Most Favored Nation Pricing Explained
On September 30, 2025, the Trump administration announced a Most Favored Nation (MFN) pricing deal with Pfizer as part of a broader effort to more closely align U.S. drug prices with those available in peer nations. Since the Pfizer announcement in late 2025, fourteen companies including AstraZeneca and Merck, among several others, have announced similar deals with the administration.
Most-Favored Nation (MFN) pricing refers to matching the lowest available price for a drug in peer nations. The various MFN pricing agreements have primarily applied to Medicaid and potential direct-to-consumer channels and has been framed as a way to narrow the gap between U.S. and international prices.
The policy arrived alongside plans for TrumpRx, a direct-to-consumer purchasing channel expected to facilitate MFN pricing for select drugs.
Limited MFN impacts on employer plans today
Given that Most Favored Nation pricing will only apply to Medicaid until the launch of TrumpRx, impact to Commercial plans is expected to be limited.
Two policy aspects are important for employers tracking potential plan impacts:
- Scope: As announced, MFN-level pricing is primarily focused on newer drugs going forward, within Medicaid and some yet-to-be-determined direct-to-consumer channels. It doesn’t directly change prices in commercial, ERISA, Marketplace, or Medicare plans today.
- Channel and distribution mechanics: Alongside MFN pricing, the administration announced TrumpRx, a direct-to-consumer cash-pay channel intended to showcase MFN-level pricing. Some early promotional discounts referenced “deal” pricing, which has been clarified or clearly compared to common commercial benchmarks like AWP or WAC.
Still, it is important to consider how MFN may act as a policy indicator. Even when private payers aren’t bound by the Center for Medicare and Medicaid Services (CMS) rules, CMS policy often sets reference points that could eventually influence coverage, pricing, and benefit design by PBMs across the commercial market.
The trajectory of Most Favored Nation pricing policy in 2026
As of Jan 1, 2026:
- Scope : MFN applies to Medicaid and some direct-to-consumer channels.
- Pharmaceutical manufacturer Involvement: Pfizer announced the first MFN deal, with AstraZeneca and Merck following suit. Since then, 14 additional pharma manufacturers have announced their own pricing agreements with the Trump administration.
- Implementation specifics: Pricing methodology and specific implementation timelines remain undisclosed as of the original announcement.
- Drug channel effects: Potential revenue pressure may be applied to retail, mail-order, and wholesalers if consumers are encouraged to purchase medications directly from manufacturers. States may need to adjust Medicaid dispensing reimbursement to maintain medication access.
Practical steps to take now
As we monitor potential policy updates and impacts on the pharmacy benefits space, there are several contract language considerations you can cover today with your PBM to prepare for a possible impact of MFN pricing:
- Inflation protection language: Are inflation-linked rebates or guarantees clearly defined and benchmarked to verifiable indices?
- Rebate pass-through definitions: How specific are “100% pass-through” policies (admin fees, price-protection, inflation penalties, other value streams included/excluded)?
- Market check rights and cadence: Check for rights to reopen pricing based on observed or proposed external market shifts (manufacturer pricing participation, channel mix changes).
- New drug launch provisions: Clarify how initial discounts or guarantees apply for pipeline products (especially for specialty drugs) during the first 6–12 months.
- Formulary governance: Request visibility into material formulary changes by your PBM with documented clinical and economic rationale.
- Audit and data rights: Check for the ability to validate unit costs, rebates, inflation penalties, and any “new category” discounts that might emerge under MFN-influenced arrangements.
While there are no direct changes yet to employer Commercial pharmacy benefit plans, the emerging Most Favored Nation pricing arrangements could drive broader adoption or become an informal reference in commercial negotiations. If pharma manufacturer participation widens, there could be ripple effects in list-price strategies, launch pricing for specialty drugs, and rebate mechanics.
Employers don’t need to predict the policy’s eventual effects, but should focus on securing contracts and establishing oversight that can remain steadfast in the face of any major changes over time.
Frequently Asked Questions (FAQ)
Does Most Favored Nation (MFN) pricing change my plan’s drug prices today?
No. When announced on 9/30/2025, MFN applied only to Medicaid. Commercial and employer plans were not included. Subsequent announcements have not directly targeted commercial plans.
Which pharmaceutical manufacturers offer MFN pricing?
Currently Pfizer, AstraZeneca, Merck, Eli Lilly, Novo Nordisk, Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Gilead Sciences, GSK, Merck & Co., Novartis, Roche’s Genentech and Sanofi have announced MFN pricing agreements on select drugs.
Why are TrumpRx MFN discounts so big compared to AWP/WAC?
Some advertised figures reference a “deal price” rather than common industry benchmarks, so they’re not directly comparable to your plan guarantees. The discounts are on the list price; PBMs also typically negotiate discounts in the form of rebates to reduce net cost.
Could MFN pricing agreements eventually influence private plans?
Possibly. CMS policies often set benchmarks that ripple into the commercial market, particularly if more manufacturers participate or if MFN-style references surface in negotiations.
What should I do right now?
While there is no immediate impact to Commercial plans, you can take proactive steps such as reviewing your contract definitions, market-check rights, rebate pass-through, audit/data rights, and new-drug launch provisions with your PBM.
This FAQ provides general information and does not constitute legal advice.
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