Pricing Pressure Redux: Biopharma’s IRP Overhang Returns

From 2018 proposals to 2025, the revival of International Reference Pricing (IRP) highlights enduring policy risk for drug developers navigating pricing scrutiny and investor skepticism.

Since first proposed in 2018, International Reference Pricing (IRP) has loomed large over the biopharma sector. Initially introduced by the Trump administration as a way to lower Medicare Part B drug costs by benchmarking U.S. prices to those abroad, the proposal evolved into the “Most Favored Nation” (MFN) model in 2020—prompting significant investor concern.

Biopharma equities, particularly the NBI and DRG indices, underperformed broader benchmarks following the original proposal. Companies adopted conservative pricing strategies and emphasized pipeline diversification to hedge against potential pricing headwinds. Industry sentiment remained cautious as firms like Regeneron and BioMarin acknowledged regulatory uncertainty, while Alnylam criticized the MFN order outright.

Though implementation stalled amid legal and political hurdles, the threat of IRP remained a policy wildcard. Now, in 2024–25, IRP has returned to the national spotlight as President Trump revives the issue, reigniting fears of regulatory overhang.

While the sector has shown resilience, adapting through volume-based growth and stakeholder engagement, drug pricing remains a durable political issue. Investors should continue to monitor IRP developments as a key macro risk for valuation and capital deployment in the biopharma space.

Risks

The resurgence of IRP under the Trump 2024–25 agenda renews regulatory risk for biopharma. While full implementation remains uncertain, investor sentiment could again be tested. Persistent policy overhang may pressure valuation multiples, especially for companies with high exposure to Medicare or premium-priced therapies in competitive categories.

Tignes, France. Hartaj Singh. Winter, 2022.

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Upcoming Newsletter Events

May 2025: Video podcast with an Industry Expert exploring potential ramifications of tariffs and the International Reference Pricing (IRP) model favored by the Trump Administration.

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About the Author

Hartaj Singh brings over 30 years of experience in drug development, corporate strategy, hedge fund management, and biotech analysis. With a career spanning top investment banks, Hartaj has been a highly ranked analyst, known for providing astute guidance on biotech investments for over a decade. His deep sector knowledge, honed through years of navigating the biotech landscape, is now being put to use to help investors capitalize on biotech opportunities.