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

While MFN is not currently in effect, variations of the policy have been proposed multiple times and remain a recurring theme in federal drug pricing discussions. In a post-IRA environment where Medicare negotiation is already reshaping pricing dynamics, MFN represents a potential next phase of pricing reform.

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

If U.S. Medicare reimbursement is 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.

2. Increased Pressure on Gross-to-Net Strategy

MFN could effectively cap top-line pricing:

• 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

If MFN is 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

Manufacturer Decision-Making Under MFN Risk

Even before implementation, MFN risk affects strategic planning. Manufacturers should be incorporating MFN into scenario modeling now

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

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 may or may not materialize in its current form, but the direction of travel in U.S. drug pricing policy is clear: increased scrutiny, global benchmarking, and tighter reimbursement controls. Organizations that wait for final rules before acting risk being structurally unprepared.

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.

Schedule a conversation with our experts to evaluate your MFN exposure and build a readiness strategy.