produces inequitable benchmarks that reduce pricing flexibility. Policy makers should treat IRP data cautiously, as simple price comparisons fail to account for access timing, innovation financing, and patient value.

The implementation of MFN pricing also introduces policy inconsistencies regarding launch sequencing and resource costs. Since the US is usually the first-to-launch country for most products by 8 to 15 months,⁶ there are often no international prices available for comparison at launch. Waiting for other countries to "declare" prices would result in significant access delays for US patients. Furthermore, while US drug prices may appear higher, the US also faces significantly higher health care costs across the board, including inpatient costs and distribution. Appropriate standards of comparability must capture total health care resource use rather than focusing on a single input. It is also critical to note that many countries that previously implemented IRP are moving away from it in favor of value-based assessments because IRP fails to reflect true market value and incentivizes industry launch delays.

Prioritizing Patient Access

In the US, patients usually access new treatments earlier than in any other country, and MFN policies put this access at risk. In countries following IRP models, while list prices may appear lower, patients face significant time lags between a drug's regulatory approval and its actual reimbursement and availability. Pricing reforms should focus on ensuring patient access without undue delays in treatment or financial burden.

The Way Forward Is Patient-Centered Value

Pharmaceuticals are only one component of the health care system, and sustainable reform requires a system structured around the patient. Value should be defined as an evaluation of treatments that include various aspects, such as clinical markers of benefit, quality of life, reduction of caregiver burden, and improvements in health equity. Instead of relying on policies that borrow prices from other settings, the US should focus on an internal, evidence-based, and patient-centered value assessment system. Sustainable health care reform should balance cost, access, and innovation while explicitly reflecting what matters most to patients and society.

Action Steps

To transition from a price-centric system to a value-centric one, decision-making must be guided by a patient-centered value framework with clearly defined core elements, rather than reliance on any single, preexisting model. Such a framework should systematically incorporate input from patients, caregivers, communities, and society at large, reflecting outcomes and impacts that extend beyond payer cost considerations alone. Policy makers should require meaningful, documented patient and caregiver engagement in pricing and coverage decisions before policies advance. In addition, value frameworks should support flexible, value-based negotiation approaches that can adapt to differing patient needs and real-world contexts. To operationalize sustained patient engagement, the US should establish structured, ongoing pathways for patient participation with CMS and other payers, moving beyond ad hoc consultations toward permanent, representative advisory roles.

Conclusions

The desire to lower drug costs in the US is understandable, but the proposed solution of IRP models presents a threat to the access and innovation Americans currently benefit from. We believe US policy makers should leverage their market power to lead the world in developing pricing mechanisms that reflect patient-centered value of new therapies.

Furthermore, the path forward is not through imported prices and value systems, but through the integration of formalized, comprehensive patient-centered value frameworks. Continued engagement, consistent measurement of patient-centered outcomes, and the refinement of policies that balance those outcomes with cost, access, and innovation are essential to ensure an equitable and sustainable health system.

Disclosures: Ms Seo received funding from the Center for Innovation and Value Research related to this project and has received funding from the Partnership to Fight Chronic Disease for work unrelated to this project.

References

1. Rogers HA. Most-favored-nation prescription drug pricing executive order: legal issues. Congress.gov. June 5, 2025. Accessed February 4, 2026. https://www.congress.gov/crs-product/LSB11319
2. 2025 Fall Policy Summit. Center for Innovation & Value Research. Accessed February 4, 2026. https://valueresearch.org/events/2025-fall-policy-summit/
3. Mulcahy AW. Comparing New Prescription Drug Availability and Launch Timing in the United States and Other OECD Countries. RAND Corporation; 2024. doi:10.7249/RRA788-4
4. New prescription drugs typically sold first in U.S., reach other wealthy nations within a year. News release. RAND Corporation. February 1, 2024. Accessed February 4, 2026. https://www.rand.org/news/press/2024/02/01/index2.html
5. GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model. CMS. Updated December 23, 2025. Accessed February 4, 2026. https://www.cms.gov/priorities/innovation/innovation-models/generous
6. Hohn B, Keller J, Pangasa A. U.S. and European first launch trends and implications for emerging biopharma. ZS. September 2, 2025. Accessed February 4, 2026. https://www.zs.com/insights/us-novel-first-launches-implications-emerging-biopharma