Navigating Most-Favored Nation & Other Regulatory Changes in Deal Making

Locust Walk examined how regional licensing trends are evolving and potential deal strategies to navigate uncertainty amid three converging regulatory shifts: the U.S. Most‑Favored Nation (MFN) Executive Order and proposed GLOBE/GUARD rules, the EU Pharmaceutical Package, and Japan’s NHI pricing reform. Together, these changes increase the risk that ex‑U.S. pricing decisions could cascade back into U.S. revenue.

1. Global pricing is becoming increasingly interconnected.
   U.S. MFN exposure, mandatory EU‑wide launches, and recurring Japanese price cuts mean that a single low ex‑U.S. price could materially compress U.S. pricing, making globally coordinated pricing strategy essential.
2. Regional deal activity is resilient, but geographically rebalanced.
   Deal volume and economics have held steady post‑MFN, though activity has shifted away from Europe toward Asia, where experienced partners remain active.
3. Deal structure can mitigate pricing risks.
   Thoughtful deal strategy across diligence, governance, economics, and termination provisions may help limit U.S. pricing exposure while enabling selective ex‑U.S. upside participation.

As policy complexity rises, disciplined deal design is central to sustainable regional partnering.

We welcome the opportunity to connect and discuss further.