Following Insmed’s decision to hold off on launching a newly approved lung disease drug in Europe, experts anticipate more companies will do the same as they seek to avoid price erosion in the U.S. Will Chinese biotechs fill the void?
Despite receiving European approval for inflammatory lung disease drug Brinsupri last November, Insmed is holding off on launching the product due to lingering questions around President Donald Trump’s Most Favored Nation drug pricing initiative. The company is far from the only biopharma reevaluating their global launch strategies in light of MFN. As the far-reaching effects of the policy unfold, experts warn that retreating from overseas markets could have unintended consequences—including providing a springboard for Chinese biotechs.
In addition to Insmed, Ligand Pharmaceuticals, United Therapeutics and multiple other companies have discussed how MFN is shaping their ex-U.S. strategies. Many other drugmakers are evaluating their strategies in private. Matthew Majewski, vice president at Charles River Associates (CRA), told BioSpace that companies working in various therapeutic areas have asked his team whether they should be launching in the EU and other MFN reference markets.
Companies have questioned whether they can limit launches to the markets where they can charge the most to avoid eroding U.S. prices, Majewski explained. However, that approach has a flaw. As Eva Marchese, vice president at CRA, told BioSpace, a new EU pharma regulatory package contains provisions to stop companies from cherry-picking EU countries.
Without the package, a drugmaker could limit launches to countries such as Germany. With the package, the U.S. price could be tied to the Czech Republic and Spain. A CMS assessment found Germany’s purchasing power is 83% of that of the U.S., while in the Czech Republic and Spain it is 64%.
If the Trump administration pushes ahead with its proposed MFN models, drugmakers will need to either accept lower prices in the U.S., persuade reference countries in the EU and other regions to pay more or restrict where they launch medicines. Majewski described the situation as a “game of chicken.” Unless someone backs down, Majewski said some drugs might not reach the EU in “the short-ish term.”
Nerea Blanqué-Catalina, a partner in global market access, pricing and sustainability at Alira Health, agreed, even going so far as to suggest that drug availability in the U.S. and Europe could diverge to the extent that there are effectively two different standards of care.
The situation has led experts to start considering what happens if companies avoid launching drugs in Europe or set high prices that severely limit uptake. One possibility is that Chinese biotechs will fill the gap.
Filling the Void
Typically, multiple companies are developing molecules for every major drug target. If one company decides against launching in the EU, a rival that is less price-sensitive could quickly introduce a molecule with the same mechanism of action.
Allistair Booth, a partner at Pinsent Masons, told BioSpace via email that Chinese biotechs “are very well placed to take advantage of any market anomalies MFN creates.” Booth estimated that the cost of drug development in China may be low enough to enable commercially viable returns on ex-U.S. products.
Majewski said biopharma companies are “saber-rattling” about the threat of Chinese biotechs claiming markets abandoned by U.S.-focused drugmakers over MFN concerns. Yet he agrees that companies from China, Europe or other regions could step up if new drug launches are restricted to the U.S.
The consequences of rivals claiming overseas markets could come back to the U.S. market. If a company can set a price that is acceptable to EU payers, Majewski sees no barrier to them bringing the product to the U.S. and undercutting companies that have avoided MFN reference markets. Citing that scenario, Majewski predicted that companies with drugs that can be copied will conclude that they need to launch in the EU despite MFN dictating that U.S. prices must drop as a result.
For now, though, experts who spoke with BioSpace maintain that, in the near term, a U.S.-only strategy is likely to win out. Blanqué-Catalina foresees MFN limiting which drugs launch in the EU for at least the next five years.
Concern about reputational risk could slow the divergence, as drugmakers headquartered in Europe would feel “very weird” to only launch a medicine in the U.S., Marchese said. However, such pressures only apply to a subset of the top global drugmakers. Majewski agreed that for now, European patients will miss out on novel therapeutics.
“U.S. prices need to come down, and European prices need to come up a little bit in order to meet this happy medium. There could be some pain while we play this game,” Majewski said. “Long term, there’s hope for the future that we’ll figure it out.”
