Negotiating MFN - Part 2: Access in GLOBE/GUARD countries – False Immunity?

This is Part 2 of Negotiating MFN, a four-part series examining how companies and policymakers are navigating the new US pharmaceutical pricing landscape. Part 1 examined why GENEROUS basket countries - including the UK - appear more exposed than policymakers have assumed. This piece looks at the eleven countries that sit in the GLOBE and GUARD basket but outside GENEROUS. Parts 3 and 4 turn to what companies can do in response.

A recurring theme in conversations with health policy officials in certain countries right now is a particular kind of relief. 

These countries are not in the GENEROUS basket - the eight countries whose net prices are now directly referenced by the US. The vast majority of the pharmaceutical market is covered by GENEROUS agreements, whose participating companies are formally exempt from GLOBE and GUARD until at least 2029. And even for the remainder, those models so far reference list prices rather than the confidential net prices negotiated domestically. The US pricing reform, on this reading, belongs to someone else. 

I understand why that conclusion feels credible - but it warrants closer examination. 

What the framework says

Let’s be precise about where the grounds for reassurance lie and where they may not hold. 

GLOBE and GUARD reference 19 countries - the eight GENEROUS countries plus eleven others: Australia, Austria, Belgium, Czech Republic, Ireland, Israel, Netherlands, Norway, South Korea, Spain and Sweden. For these eleven countries, domestic reimbursement prices are set to be formal inputs into GLOBE and GUARD. But the 17 companies with GENEROUS agreements - covering around 86 per cent of the relevant market, according to US policymakers - are currently exempt from GLOBE and GUARD. For most products then, there is no formal link between domestic prices in these markets and the US market today. 

For the remaining 14 per cent, the draft GLOBE and GUARD provisions currently demand only the referencing of list prices. Where a confidential net price sits well below the public list price, there may be room to manage exposure.  

But pharmaceutical companies - including those with MFN deals - are already treating launch decisions in these markets as carrying US pricing risk. While GENEROUS countries may be most affected, GLOBE/GUARD countries are not insulated. There are five reasons why.

Why companies cannot consider the US as insulated from GLOBE/GUARD prices

The first is timing. GENEROUS exemptions are not permanent. GENEROUS companies hope for extensions beyond the current 2029 sunset, but cannot plan on that basis. A company accepting a low net price in a GLOBE/GUARD country today is setting a benchmark that may be on the books when - and if - GLOBE and GUARD begin to apply. For products whose commercial peak spans that potential window, the exemption offers less shelter than it appears. Companies are reflecting that in launch decisions right now, and patients are already feeling the consequences. 

The second is the direction of travel on list versus net prices. The US government has shown a clear preference for net price referencing - CMS already allows voluntary net price submission under GLOBE and GUARD, and the administration’s rhetoric is clear on its preference for international correction of net pricing. The administration also has all sorts of future leverage over companies, not the least being its stance in future IRA negotiations – and it has ‘form’ for muscular and creative use of leverage where it sees its interests as engaged. Unsurprisingly then, companies are pricing their launch decisions on the expectation that this distinction will narrow over time, not hold indefinitely. 

The third is that international reference pricing systems are dynamic and interconnected. Many GLOBE/GUARD countries are themselves referenced in other markets’ IRP baskets. Among the GENEROUS basket countries, Canada's PMPRB operates a formal price ceiling mechanism benchmarked against eleven countries, six of which are GLOBE/GUARD markets - meaning a low price in Australia, Belgium, the Netherlands, Norway, Spain or Sweden could directly constrain Canada's permitted price ceiling and flow through into the GENEROUS calculation. France and Italy each take EU market prices into account in their pricing negotiations, creating a further, if less mechanistic, channel of influence. The boundary between what is inside and outside the GENEROUS reference universe is therefore more permeable than the formal framework suggests. 

The fourth is that low reimbursement prices in GLOBE/GUARD countries may informally influence IRA drug price negotiations. While MFN has drawn attention away from these negotiations, they remain a running financial sore for companies.  This is a critical yet underpriced issue – little discussed, since companies are reticent to draw attention to something that carries immediate financial risk. While the IRA’s Maximum Fair Price negotiations are formally governed by specific statutory criteria, the CMS has very substantial discretion and evidence of low prices in GLOBE/GUARD countries may be drawn upon as supporting evidence for what constitutes a fair US price.  

The last reason cuts across all the rest: simple arithmetic. For most innovative products, the US market may be fifty to one hundred times the size of any individual GLOBE/GUARD country market. A modest probability-weighted expectation of US revenue impact can be sufficient to make non-launch commercially rational, even if the risk – arising through the above factors – is indirect. For affected patients, the result is the same whether a company defers a launch for strategic reasons or regulatory ones. 

Why confidentiality offers only a limited shield – and used crudely, can backfire

One response I encounter from policymakers is that domestic confidentiality law could provide a solution - legislation preventing pharmaceutical companies from disclosing net prices to US authorities. 

Certainly, net price confidentiality is more important than ever, amongst GLOBE/GUARD nations – this is no time to water down existing protections.  Yet the argument that such countries can protect themselves from the implications of US referencing by hardening such legislation does not quite work.  

The GENEROUS reporting obligation runs from the manufacturer to CMS. It is the company’s obligation, not the government’s. Domestic confidentiality provisions govern the relationship between the payer and the company; they cannot override a company’s separate obligations under a US federal programme. A company facing that conflict has only one commercially rational resolution: not to launch in the country whose law creates it. Legislation intended to protect pricing confidentiality could instead tell companies not to launch - accelerating exactly the access outcome it was designed to prevent, and leaving patients without medicines that might otherwise have been available to them. 

What can help

The appropriate response to these dynamics is not to dismiss them as remote or contingent. Companies are already making launch decisions - on products whose pricing today may anchor their US exposure for years ahead. 

Engaging with this reality - in the design of national pricing frameworks, in direct negotiation with companies and in direct dialogue with the US government on how GLOBE and GUARD interact with allied health systems - is more likely to produce durable outcomes than seeking reassurance in a reading of the framework that the market may already have moved past. 

The companion paper to this post sets out the analytical detail of the four mechanisms and their implications.  

Parts 3 and 4 of this series, to be published 8 July and 15 July, turn to what pharmaceutical companies can do in response – first, the strategies available to companies in GENEROUS countries, and then the wider moves now becoming available in the multiplayer game MFN has created for global launch strategy.