Healthcare Reform
In the U.S., the EU and other foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare systems that could affect our future results of operations. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For example, the ACA, effective since March 2010, is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
Healthcare reforms that have been adopted, and that may be adopted in the future, could result in further reductions in coverage and levels of reimbursement for pharmaceutical products, increases in rebates payable under U.S. government rebate programs and additional downward pressure on pharmaceutical product prices. As discussed above, in August 2022, the IRA was enacted codifying, among other things: a Medicare drug price negotiation program, under which HHS directly negotiates the selling price of statutorily specified number of Part B and Part D drugs and biologics each year; inflation rebates which penalizes drug manufacturers that increase prices of Medicare Part B and Part D drugs at a rate greater than the rate of inflation; and a redesign of the Part D benefit. The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties. The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. To date, none of the legislative attempts to extend the subsidies has been enacted. These IRA provisions began taking effect progressively starting in 2023, although certain policies have been subject to legal challenges. For example, the provisions related to the negotiation of selling prices of high-expenditure single-source drugs and biologics have been challenged in multiple lawsuits. Additionally, we cannot predict whether the U.S. Congress will further amend the IRA or if the government will adopt new or different interpretations of the law in future guidance or rulemaking. However, at this time, the Trump administration is continuing to implement the IRA and to defend the law in litigation. While it is unclear how the IRA will be implemented in the future and the outcome of the litigation, it will likely have a significant impact on the pharmaceutical industry.
In addition, the Trump administration has taken several steps to try to align U.S. drug prices with drug prices in other countries through an approach known as most favored nation (MFN) pricing. For example, on May 12, 2025, the current Presidential administration published an executive order which, among other actions, instructed HHS to communicate MFN price targets. The executive order also directed certain steps if “significant progress towards [MFN] pricing … is not delivered.” On July 31, 2025, the U.S. President issued letters to 17 pharmaceutical companies (not including argenx), calling on those manufacturers and “every manufacturer” to take the following steps within 60 days: extend MFN pricing to Medicaid for all of their existing drugs; guarantee Medicare, Medicaid, and commercial payors receive MFN pricing for newly-launched drugs; return increased revenues abroad to American patients and taxpayers; and participate in direct-to-consumer or direct-to-business distribution models to provide “high-volume, high rebate” drugs at MFN pricing. Certain manufacturers have entered into direct agreements with the government.
On November 6, 2025, CMS announced the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model under its Center for Medicare and Medicaid Innovation authority (CMMI). The GENEROUS Model is a voluntary model that tests the impact of CMS-facilitated supplemental rebate agreements that align the Medicaid net price with a defined MFN price. In December 2025, CMS issued the Global Benchmark for Efficient Drug Pricing (GLOBE) Model and Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model proposed rules under its Center for Medicare and Medicaid Innovation authority. The GLOBE and GUARD models would require manufacturers to pay additional rebates for certain drugs based on the difference between the Medicare price and the price in market basket countries. CMS proposes that the agency would apply the new rebate requirement to utilization by approximately 25% of Medicare Part B fee-for-service enrollees (under GLOBE) and 25% of Medicare Part D enrollees (under GUARD). It is uncertain if these proposed rules will be finalized and if they are, how they will impact our business.
Additionally, in Congress, there are pending legislative proposals that, if enacted, would require MFN pricing in certain healthcare programs. We cannot predict if any of these legislative proposals will be enacted, how they would be implemented, and how they could impact our business.
We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S. federal government will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
Further, legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals, if any, of our product candidates, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing conditions and other requirements.
Individual states in the U.S. have also become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, affordability review boards, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our products or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.
In international markets, reimbursement and healthcare payment systems vary significantly by country (including across the EU’s individual member states), and many countries have instituted price ceilings on specific products and therapies. Future political, economic, and regulatory developments may further affect the ability of pharmaceutical companies to profitably commercialize current and future products.