The U.S. market's high prices create the large profit pool necessary to fund risky drug development. If the U.S. adopted price negotiation like other countries, the global incentive for pharmaceutical innovation would shrink, resulting in fewer new drugs being developed worldwide.

Initial panic over the MFN drug pricing scheme was based on pegging U.S. prices to the lowest in the industrialized world. The actual proposal is far less drastic, targeting the second-lowest price among a small cohort of high-income nations (G7 plus Denmark and Switzerland), a significantly less onerous benchmark.

Facing public outrage, Mylan offered a "generic" EpiPen at half price. However, due to convoluted drug pricing economics, this move quelled the controversy while allowing the company to earn nearly the same amount of profit per device. It exposed the illusion of consumer savings in a broken system.

China holds a choke point on the global pharmaceutical supply chain, being the sole source for key ingredients in hundreds of US medicines. This leverage could be used to restrict supply, creating shortages and price hikes, opening a new, sensitive front in geopolitical tensions.

While MFN pricing is seen as a major threat, it could have an unexpected positive effect. It would force companies launching new drugs to establish a GDP-adjusted global price from the start, ending the current system where the U.S. effectively subsidizes lower prices elsewhere.

Major pharmaceutical companies are now willing to deploy the "nuclear option" of pulling planned R&D investments to express displeasure with national drug pricing policies. This tactic, seen in the UK, represents a direct and aggressive strategy to pressure governments into accepting higher prices for innovative medicines.

To fix the R&D funding imbalance, the CEO proposes a 'one fair price' system. A drug would have one US price with no rebates, and a price in other developed nations would be indexed to their GDP per capita.

Historically a Democratic focus, drug pricing policy has been co-opted by Republicans, making it a bipartisan political issue. This alignment creates a stable policy overhang and sustained uncertainty around pricing and innovation, deterring generalist investors regardless of which party is in power.

A centrist solution to high drug prices involves combining ideas from both political aisles. Oliver Libby suggests allowing Medicare to negotiate prices (a left-leaning idea) while also extending patent life for drug companies (a right-leaning idea), thus lowering costs without killing the incentive for innovation.