“MFN pricing could potentially remove the US market as the financial foundation of the biotech model — and that’s what’s scary to me.”
Dr. Stella Vnook, Co-Founder and Executive Board Chair, Kaida BioPharma
On March 9, 2026, the Mid-Sized Biotech Alliance of America issued a statement opposing H.R. 7837, the Most Favored Patient Act of 2026, calling it a threat to American biotech innovation. “Any policy linked to price controls would reduce the resources available to reinvest in future research,” said Alanna Temme, President of the MBAA. “That means fewer clinical trials, delayed treatments, and in some cases, therapies that never reach patients at all.”
The executive order, signed on May 12, 2025, would require the US to tie Medicare and Medicaid drug prices to the second-lowest net price among eight reference countries — Canada, Denmark, France, Germany, Italy, Japan, Switzerland, and the United Kingdom. MBAA member companies collectively invested $6.5 billion in R&D in 2024 and reinvest nearly 40 percent of revenue back into research — roughly double the rate typical of large pharmaceutical companies. The alliance argues that capping US prices at international reference levels would directly reduce the capital available to sustain that investment.
To understand what that means in practice for individual companies, PharmaSource spoke with Dr. Stella Vnook, Co-Founder and Executive Board Chair of Kaida BioPharma and a serial biotech founder and strategic advisor with 25 years of experience spanning research, manufacturing, marketing, and commercialization.
What MFN Does to a Mid-Sized Biotech’s Financial Model
To understand MFN’s impact on biotech innovation, the starting point is the numbers — not at the large pharma level, where diversified portfolios can absorb revenue reductions across products, but at the level of a single-asset or narrow-pipeline company where one drug’s peak revenue determines whether the next program gets funded.
Stella worked through a concrete scenario to illustrate the math. Take a mid-sized oncology program priced at $15,000 per month — roughly $180,000 per year — targeting a peak US revenue of around $6 billion. Under MFN pricing benchmarked to a second-lowest international reference price, the same product would be priced at approximately $35,000 to $45,000 per patient per year, in line with UK or German reimbursement levels. Peak revenue falls to approximately $2 billion.
“That’s a 60 to 70 percent revenue cut for a mid-sized biotech company that does not have a portfolio like large pharma,” she explains. “The company probably paid $400 million in acquisition costs, then put in another $250 million to complete the Phase 3. MFN doesn’t retroactively change any of that. But with two billion instead of six billion in peak revenue, the net present value of that program just collapses.”
For large pharmaceutical companies, a revenue reduction of that scale on one product can be absorbed across a broader pipeline. For a small or mid-sized biotech built around one or two assets, it can make the difference between a program that reaches patients and one that never completes Phase 3. Stella has seen that happen already, in the current funding environment, before MFN has even passed.
“In the past two years, even without MFN, I’ve seen companies unable to fund their Phase 3 because investors did not see their return on investment fast enough. For rare disease programs, this is going to be devastating. There are real patients waiting for treatments that will probably never be developed.”
The rare disease and orphan designation programs are particularly exposed. A program targeting fewer than 10,000 patients in the US already has a low global revenue ceiling. If US pricing is capped at German or UK reference levels, the net present value of that program can go negative before a Phase 3 trial even begins.
The Compounding Effect: MFN Is Not the Only Pressure
Stella is careful to situate MFN within a broader set of simultaneous pressures on biotech R&D investment. The policy does not exist in isolation, and understanding its full impact requires understanding what is happening around it at the same time.
NIH grant funding, which supports a significant portion of early-stage biotech R&D, is facing proposed budget reductions of approximately 40 percent. Investor sentiment toward biotech has already been deteriorating — biotech stocks lagged the broader market through 2025, and IPO activity has declined. MFN, layered on top of those pressures, compounds an environment that is already difficult for early and mid-stage companies to navigate.
“We have so many different moving parts. If we have MFN on one side, then a 40 percent NIH budget reduction on the other, and now investors who are shifting from biotech to technology or real estate, then who is funding that R&D innovation? Who is filling that gap?”
Biotech investors already work on decade-long return timelines. MFN introduces a ceiling on peak revenue that investors must now discount when evaluating whether to fund a program. When that ceiling drops substantially, valuations fall, available capital shrinks, and investment concentrates in later-stage, lower-risk programs where the return horizon is shorter.
“Investors are not looking at today’s price. They’re asking what the profitability of that drug will be when it reaches its full market potential. When MFN introduces a ceiling that investors now have to discount into their models, it drives down valuations and shrinks the capital available for early-stage and mid-sized companies.”
There is also a global market access dimension. If US prices are capped at international reference levels, some companies may respond by withdrawing from the lower-margin international markets whose pricing is being used as the benchmark — prioritizing the US revenue they can still capture over markets that are now directly constraining their upside. The unintended consequence could be reduced drug access in the markets whose pricing MFN is using as its reference point. PharmaSource interviewed EU Correspondent, Christoffer Frendesen, about how MFN pricing will affect EU markets in a recent podcast episode.
The Problem MFN Is Trying to Solve
Stella is not dismissive of the problem the policy is trying to address. American patients do pay more for many drugs than patients in comparable countries. She has personal experience of that — she describes calling drug companies to ask about rebate programs and working with nonprofit organizations to help cover the cost of her mother’s cancer treatment.
“I have to acknowledge that patients are paying a lot. I don’t believe anyone creates a drug that people can’t afford on purpose. The whole purpose is to create medications that people can take in order to feel better.”
Her argument is not that the current pricing system is working well for patients. It is that MFN targets the wrong part of the chain. The manufacturer — the entity that spends approximately $1 billion over 15 years creating the drug — bears the full cost of the policy. The intermediary layer that determines how much of that price patients actually see at the pharmacy is untouched.
“MFN targets the manufacturer — the one entity in this whole chain that actually spends about a billion dollars over 15 years creating the drug. It doesn’t touch the pharmacy benefit managers that pocket $7.3 billion just from the spread. So maybe there’s just a better way.”
What Stella Would Support Instead
When asked what drug pricing reform she could back, Stella outlines a set of alternatives she believes could reduce patient costs without dismantling the innovation funding model.
Direct-to-patient pricing transparency — so patients can see actual out-of-pocket costs before they reach the pharmacy — is one she supports as an immediate practical step. Serious reform of pharmacy benefit managers, which she views as the primary structural driver of the gap between list price and what patients pay, is the change she considers most necessary. Value-based contracts, where pricing is tied to clinical outcomes, offer a mechanism for aligning pricing with demonstrated patient benefit. And a more deliberate approach to product mix — ensuring that not every indication defaults to the most expensive modality when a less costly option would serve the patient equally well — could reduce systemic cost without penalizing innovation.
“There are a lot of things we can do. I’d support serious PBM reform. I’d support value-based contracts where pricing is tied to outcomes. I just think the most evident and easiest solution on the surface isn’t going to fix a complicated systemic issue. How did we get here? That’s what we need to answer first.”
