BEFORE THE

United States Trade Representative

Washington, D.C.

 

In the Matter of

United States Trade Representative

Request for Comments Regarding Foreign Nations Freeloading on American-Financed Innovation (Docket No. USTR-2025-0011)

Comments of

Thomas A. Schatz

President

Citizens Against Government Waste

June 26, 2025

 

Citizens Against Government Waste (CAGW) is a private, nonprofit, nonpartisan organization dedicated to educating the American public about waste, fraud, abuse, mismanagement, and inefficiency in government.  On behalf of the more than one million members and supporters of CAGW, I offer the following comments regarding the United States Trade Representative’s request for comments on the proceeding titled “Regarding Foreign Nations Freeloading on American-Financed Innovation” (Docket No. USTR-2025-0011) as part of the agency’s implementation of President Trump’s Executive Order 14297 “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.”[1]

The U.S. has the most innovative biopharmaceutical industry in the world.  Project Warp Speed, which delivered safe and effective COVID-19 vaccines in an extraordinarily short period of time, was only one example of how pharmaceutical companies deliver vital live-saving cures and treatments.  Implementing a most favored nation (MFN) policy may seem like a smart way to lower the cost of prescription drugs for American consumers, but it would both fall short of that goal and have devastating consequences for the biopharmaceutical industry.  Importing European-style price controls will undermine the United States’ position as the global leader in biopharmaceutical research and innovation and threaten millions of American manufacturing jobs.

According to a November 2021 report by the Congressional Budget Office, the biopharmaceutical industry spent $83 billion on drug research and development in 2019.[2]  When adjusted for inflation, it is 10 times what the industry spent annually in the 1980s.[3]   Between 2010 and 2019, the number of new drugs approved for sale increased by 60 percent compared to the previous decade, with a peak of 59 new drugs approved in 2018.[4]

The amount of investment in research and development by American companies is due to the market-friendly approach that the U.S. has taken compared to countries in the European Union that have implemented price controls and other forms of government intervention.  In 1990, $16.7 billion was invested in biopharmaceutical research, with European countries contributing 59.2 percent of that total and the U.S. contributing the remaining 40.8 percent.[5]  By 2017, $95.7 billion was invested in research and development, with the U.S. making up 58.3 percent and Europe contributing the remaining 41.7 percent.[6]  Since the beginning of 2025, biopharmaceutical companies have committed to investing $270 billion in manufacturing and research in the United States over the next five to 10 years.[7]

MFN also fails to stop foreign freeriding of American innovation.  In President Trump’s first term, a February 2020 Council of Economic Advisers report found that U.S. consumers pay higher prices due to free-riding abroad and foreign price controls, and that reducing both would increase competition and lower drug prices for Americans.[8]   Adopting MFN would import European-style price controls and likely lead to a decrease in biopharmaceutical R&D that Europe experienced in the 1990s and 2000s while making future criticism of government price controls and socialized medicine more challenging.

Adopting MFN would also harm the American economy through a decline in research and development.  The biopharmaceutical industry is one of the leaders in U.S. manufacturing jobs, with more jobs than other industries like aerospace, coal, iron and steel.[9]  An August 11, 2020, coalition letter signed by 82 organizations including Citizens Against Government Waste expressed “grave concerns” with President Trump’s executive order on MFN in his first term and noted, “Medical innovation directly or indirectly supports 4 million jobs and $1.1 trillion in total economic impact, which will be threatened by importing price controls.”[10]  Investment would diminish drastically, and those jobs would be at risk if MFN is adopted.

Implementing price controls through MFN would also limit access to vital cures.  Patients in foreign countries that have government-run healthcare or government-imposed price controls have less access to medicine than American patients.  According to an April 2023 PhRMA study, patients in Organization for Economic Cooperation and Development (OECD) countries have access to only 29 percent of new medicines, while patients in the U.S. have 85 percent of new medicines.[11]  The study also found that patients in OECD countries wait an average of 41 months longer than patients in the U.S. for their government health plan to cover new medicines.[12]  If the U.S. imports European-style price controls, reduced access to medicines will follow and American patients who are the sickest and need vital medicines would be impacted the most.

CAGW urges the administration to reject MFN policies.  The adoption of MFN will undermine America’s position as the global leader in biopharmaceutical research and innovation, put American manufacturing jobs at risk, and fail to do anything to limit foreign freeloading on American innovation.  Rather than adopting MFN, the administration should reduce regulations, encourage free-market solutions, negotiate better trade deals, encourage U.S. innovation, and get foreign countries to pay their fair share.  That would deliver meaningful and lasting benefits to businesses, families, and patients.

 

[1] Office of the United States Trade Representative, “Request for Comments Regarding Foreign Nations Freeloading on American-Financed Innovation,” May 23, 2025, https://ustr.gov/sites/default/files/files/Press/Releases/2025/pharma%20FRN.pdf.

[2] Congressional Budget Office, “Research and Development in the Pharmaceutical Industry,” April 2021, https://www.cbo.gov/system/files/2021-04/57025-Rx-RnD.pdf.

[3] Ibid.

[4] Ibid.

[5] Citizens Against Government Waste (CAGW), “Most Favored Nation Policy is Unfavorable to U.S. Biopharmaceutical Research,” November 20, 2020, https://www.cagw.org/most-favored-nation-policy-is-unfavorable-to-u-s-biopharmaceutical-research/.

[6] Ibid.

[7] Randal Drummer, “Drugmakers plan $270 billion in US manufacturing investment,” CoStar News, June 10, 2025, https://www.costar.com/article/617910503/drugmakers-plan-270-billion-in-us-manufacturing-investment.

[8] Council of Economic Advisers, “Funding the Global Benefits to Biopharmaceutical Innovation,” February 2020, https://trumpwhitehouse.archives.gov/wp-content/uploads/2020/02/Funding-the-Global-Benefits-to-Biopharmaceutical-Innovation.pdf.

[9] CAGW, “CAGW Files Comments with Department of Commerce Regarding Pharmaceutical Drug Imports Under Section 232,” May 6, 2025, https://www.cagw.org/agency_comments/cagw-files-comments-with-department-of-commerce-regarding-pharmaceutical-drug-imports-under-section-232/.

[10] CAGW, “CAGW Joins Coalition Opposed to Trump Most Favored Nation Drug Pricing Executive Order,” August 11, 2020, https://www.ccagw.org/legislative-affairs/letters-officials/cagw-joins-coalition-opposed-trump-most-favored-nation-drug.

[11] PhRMA, “New Global Analysis Shows Patient Access Challenges Around the World,” April 12, 2023, https://phrma.org/blog/new-global-analysis-shows-patient-access-challenges-around-the-world.

[12] Ibid.