Pharma executives are used to navigating complexity, but few periods have tested their judgement like the present. As Brendan Shaw writes, between Washington’s renewed push for “most favoured nation” (MFN) drug pricing, fresh waves of US tariffs, and a volatile global policy mood, the rules of engagement for global pharma are being rewritten in real time. CEOs are learning that in a world of instant policy reversals and political brinkmanship, sometimes the bravest decision is to keep a cool head.

“Good decisions come from experience. Experience comes from making bad decisions.”

Mark Twain

“You can’t make decisions based on fear and the possibility of what might happen.”

Michelle Obama

“God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and wisdom to know the difference.”

Serenity Prayer

Spare a thought for the CEOs of global pharmaceutical companies these days.

They don’t often get a lot of sympathy, but pharma CEOs must be scratching their heads and trying to work out the best way forward given everything that’s going on at the moment.

Uncertainty personified

Five years ago, I speculated in this publication that MFN pricing could ‘get messy’.

Today, as the second Trump Administration has another go at implementing its most favoured nation (MFN) medicine pricing policies and tariffs, it appears the messiness is now getting real.

In the last few months, we’ve seen various US government pronouncements and sudden unexpected statements affecting our embryonic understanding of how the MFN provisions and US tariffs will affect the business environment for companies.

The interpretation of what MFN means, how it will interact with recently announced US pharmaceutical tariffs, what sort of strategies pharmaceutical companies can use to plan around this, and the policies’ broader impact on global health have led to many ‘unknowns’.

Even in the last few weeks, we have seen reinterpretations from commentators, new ‘deals’ negotiated between the Trump Administration and individual pharmaceutical companies, and exemptions from tariffs that all leave more questions than answers.

Identifying the reasons why the US Administration is doing this is complicated. Is it to ensure Americans pay less for medicines, or to attract more pharmaceutical company investment in the US, or to ensure sovereign manufacturing capability, or to get other countries to help fund the ‘Bill Beautiful Bill’ tax cuts? Or is it all of these reasons?

All of this is coming on top of fundamental disruption and changes going on inside the industry itself, whether that’s changes in CEOs, variable revenue streams, corporate restructurings and disruptive new technologies all coming at the same time.

I suspect there’s more than one CEO taking a pause and having a few deep breaths at various times these days.

Implications for global health

The implications of the US Administration’s MFN and tariff policies for global health policies are yet to become clear.

One thing we don’t know yet is how other countries will react to these moves. Already, we’ve seen some countries like the United Kingdom potentially start to pivot to some sort of pricing reforms. The European Union has been urged by pharma companies to maintain a competitive business environment in the face of US threats.

On tariffs, up until Donald Trump’s announcement of 100% pharma tariffs in late Septembe,r the ‘clear thinking’ on the EU side was that European pharmaceuticals were protected from large-scale tariffs by its agreement with the US Administration earlier this year. However, Trump’s September announcement caused uncertainty about future tariff rates in Europe and Japan. Every day, a new beginning …

Before this year, the direction of travel in global health policy had been for a reduction in tariffs. Various countries, including the United States, have previously agreed to keep tariffs on medicines at zero through the World Trade Organization Agreement on Trade in Pharmaceutical Products. This agreement is based on the realisation that tariffs increase the prices of medicines. Eliminating tariffs helps achieve lower taxes for patients, consumers and health funders and better health care. New US tariffs on pharmaceuticals risk undermining this policy direction.

Then, of course, is the impact of the MFN pricing policies. There are more questions than answers about how these will be implemented in the United States, what impact it will have on pricing in other markets, and how other countries will react to US pricing policies over time. There are questions about whether what the US Government is proposing is even legal, and when and how it would be implemented. It’s also not clear how many countries will agree or respond to the US Administration’s policies.

Moreover, while the US MFN pricing policy is apparently aimed at high-income, developed countries, there must be questions about how such policies might impact companies’ ability to provide lower prices in middle- and lower-income countries through tiered or differential pricing. Companies facing lower revenue or increasingly volatile policy environments may back off on initiatives to provide cheaper prices in lower-income countries, in part due to more uncertain pricing structures and business conditions. Without some sort of policy protection, the uncertainties for companies must be increasing in this space.

Implications for pharma companies

For CEOs and the pharmaceutical companies they lead, the rapid and variable landscape of MFN and tariffs has quickly become a textbook case study of organisational decision making under uncertainty.

Whether it is internal company discussions on global pricing strategy or governments trying to assess the impact of US policies on their own health systems, managing uncertainty has become the norm. Making decisions in this space, or sometimes not making decisions, has become a management skill in its own right.

Getting to grips with this is as much an art as a science. I can still hear the questions of my business school professors echoing in my mind as we all feverishly try to make sense of the evolving policy and business landscape in real time. “Are you making good decisions?”.

When the world changes on a rhetorical flourish in an Executive Order, when tariff rates escalate after offhand remarks on Air Force One, or when share prices fall on the back of a comment on social media, it makes business decisions all the more difficult.

How companies assess the landscape of options and make the best decisions based on limited information and increasing uncertainty is important.

Various decision-making frameworks have come and gone over the years in the business and management literature. These have all been designed to help companies make the best decisions they can in the face of uncertainty.

Whether it’s using a VUCA framework (Volatility, Uncertainty, Complexity, Ambiguity), or ‘slow thinking vs fast thinking’ from Daniel Kahneman, SWOT analysis, or even the Serenity Prayer, such approaches can provide at least some guidance for execs trying to make sense of the rapidly evolving policy and business environment in pharmaceuticals.

Ultimately, some companies may choose to ‘pause’ their investment decisions or market entry strategies in other countries because of the uncertainty. At one level, one could understand why some companies might do this.

However, there is also the risk that the ‘pause’ may continue indefinitely. Companies may miss out on market opportunities, revenue and investment opportunities out of a fear of making the wrong decision at precisely the time when there may be no single ‘right’ or ‘wrong’ decision.

Moreover, at a point in time, sometimes the best decision is not to make any changes or even not make a decision. Deciding to stay the course and do nothing different can itself be a strategy, as demonstrated by AFC Richmond in the series Ted Lasso when the team are a man down and doesn’t change their normal game plan.

A cool head, a steady hand and the occasional laugh might be the way CEOs can navigate all of this going forward.

One suspects this is how things are going to be for some time to come.

Brendan Shaw is the Principal of Shawview Consulting and an Adjunct Professor at the Sydney Pharmacy School, Faculty of Medicine and Health, at the University of Sydney.