What Potential Fallout Will MFN Policies Have?

With the launch of TrumpRx earlier this year, Americans got their first taste of how the administration is attempting to implement its most favored nation (MFN) pricing policies. Lindsay Bealor Greenleaf, head of market access policy strategy at ADVI, spoke with Pharmaceutical Executive about the current state of MFN and how the industry expects it to impact operations as more of the policies come online.

Pharmaceutical Executive: What potential fallout will MFN policies have?
Lindsay Bealor Greenleaf: The fallout from these policies lies squarely on the concerns around innovation and drugs launching in the future. There were some projections back in 2020, when the Trump led CMS proposed doing a MFN policy just for Medicare, Part B drugs. There was an American Action Forum projection back then that said just focusing on Part B with MFN pricing would result in 60 fewer drugs to launch over the next decade. That's just the Part B drugs.

We're always on the hunt for new projections like that, and some folks on our team are actually working on our own projection for what this might mean for launches going forward. I'll have some updated numbers for you soon, but you can imagine just 60 drugs being just the medical benefit of those physician administered drugs.

This is something that is being proposed, not just for those medical benefit drugs, but also on the pharmacy benefit side. It's concerning from an innovation perspective. So, that's the biggest fallout. The other thing to point out that manufacturers are trying to wrestle with here is the potential for these MFN Medicare policies to be finalized in the context of everything else that's going on.

We're often talking about MFN all day, but it's also inflation reduction act (IRA) all day. We're talking about IRA government negotiation, and the fact that there are 10 drugs with a negotiated price, or a CMS set price.

In 2027, there’s another 15 drugs, and then another 15 after that, We're going to have a lot of drugs subject to these negotiated/CMS set prices. That's having a huge impact on launch planning, R&D, and capital for new investments.

You also have layered on top of the IRA negotiation concerns the 340 B program. This is huge for our clients, and it's just not talked about enough. The 340 B drug discount program (where the majority of American hospitals and pharmacies contract with) have access to massive discounts, including statutorily mandated discounts that manufacturer must provide on an upfront basis, sometimes roughly 50% off the price of a drug.

As of today, one-in-four drugs flows through a 340 B entity. One-in-four drugs is subject to the statutory mandatory discounts.