The Drug Pricing Environment at an Inflection Point

What you’ll learn:

The drug pricing environment is undergoing a significant structural reset. Manufacturers used to manage government rebate obligations, formulary negotiations, and copay program economics as separate, discrete pressures. Now those pressures are converging into a different operating model. Government pricing across multiple programs, commercial transparency mandates, and international reference pricing are all moving at once. The question for manufacturers is how fast this change hits and on how many fronts.

The most concrete marker of this shift is the Inflation Reduction Act’s maximum fair price (MFP) program, which moved from a policy-planning exercise to operational reality in early 2026. Negotiated prices for the first 10 Medicare Part D drugs took effect that year, representing reductions of at least 38% off 2023 list prices, and the program is already in its third negotiating cycle, with 15 additional Part B and Part D drugs selected for prices taking effect in 2028. That third cycle is notable because it marks the first time physician-administered Part B drugs are subject to negotiation, extending MFP dynamics into infusion and provider-administered specialty products in ways the first two cycles did not.

The program’s cascading spillover into Medicaid Best Price and 340B ceiling pricing means the financial implications extend well beyond Medicare. Manufacturers need to take a strategic approach to their launches and now consider indication sequencing, launch timing, and orphan-designation strategy. They need a trusted partner to address any blind spots as they enter the market under this new legislation.

Running in parallel with MFP is the Trump Administration’s most-favored-nation (MFN) pricing initiative. Following the May 2025 Executive Order directing manufacturers to align US pricing with international peers, the Administration secured voluntary pricing commitments from 16 major manufacturers by January 2026. Furthermore, some manufacturers have already agreed to price certain future medicines in the United States at or below MFN pricing. Three MFN-based models have since been introduced across all major government programs: GENEROUS for Medicaid, now operational; and GLOBE and GUARD for Medicare Part B and Part D, respectively, with final rules expected to take effect as soon as October 2026. Taken together, these models aim to simultaneously implement international reference pricing across the two largest government payers in the United States. With such a rapid transition potentially coming into effect, manufacturers need to understand the implications of how GENEROUS, GLOBE, and GUARD will affect where pricing and access concessions are granted and how manufacturers should adjust their strategy for both on-market and pipeline products.

At the same time, the commercial pricing architecture that has defined the specialty drug market for decades is also under significant pressure. The Consolidated Appropriations Act of 2026, signed in February, mandates a 100% pass-through of rebates to plan sponsors and the decoupling of pharmacy benefit manager (PBM) compensation from drug prices in Medicare Part D, with implementation beginning in 2028.

The practical effect appears to be accelerating the shift already underway by moving away from gross-to-net contracting, driven by rebate depth and toward a model in which net price transparency and demonstrated outcomes carry more weight.

Evidence generation that will support demonstrated outcomes may be an avenue to mitigate some of this exposure. Plan sponsors are increasingly signaling their willingness to accept lower rebates in exchange for tighter utilization-management controls, and those exclusion strategies are now being executed with conviction when formulary design and clinical management are aligned. As the tightening of formularies continues, pricing needs to align with where the market is providing access as rebates move to full pass-through.

Manufacturers that continue to treat pricing primarily as a contracting and rebate-management function are increasingly exposed on more fronts than their current models capture. Responding to each new rule in isolation will be insufficient. Manufacturers should map how changes to MFP, Medicaid Best Price, 340B, commercial rebates, and emerging MFN models affect both on-market and future products. The analysis should cover net price, launch economics, global price corridors, and portfolio value.

Pricing also needs to move earlier in cross-functional planning. Launch decisions, evidence generation, formulary strategy, and channel design can no longer be made independently from one another. Scenario planning across these decisions can help identify unintended trade-offs and reveal where evidence or access plans need strengthening. In practice, this means pricing, market access, medical, and global strategy working from one scenario model, with a single owner accountable for portfolio-level price corridors.

The manufacturers best positioned for this environment will be those that turn policy change into an integrated enterprise strategy, one that protects value, supports patient access, and creates a clearer path from pipeline planning to sustainable commercialization.

Quick Reference Guide

Inflation Reduction Act (IRA). 2022 law that created Medicare’s authority to negotiate drug prices, among other provisions.

Maximum Fair Price (MFP). The negotiated price ceiling for selected drugs under the IRA’s Medicare Part D and Part B negotiation program.

340B Drug Pricing Program. Program requiring manufacturers to sell outpatient drugs at a discount to eligible hospitals and clinics serving low-income patients.

Most-Favored-Nation (MFN) Pricing. Policy directing US drug prices to align with the lower prices paid in peer countries.

GENEROUS. MFN-based pricing model for Medicaid; currently operational.

GLOBE. MFN-based pricing model for Medicare Part B; final rule expected as soon as October 2026.

GUARD. MFN-based pricing model for Medicare Part D; final rule expected as soon as October 2026.

Consolidated Appropriations Act of 2026. Law signed February 2026 mandating full rebate pass-through to plan sponsors and delinking PBM compensation from drug prices in Part D, effective 2028.