As AstraZeneca braces for the impact of the U.S. “most favored nation” drug pricing policy, CEO Pascal Soriot suggests that a “very conservative” way to model the fallout would be removing the eight reference markets from future product forecasts.
Soriot provided that method during AZ’s first-quarter earnings call, stressing that it’s only a “very conservative” approach that the British drugmaker doesn’t think will actually materialize.
“But we are working very hard—not only we, but the whole industry—to improve the access and pricing environment in all of those countries,” Soriot said on Wednesday’s call, adding that, “ultimately, our goal is to launch those products in every single market and improve the access environment.”
The Trump administration’s MFN policy aims to reduce U.S. prescription drug costs by linking them to prices paid in certain other developed countries. The initiative typically uses a basket of eight high-income countries to benchmark U.S. prices: Canada, Denmark, France, Germany, Italy, Japan, Switzerland and the U.K.
So far, 17 of the largest pharma companies, including AZ, have signed on amid Trump’s threat of pharmaceutical tariffs. Additional participation from other drugmakers is expected as the President has unveiled a 100% levy on pharma imports, with certain exceptions, as the Commerce Department has identified them as a risk to U.S. national security under Section 301 of the Trade Act of 1974. The MFN deals only affect future products.
On the flip side of the administration’s MFN policy, as Trump bemoans foreign “free riding” on U.S.-funded innovation, the U.S. government and the pharma industry are targeting higher spending by other countries. That endeavor could take time. Before that, Soriot’s comment suggests that pharma companies may opt to skip those benchmark countries for new product launches if their reference prices are too low. But the AZ chief executive appears optimistic that some form of a compromise could be reached.
“We have time to do this, because new products will not be launched immediately,” Soriot said. “You’ve seen some movements in the U.K. already. And discussions based on the 301 investigation, we’ll start with other countries in the next few weeks or months.”
Companies are effectively leveraging R&D investments in respective countries as bargaining chips to push for more amenable pricing environments. As Soriot highlighted improvement in the U.K., AZ on Wednesday said it will resume a 300 million pound sterling ($404 million) investment program in its home country months after freezing the plans in response to stalling drug pricing negotiations.
“We are getting positive response[s] in some countries, and more wait-and-see in other countries,” Soriot added. “But this is going to play out over the next 18 months, two years, so we have time to hopefully reshape the environment.”
Still, Soriot suggested that losing that market wouldn’t be a huge hit to AZ as the entire European market represents 20% of the company’s global sales.
“Take a fragment out of this, this is not huge,” he said.
With multiple new launches underway carrying blockbuster potential, AZ is targeting $80 billion in revenue by 2030, compared with $58.7 billion in 2025.
Beyond AZ, pharma companies have reported mixed results from their efforts to increase prices in other countries.
In March, Astellas CEO Naoki Okamura suggested that MFN helped the company secure a higher reimbursement price for its eye medicine Izervay in Japan.
“We leveraged this most favored nation dialog” and received a “relatively reasonable pricing” in Japan, Okamura said, as quoted by Bloomberg, even though he said it’s unclear if Japanese authorities explicitly considered Trump’s policy in their deliberations.
However, Novartis CEO Vas Narasimhan lamented on a Tuesday call with reporters that, “we’re not seeing the progress that we had hoped to see at the pace that we had hoped to see” in the Swiss pharma’s MFN engagement with European and Japanese governments.
“What’s very important now is that we continue to advocate for the European government to ensure they’re properly rewarding innovation and not take policies that really don’t enable companies like ours to continue to invest in Europe, in clinical trials, in manufacturing,” Narasimhan said. “Europe needs a healthy ecosystem, which is going to require a complete rethink on how reimbursement systems work in the continent.”