After President Donald Trump’s administration took office in early 2025, a series of policy changes have directly impacted the pharma sector.

From tariffs and onshoring initiatives to Most Favored Nation (MFN) agreements, companies are adjusting their practices to strengthen their position in the lucrative US market.

Given the scale of these developments, CEOs and executives are closely monitoring the news, says Kit Conklin, senior vice president of Risk & Compliance at Exiger, and an advisor involved in the creation of the BIOSECURE Act.

“I don't have to educate executives about policy issues anymore. It's been an eye-opening year for CEOs and senior leaders at pharma companies and medical device companies.”

MFN could lead to market strategy switch

Arguably, one of the biggest developments in the US space in 2025 has been MFN. The executive order, which aligns drug prices in the US with other developed countries, would see drugs put onto TrumpRx,gov, a government-led direct-to-consumer (DTC) platform.

John Riddle, managing director of healthcare investment at Brown Gibbons Lang (BGL), an independent investment bank and financial advisory firm, believes that MFN is set to be one of the more impactful developments. He believes that policies that bring down drug spending are shaping key industry trends, prompting companies to be more selective in their investments, especially considering the upcoming patent cliff.

“Big candidates that are coming off patent certainly drive a need to develop new blockbuster drugs and spend money, while at the same time, these drug companies are potentially under pressure for pricing. These companies still have a lot of money from these blockbuster drugs, but it's how they fund development,” says Riddle.

As MFN utilises reference pricing from other developed nations, there are questions as to pharma’s strategy for new drugs coming to the market. Dr Maximilian Vargas, VP of evidence and access strategy at Certara, a drug and device modelling solution company, believes that pharma companies may rethink their launch strategies to retain higher prices in the US to gain return on R&D expenditure.

“Companies may want to avoid or delay countries that might fall into the reference basket for MFN, which then makes countries that are outside that reference basket much more attractive,” Vargas explains.

This is not an easy solution, however, as non-reference countries will have a lower population and lower revenue. “That would be more of a strategy to preserve the US core of price and revenue,” Vargas adds.

Another strategy, which has already been implemented by companies like Eli Lilly, is to increase the price in reference countries to preserve some of that US price. After the announcement of MFN, Lilly increased the price of its diabetes and weight loss drug Mounjaro (tirzepatide) in the UK.

While Lilly has managed to do this, Vargas said it is difficult to increase the price of existing products, but it could be an avenue that pharma considers with new candidates.

“If you launch high outside the US in a reference market, or what's perceived as high by the HTA system, you could just give a confidential discount, to bring that down to a level that maintains access for that market, but then there's some questions around whether these prices would need to be disclosed which would breach that agreement,” Vargas says.

One of the main areas in which MFN is likely to impact is rare disease, Vargas adds, stating that due to low patient numbers and high R&D costs associated with the development of these candidates, partially due to needing a higher volume of sites to recruit patients, it is vital that companies are able to recuperate those costs, which will be more difficult if they fall into MFN and reference pricing.

Onshoring efforts by all-sized pharma

Another huge movement in the US has been the push for onshoring manufacturing, a movement spurred by calls by both the administration and tariffs.

While onshoring is something which is being undertaken by pharma companies of all sizes, Matt Flath, SVP of Northeast Science and Technology Center, a science and technology campus in New Jersey, does not believe this is solely related to the Trump administration’s requests.

“This is something that has been brewing for a while, but the Trump administration has pushed it by combining the company's concerns over BIOSECURE with potential tariffs and more direct financial kind of impacts of not manufacturing onshore in the US,” Flath explains, adding that even contract development and manufacturing organisations (CDMOs) are also seeking onshore options in the US.

This opinion is also held by Peter Walters, a fellow in advanced therapies at CRB, a firm which offers engineering, architecture, construction, and consulting for life science companies. “It is very unlikely that tariffs were announced and those organisations chose to pivot on a dime to invest billions and billions. I think those investments were already planned, and they’re taking that pre-planned investment and rebranding all of that smartly to curry favour with the administration,” Walters says.

Flath views the move to onshoring as positive for the industry, making it “more resilient to global supply chain interruptions”, especially considering BIOSECURE, which is now part of the US National Defense Authorization Act for Fiscal Year 2026 (NDAA).

Looking ahead to 2026, Flath expects more companies to conduct more rigorous due diligence in identifying locations and establishing onshore facilities, but many are still erring on the side of caution due to uncertainty.

“The actual decision to build the facility will probably be dragged out a little bit until there's more clarity about what the final shape of the laws and the tariffs will be,” Flath adds.

This is not just something that is impacting manufacturing for the market, Flath notes, stating that companies are also seeking to onshore research and development in response to the administration's request.

“While some may use a third-party to run certain research processes, some are now bringing that in-house. This shows there is concern over not just the supply chain, but also the research chain,” Flath concludes.

Hesitancy remains over BIOSECURE Act

Conklin agrees that BIOSECURE is aligned with onshoring efforts, stating that incentives are likely to encourage companies to align manufacturing with Western values, as financially it will be difficult for them to compete.

“There is going to be a period of one to five years for some of these medications and some of these precursors to be reassured. Western companies cannot economically compete against [Chinese] companies that use forced labour or have no environmental standards and that do not comply with global health standards for clinical trials or other things,” Conklin says.

Riddle said that there is still hesitancy by investors and lenders as moves are being made away from China while they await more clarity on the impact.

R&D left vulnerable?

Questions remain over which parts of pharma businesses will be most affected by reduced revenues from lower drug prices and higher costs due to onshoring manufacturing.

While many believe that R&D is safe due to its importance for future-proofing companies, some believe this could be a space that is under threat.

“We're pulling dollars out of the system, so where is pharma going to find those dollars? They could think about it in two ways. There's taking the using the innovation argument and saying, well, our most costly piece is probably the innovation engine, R&D, because there are a lot of lost bets there, and you never get those dollars back".

"I suspect that the long strategic view is going to prevail, and that pharma and biotech know they need to be producing or purchasing innovation. Therefore, I believe we will see preservation of the R&D dollars and cuts will be made somewhere else,” Vargas says.

This investment, however, will likely be more considered as to what kinds of assets pharma looks to develop. “We will see more focus on projects where there's true clinical innovation that is taking a completely underserved population,” says Vargas. “This will reduce the number of ‘me too’ products because cost pressures may make companies consider whether it is worth venturing into an established market. They will want to focus R&D dollars on true game changers.”

Others believe the impact could be harder on R&D, with Walters saying that it could be the hardest squeezed, but this will be balanced, as Vargas says.

Walters concludes that while pharma companies are making efforts to avoid passing income losses onto patients, there are clear limits to what can be cut. “You can’t just squeeze R&D, as companies rely on developing new pipeline products. I think that in the next five years, we will see a decrease in clinical trial programs, especially in Phase I, which is unfortunate, because that’s the level where you really see the great innovations.”