What Is MFN?
A Most Favored Nation (MFN) drug pricing policy would tie certain U.S. drug prices (most likely within Medicare) to the lowest price paid for the same product in a basket of comparable, economically advanced countries.
Rather than relying solely on domestic benchmarks such as Average Sales Price (ASP), MFN models use international reference pricing (IRP) to cap U.S. reimbursement levels
MFN has moved rapidly from policy proposal to operational reality. The Trump Administration has reached voluntary MFN pricing agreements with 17 of the largest pharmaceutical manufacturers, representing 86% of the branded drug market, and is actively working with Congress to codify those agreements into law. In parallel, CMS has proposed two mandatory Medicare MFN payment models–GLOBE (Part B) and GUARD (Part D)–with implementation beginning as early as October 2026. In a post-IRA environment where Medicare negotiation is already reshaping pricing dynamics, MFN is no longer a future risk to model–it is a present-tense strategic challenge.
Why MFN Matters for Market Access
MFN is not simply a pricing policy. It fundamentally changes the interplay between global pricing strategy and U.S. access dynamics.
Historically:
- U.S. pricing has been largely insulated from international pricing decisions
- Market access strategy in the U.S. focused primarily on payer mix, contracting, and value demonstration domestically
Under MFN:
- Global pricing decisions directly influence U.S. reimbursement
- Ex-U.S. launch sequencing and pricing strategy become U.S. access decisions
- Market access planning must shift from domestic optimization to global coordination
This creates both operational complexity and strategic risk.
Key Market Access Impacts
1. Global Launch Sequencing Becomes a U.S. Access Lever
Now that U.S. Medicare reimbursement is being pegged to the lowest international price:
- Early lower-price agreements in EU markets could reduce U.S. reimbursement ceilings
- Delays in ex-U.S. launches may become more common
- Manufacturers may prioritize price stability over speed to global access
Market Access Implication:
Launch sequencing, traditionally a commercial strategy decision, becomes a critical component of U.S. access preservation.
This dynamic is already playing out. The December 2025 U.S.-UK pharmaceutical pricing agreement increased UK net drug spending through reduced clawback rates and a higher cost-effectiveness threshold–an early, real-world example of MFN exerting upward price pressure in reference markets. Manufacturers should monitor whether foreign market launch sequencing shifts as this pricing environment evolves.
2. Increased Pressure on Gross-to-Net Strategy
MFN is now effectively capping top-line pricing. The White House projects a 30% decrease in net prices for drugs in the U.S. over 10 years, with $529 billion in aggregate domestic savings–with the largest impact concentrated in roughly 150 single-source products in antipsychotics, antiretrovirals, antineoplastics, anti-inflammatory biologics, and antidiabetics. Specific implications include:
- Reduced flexibility to offset domestic rebates with higher list prices
- Potential compression of net revenue if international reference prices are significantly lower
- Greater scrutiny of contracting structures across both Medicare and commercial segments
Market Access Implication:
Manufacturers will need tighter integration between pricing, contracting, and policy teams to manage cross-market impacts
3. Impact on Medicare Negotiation Leverage
As MFN is now layered onto IRA price negotiation:
- The “maximum fair price” ceiling could be influenced by international pricing floors
- Negotiation dynamics may shift toward even greater federal leverage
- Therapeutic classes with strong ex-U.S. HTA pressure (e.g., oncology, immunology) could see disproportionate exposure
Market Access Implication:
Access teams must prepare for negotiations that incorporate international comparators more explicitly and aggressively.
4. Formulary and Utilization Management Ripple Effects
Lower Medicare reimbursement rates could:
- Change buy-and-bill economics in Part B
- Affect provider margin and prescribing behavior
- Influence payer formulary positioning in Part D
If margins compress:
- Providers may prefer alternative therapies with better economics
- Access hurdles may increase if plans attempt to offset reimbursement compression elsewhere.
Market Access Implication:
Manufacturer field reimbursement and provider engagement strategies will need to adapt quickly
5. The GLOBE and GUARD Models: Mandatory MFN Coming to Medicare
Beyond the voluntary manufacturer agreements, CMS has proposed two mandatory MFN payment models that will directly affect manufacturers regardless of whether they have negotiated deals with the administration:
- GLOBE (Global Benchmark for Efficient Drug Pricing): A mandatory Part B model launching October 1, 2026. Covers single-source drugs and biologics in seven USP therapeutic categories with annual Part B spending above $100 million. CMS estimates GLOBE will cover approximately 55% of annual Part B FFS drug spending. Manufacturers whose products exceed the international benchmark must pay an incremental rebate to Medicare.
