Shots:
- U.S. tariff shifts are forcing pharma manufacturers to accelerate reshoring, reduce duty exposure, and stabilize pricing, fueling renewed investment in onshore final manufacturing, Most Favored Nation pricing strategies, and selective direct-to-consumer pilots to secure tariff relief amid policy volatility
- As pricing, reimbursement, market access, and trade regulations evolve, companies are prioritizing late-stage, lower-risk assets while scaling financial modeling, forecasting, and compliance infrastructure to navigate rapid policy and payer-driven disruption
- In this PharmaShots interview, Jesse Mendelsohn, Senior Vice President at Model N, breaks down how regulatory complexity, PBM consolidation, and supply-chain fragility are reshaping pharma strategy—pushing manufacturers toward data-driven decision-making, proactive policymaker engagement, and patient-access protection in a volatile U.S. market.
Saurabh: How are pharma manufacturers adapting to recent US tariff policies, and what impact are these measures having on drug pricing and supply chains?
Jesse: Pharma manufacturers are taking a two-pronged approach to tariffs. Many are shifting more final assembly and fill/finish operations to the U.S. through contract manufacturing, similar to how automakers avoid tariffs by localizing production. This strategy means duties often apply only to active pharmaceutical ingredients (API) and components, not finished drugs, helping blunt downstream pricing effects. At the same time, most large players indicate they can absorb some tariff-related costs through efficiency gains and existing U.S. capacity, so broad price spikes tied to tariffs alone are unlikely.
Manufacturers are also increasingly entering into agreements with the Trump administration whereby they agree to offering Most Favored Nation (MFN) pricing to Medicaid and/or launch direct-to-consumer (DTC) selling models in exchange for tariff relief.
Still, the constantly shifting tariff policies have created uncertainty and could delay or alter planned investments. Manufacturers’ main concern is unpredictability. Too much policy noise raises compliance risks, investment hesitation and ultimately threatens stability in patient access.
Saurabh: What elements of the most-favored nation policy still influence today’s drug pricing reforms?
Jesse: The recent Pfizer drug pricing deal moves the most-favored nation (MFN) policy from theoretical influence to real-world pressure. The MFN executive order lacked enforcement measures, making adherence optional. But Pfizer’s agreement sets a precedent.
The manufacturer committed to selling drugs to Medicaid patients at the lowest price offered in other developed nations and guaranteed MFN prices on some new drugs for all major payers. In exchange, they received a three-year grace period on pharmaceutical-specific tariffs, as long as the company continues to invest in U.S. manufacturing.
This development puts pressure on other manufacturers to reach similar deals.
Saurabh: How are federal pricing and reimbursement reforms influencing R&D investment decisions in the pharma industry?
Jesse: Executives describe this as the “age of uncertainty,” where unpredictable policy shifts force more conservative portfolio management. In an effort to maintain margins, manufacturers are steering late-stage investments toward therapeutic areas or channels less exposed to rebate resets and Medicare price negotiations, while de-emphasizing programs vulnerable to sharp reimbursement cuts.
Companies are also putting more money into financial infrastructure like contract analytics, enhanced revenue management processes, and data systems to see how new pricing rules will affect margins. This budget allocation potentially limits how much manufacturers can spend on early-stage or higher-risk programs. Instead, firms are focusing R&D on areas less exposed to Medicare negotiations and reimbursement cuts. Science still drives the pipeline, but policy pressures now shape which projects move forward.
Saurabh: What major challenges will the manufacturers face in balancing compliance with evolving US trade and healthcare policies while maintaining patient access to medicines?
Jesse: Manufacturers face several challenges as trade and healthcare rules keep shifting. Tariffs, Medicare price negotiations, Medicaid best price rules and 340B changes are moving quickly, raising the chance of mistakes that can bring heavy penalties. Contracts are also getting harder to manage as PBMs expand into group purchasing, which blurs the line between buying and reimbursement obligations. On top of that, loopholes in 340B, such as contract pharmacies using cash flow advantages, add even more uncertainty.
On the supply side, moving some production to the U.S. helps reduce tariff risk but does not remove reliance on imported ingredients, leaving gaps in the chain. Companies have to juggle all this while keeping patient access programs running and making sure compliance processes do not accidentally limit supply or delay payment. At the center of it all is the need for clean, reliable and transparent data so they can stay compliant and protect patients at the same time.
Saurabh: Do you see pharma companies changing how they engage with policymakers in light of growing scrutiny around drug pricing and global trade policies?
Jesse: Industry engagement is becoming more assertive and data-driven. Manufacturers are increasingly focused on showing policymakers the downstream consequences of reforms such as Medicare’s MFP, which can cascade into Medicaid, state, and 340B pricing. They are also pressing for more process discipline, urging government agencies to slow the pace of change and provide predictable rulemaking cycles that allow companies to adapt without risking penalties.
Pharma is highlighting its commitments to affordability and patient access programs to counterbalance political scrutiny. Tariff rhetoric and rapid-fire policy shifts are prompting companies to emphasize the need for stability in both healthcare and trade policy, arguing that uncertainty discourages investment. It’s clear that manufacturers are engaging earlier, using stronger evidence and applying more pressure for regulatory predictability
About the Author
Jesse Mendelsohn is a Senior Vice President at Model N, the leading revenue optimization and compliance provider for life sciences and high-tech manufacturers. With over 20 years in the industry, Jesse is an expert in pharmaceutical pricing, revenue, payer management, and government regulation, including Medicaid and state pricing laws.
Related Post: Predicting 2025 Trends: Jesse Mendelsohn from Model N in an Illuminating Discussion with PharmaShots
