Americans Pay Way Too Much for Drugs. That Part Is True.

U.S. drug prices are two to nearly four times higher than in Canada, Mexico, and most of Europe. Kevin Schulman, a health economist at Stanford Graduate School of Business, found exactly this in comparative research alongside colleagues from Harvard Medical School.

Nobody serious disputes this. The system is broken. Americans subsidize cheaper drug prices everywhere else on the planet.

So when politicians — Trump included — say foreign nations need to pay their fair share, they're identifying a real problem.

The question is whether Most Favored Nation (MFN) pricing is the right solution. And here, the debate gets genuinely complicated.

What MFN Pricing Actually Does

MFN pricing ties what Americans pay for drugs to the prices foreign governments set. On the surface, it sounds like a straightforward fix — if Norway pays $X, why should Americans pay $4X?

Foreign governments don't negotiate from market strength alone. They negotiate from a position of centralized government power, often with an implicit threat to simply deny market access entirely. That's fundamentally different from a free market deal.

As the U.S. Chamber of Commerce noted in an August 2025 analysis, importing those pricing models means importing the consequences too — including longer waits for new treatments and fewer new drugs reaching the market.

The Chamber surveyed Americans on this trade-off. Initially, only 32.5% supported MFN pricing. When respondents learned that patients in countries with price controls often wait more than 500 days for new treatments, concern spiked: 65% said they were worried about reduced access to treatments. Only 8.4% said they weren't.

The Florida Case Study

This debate is playing out right now at the state level. Florida's HB 697 — a bill that would tie state drug pricing to foreign government rates — has been advancing through Tallahassee.

Florida has 4.2 million seniors over 65, the largest senior percentage of any state, according to an analysis by Eric Maus published by the Council for Citizens Against Government Waste in January 2026. Any drug pricing policy hits Florida harder than anywhere else.

Maus argues HB 697 would cap what insurers reimburse and what pharmacies can charge. If pharmacies can't source a medication at or below that government-set price — which is often below actual market cost — the drug could simply disappear from shelves for Florida patients.

This isn't theoretical. It's what happens when price floors are set below market equilibrium.

What the Pro-MFN Side Gets Right

The Stanford research makes a valid structural point: the reason U.S. drug prices are so high isn't just greedy pharma companies. It's the pharmaceutical benefit manager (PBM) system — a web of middlemen who negotiate prices on behalf of insurers and government programs, but operate with near-zero transparency.

As Schulman's research explains, most government programs and private insurance systems create incentives to increase prices, not lower them. The system runs on rebates, discounts, and secret side payments between manufacturers and PBMs that consumers never see.

Fix the PBM system and you'd cut a massive chunk of the price gap without touching innovation incentives at all. That part of the conversation gets almost zero mainstream attention.

The Innovation Argument Is Real — But It's Being Weaponized

Pharm industry groups and the Chamber of Commerce are right that price controls can reduce R&D investment. An April 2025 analysis by No Patients Left Behind found that foreign pricing models consistently undervalue the cost of developing new medicines, leading manufacturers to invest less in breakthrough research.

A 2022 University of Chicago issue brief found that price controls could reduce the number of new medicines available by as much as 44%.

Those numbers matter. People die from diseases that don't have cures yet.

The pharmaceutical industry has spent decades using innovation as a shield against ANY pricing reform, even reforms targeting obvious gouging on decades-old drugs with zero new R&D investment. Insulin, for example, was invented over 100 years ago. The innovation argument doesn't apply there.

Conservatives who reflexively defend every pharma pricing practice because "innovation" are doing patients a disservice just as much as progressives who think price controls have no downsides.

What Media Is Getting Wrong

Left-leaning outlets love the Stanford framing — foreign countries figured it out, Americans are just being stubborn. They ignore the real costs of centralized government price-setting and why European countries have dramatically slower access to cutting-edge treatments.

Right-leaning outlets, including Fox News, frame this entirely as a patriotism play — foreigners are ripping us off, MFN pricing makes them pay their share. They ignore that pharmaceutical companies, NOT foreign governments, set the U.S. price. Making Europe pay more doesn't automatically lower what Americans pay.

What It Means for Regular People

If MFN pricing passes at the federal or state level in its current form, Americans might see lower prices on some existing drugs in the short term. That's real and it matters — especially for seniors on fixed incomes.

But the trade-off is fewer new drugs, longer waits for treatments that do exist, and a pharmaceutical industry with less incentive to invest in the next cancer breakthrough.

A two-track approach would work better: fix the PBM transparency problem that inflates prices artificially, AND allow direct government negotiation on a limited set of drugs with no active R&D pipeline. That's targeted, it's defensible, and it doesn't blow up innovation incentives.

Instead, politicians on both sides are pushing broad sweeping fixes that make for great talking points and terrible medicine.