US MFN Drug Pricing: A 25% German Price Rise Would Cut Medicaid Savings by 3.8%

US MFN drug pricing caps a medicine’s price at the lowest, or near-lowest, price in a basket of peer countries. A preprint dated 10 November 2026, led by Thomas Hwang, simulates how US savings change if German prices rise or fall, and compares those changes with what German statutory health insurance (GKV) would spend.

How US MFN drug pricing sets its benchmark

Three US programmes now use international reference prices. GENEROUS covers Medicaid and is voluntary; it is operational, and all 50 states had signed participation agreements by 1 October 2026. GLOBE covers Medicare Part B, is mandatory, and had its final rule issued on 30 September 2026, with a start date of 1 January 2027. GUARD covers Medicare Part D and is proposed, with its final rule still pending.

GENEROUS references eight countries. GLOBE and GUARD reference 19. Six of the eight GENEROUS countries, and 14 of the 19 GLOBE and GUARD countries, are in Europe. Germany is a reference country in all three models.

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Source: Thomas Hwang, preprint of 10 November 2026, “Comparison of US MFN pricing programs” and reference-country pages.

The pricing programmes sit alongside trade action. The US Trade Representative opened a Section 301 investigation of German pharmaceutical pricing on 18 June 2026, with a public hearing on 22 September 2026. Confidential company agreements from September 2025 cover Medicaid MFN pricing among other terms (see our coverage of the MFN company agreements).

Germany’s influence comes from early launch, not price

Germany sets the MFN benchmark for only 11-14% of projected net Medicaid MFN savings, which ranks it fourth of eight reference countries. The effect runs mainly through launch timing. Germany is often the binding reference at launch, when few other prices exist. At launch it sets the benchmark for 45% of referenced Medicaid spend, falling to 16% by 18 months as other countries launch.

The GDP-PPP adjustment factor for Germany is 1.167, against 1.000 for Switzerland, so German prices look higher than Swiss prices once adjusted for national income. For more on European access under US pricing policy, see our earlier coverage.

What a German price rise does to US savings

The study models three German price scenarios: a 10% rise, a 25% rise that mirrors the UK-style concessions in the US-UK pharmaceutical agreement, and a 9.1% decrease that corresponds to the change in the statutory rebate under the GKV-BStabG, which raised the rebate on patented drugs from 7% to 15.5% (see our coverage of the GKV manufacturer discount reform).

Source: Thomas Hwang, preprint of 10 November 2026, Figures 3 and 4. The text gives $110M for the +10% scenario and about $300M for +25%.

A 25% rise cuts projected net Medicaid MFN savings by 3.8%, about $300 million a year. A 10% rise cuts them by 1.4%. The GKV-BStabG rebate change adds about 1.2% to savings. A 50% rise would add about $450 million a year to Medicaid spending, under 6% of projected MFN savings, but that scenario is not one of the three pre-specified scenarios.

Two illustrative cases in the preprint show how a German rise feeds through to the benchmark. Where Germany is the second-lowest price, a 25% rise lifts it above Denmark, so Denmark’s price of 40 becomes the benchmark and savings fall from 23 to 17 units, a 26% drop. Where Germany is the lowest price, a 25% rise moves it above France, the benchmark rises from 34 to 37.5, and savings fall from 23 to 19.5 units, a 15% drop. Each unit is a drug with a US list price of 100.

Who pays more

A 25% German rise would add about $6.2 billion (€5.5 billion) a year to GKV spending, against about $0.3 billion (€0.3 billion) to US Medicaid spending. The preprint puts the ratio at about $20 of German spending for each $1 of added US Medicaid spending. The top 20 patented medicines account for 50-60% of the added German spending.

The preprint discloses personal fees to the lead author from the National Association of Statutory Health Insurance Funds (GKV), which supplied aggregated utilisation data and reviewed a draft for factual accuracy. GKV’s own press release says GKV initiated the study with the Harvard Medical School research team, provided data access and further support, and financially enabled the study. The preprint says the authors had full control over design, analysis and interpretation.

Limitations and status

This is a preprint under peer review. The authors plan to submit it to a peer-reviewed journal, and the published version will be the version of record. The model is static and leaves out future dynamic effects and policy counter-responses. It assumes Germany adopts no price moratorium and no other provision that would limit the pass-through of price rises to statutory payers. Confidential AMNOG discounts were not modelled. A sensitivity analysis using estimated international net prices gave substantially similar results. The database was locked on 15 October 2026 and uses CY 2025 utilisation.

On whether higher German prices lead to lower prices for American patients, the preprint’s verdict is “not supported”. Under the modelled scenarios, higher German prices raise spending in both countries, and German payers bear about 20 times the added US cost.

Source: Thomas Hwang, Germany in US Most-Favored-Nation policy, preprint summary report (under peer review), 10 November 2026. Press release from GKV-Spitzenverband (German): Höhere Arzneimittelpreise in Deutschland lassen auch US-Arzneimittelausgaben steigen. Translated by the author of this article.