- GUARD (Guarding U.S. Medicare Against Rising Drug Costs): A mandatory Part D model launching January 1, 2027. Covers 17 USP therapeutic classes with annual Part D spending above $69 million. Applies to approximately 25% of Part D enrollees.
Both models are mandatory–not voluntary–and CMS has not explicitly exempted manufacturers who have already negotiated voluntary agreements with the administration. Drugs with an active IRA-negotiated maximum fair price are excluded, but all other qualifying single-source products are in scope. Biosimilars and generics are excluded.
Market Access Implication:
Manufacturers with qualifying Part B or Part D products face near-term mandatory obligations regardless of voluntary agreement status. The window to adjust international pricing to mitigate future U.S. rebate risk under GLOBE is open now–GLOBE benchmarks will be based on Q2 2026 pricing data. Dual-track revenue forecasting (model geographies vs. non-model geographies) will become essential for affected portfolios.
Manufacturer Decision-Making Under MFN Risk
With mandatory models launching in Q4 2026 and voluntary agreements already covering 86% of the branded market, MFN is no longer a risk to model–it is an operational constraint to manage. The following areas require immediate attention:
1. Portfolio Risk Stratification
Companies should assess:
- Which assets are most exposed to international price referencing?
- Which therapeutic areas face the largest EU-U.S. price deltas?
- Which products are most Medicare-dependent?
This enables:
- Prioritized mitigation planning
- Revenue-at-risk modeling
- Earlier lifecycle management interventions
2. Integrated Global Pricing Governance
MFN requires tighter alignment across:
- U.S. market access
- Global pricing & reimbursement
- Government affairs
- Legal and compliance
Decisions that were once siloed (e.g., a German price agreement) may have direct downstream U.S. impact
Prepared organizations will:
- Establish formal cross-market price governance committees
- Model international pricing agreements before execution
- Create scenario playbooks for reference price compression
3. Enhanced Economic Value Demonstration
As pricing ceilings tighten, value demonstration becomes even more critical:
- Stronger real-world evidence (RWE)
- More robust health economic modeling
- Outcomes-based contract readiness
- Clear differentiation from therapeutic alternatives
Under MFN, margin compression increases the importance of maintaining favorable access tiers and minimizing utilization restrictions.
4. Contracting Innovation and Risk Sharing
If top-line pricing flexibility narrows:
- Manufacturers may shift toward outcomes-based agreements
- Indication-specific pricing may gain traction
- Population health-based contracting could become more common
Access teams should be developing infrastructure now to support:
- Data collection and analytics
- Outcomes measurement
- Performance-based reimbursement models
5. Scenario Planning and Financial Modeling
MFN preparedness requires:
- Modeling various international basket configurations
- Estimating price floors under different country mixes
- Stress-testing gross-to-net assumptions
- Evaluating provider economics impact (especially in Part B)
This modeling should inform:
- Investor communications
- Portfolio prioritization
- Pipeline investment decisions
Preparedness Checklist for Market Access Teams
Manufacturers should consider the following actions:
Strategic Planning
☐ Conduct MFN exposure modeling by product
☐ Quantify Medicare revenue at risk
☐ Map international price differentials across key markets
☐ Assess GLOBE and GUARD model exposure by product (Part B: Oct. 2026; Part D: Jan. 2027)
☐ Evaluate April 2026 Executive Order tariff implications and compliance with MFN domestic production commitments
Governance
☐ Formalize cross-market pricing review processes
☐ Establish escalation protocols before signing major ex-U.S. agreements
☐ Align U.S. and global access leadership
Evidence & Value
☐ Strengthen RWE generation plans
☐ Prepare enhanced HEOR dossiers
☐ Expand outcomes-based contracting readiness
Operational Readiness
☐ Assess provider reimbursement impact
☐ Update field reimbursement training
☐ Develop payer communication strategies
MFN has arrived. With 17 voluntary manufacturer agreements covering 86% of the branded drug market, mandatory GLOBE and GUARD models launching in late 2026 and early 2027, an April 2026 Executive Order tying tariff relief to MFN compliance, and active Congressional codification efforts, the policy landscape has moved from “what if” to “what now.” Organizations that have not yet built MFN into their pricing governance, portfolio risk models, and access strategy are already behind.
Is your portfolio exposed to MFN risk?
At Danforth Health, we work with manufacturers to model policy exposure, align global and U.S. pricing strategy, pressure-test access assumptions, and build practical readiness plans. If MFN, or broader international reference pricing, would materially affect your portfolio, now is the time to assess your exposure and build a coordinated response.
We welcome the opportunity to help you think through the implications for your assets, pipeline, and access strategy. Schedule a conversation.
