Most Favored Nation Drug Pricing in US 2025 | Statistics & Facts

Most Favored Nation Drug Pricing 2025

The landscape of pharmaceutical pricing in the United States underwent a dramatic transformation in 2025 with the implementation of Most Favored Nation (MFN) drug pricing policies. This groundbreaking initiative aims to align American prescription drug prices with the lowest prices paid by other developed nations, addressing a long-standing disparity where U.S. consumers have historically paid 2.78 times more for medications compared to 33 other OECD countries. The policy represents the most comprehensive attempt to reform drug pricing in American history, with 14 of the 17 largest pharmaceutical manufacturers signing voluntary agreements by December 2025 to reduce prices across multiple drug categories affecting millions of patients.

The MFN pricing framework emerged from President Trump’s May 12, 2025 executive order titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients,” which directed federal agencies to negotiate with pharmaceutical companies to end what administration officials characterized as “global freeloading” on American pharmaceutical innovation. By December 2025, these negotiations resulted in historic agreements covering medications for diabetes, cardiovascular disease, cancer, asthma, and other chronic conditions. The initiative extends beyond simple price reductions, incorporating $150 billion in new U.S. manufacturing investments, the creation of a direct-to-consumer purchasing platform called TrumpRx, and the establishment of strategic pharmaceutical ingredient reserves to enhance national security and drug supply chain resilience.

Interesting Facts About Most Favored Nation Drug Pricing in the US 2025

Data sources: White House Fact Sheets (December 20, 2025; November 6, 2025; May 12, 2025), CMS.gov, Congressional Research Service

The data reveals the unprecedented scope of pharmaceutical industry participation in MFN pricing agreements in the US 2025. With 14 major manufacturers committed by December 2025—including Eli Lilly, Novo Nordisk, Pfizer, AstraZeneca, EMD Serono, Amgen, Bristol Myers Squibb, Boehringer Ingelheim, Genentech, Gilead Sciences, GSK, Merck, Novartis, and Sanofi—the initiative affects hundreds of medications used by tens of millions of Americans. The $150 billion investment commitment represents the largest pharmaceutical manufacturing repatriation effort in U.S. history, addressing national security concerns about dependence on foreign active pharmaceutical ingredient suppliers. Notably, the direct-to-consumer platform TrumpRx launching in January 2026 creates a novel distribution channel, though experts debate whether cash-paying patients will find meaningful savings compared to traditional insurance coverage. The agreements include specific tariff exemptions for three years, providing manufacturers with regulatory certainty in exchange for price commitments.

US Prescription Drug Price Comparison with International Markets in 2025

Data sources: RAND Corporation (2024), HHS.gov, KFF.org, Office of Inspector General (February 2025), American Journal of Health-System Pharmacy (July 2025)

The international price comparison data reveals the stark reality that drove MFN drug pricing policy implementation in the US 2025. American consumers paying 2.78 times more than the average across 33 OECD nations represents a systematic pricing imbalance affecting hundreds of millions of prescriptions annually. The brand-name drug disparity is even more pronounced at 3.44 times higher, explaining why branded medications account for 72% of U.S. drug spending despite representing only 10% of prescriptions. Interestingly, generic drug prices in America are actually 16% lower than international averages, but this advantage is overwhelmed by branded drug costs. The fact that Americans—representing less than 5% of the global population—generate 75% of worldwide pharmaceutical profits illustrates the extent to which U.S. consumers subsidize drug development and international price discounts. Medicaid net spending reaching $51 billion in FY 2023 (a 72% increase from 2017) and Medicare Part D diabetes drug expenditures surging 364% from 2019 to 2023 ($7.7 billion to $35.8 billion) underscore the unsustainable trajectory that necessitated MFN intervention.

Pharmaceutical Company Agreements Under MFN Pricing in the US 2025

Data sources: White House Press Releases (December 19-20, 2025; November 6, 2025), CNN Politics, CNBC, Axios

The pharmaceutical company participation timeline demonstrates the accelerating momentum of MFN agreements in the US 2025. While initial hesitation characterized industry response following the May 12, 2025 executive order, the November agreements with Eli Lilly and Novo Nordisk on blockbuster GLP-1 medications marked a turning point. These deals covering Ozempic, Wegovy, Zepbound, and Mounjaro—drugs with combined annual U.S. expenditures exceeding billions—established a precedent for comprehensive pricing restructuring. The December 19, 2025 announcement represented the largest single-day commitment, with nine manufacturers simultaneously agreeing to MFN terms. Notably, Bristol Myers Squibb’s commitment to provide Eliquis free to Medicaid is unprecedented, as this blood thinner represents one of America’s highest-expenditure medications. The API donations to the Strategic Active Pharmaceutical Ingredients Reserve address critical national security vulnerabilities, with 98.8kg of albuterol, 6.5 tons of apixaban, and 3.5 tons of ertapenem providing emergency medication capabilities. Only Johnson & Johnson, AbbVie, and Regeneron among the 17 targeted companies had not publicly announced agreements by December 20, 2025, though administration officials indicated all companies had reached terms.

Medicare and Medicaid Drug Spending Impacts in the US 2025

Data sources: CMS.gov, MACPAC.gov, HHS.gov (November 2025), Office of Inspector General (February 2025), MedPAC Data Book (July 2024), KFF.org (August 2025)

The federal program expenditure data illustrates why MFN drug pricing became imperative in the US 2025. Medicaid’s total spending reached $900.3 billion in FY 2023, with prescription drugs representing $60 billion after rebates in 2024, a $10 billion increase in just two years. The 364% surge in Medicare Part D spending on 10 diabetes medications from 2019 ($7.7 billion) to 2023 ($35.8 billion) exemplifies unsustainable growth trajectories, with projections estimating these expenditures could reach $102 billion by 2026 without intervention. The Inflation Reduction Act’s $2,000 out-of-pocket cap for Medicare Part D enrollees in 2025 provides immediate relief to 18.7 million beneficiaries (36% of Part D enrollees), with average savings of nearly $400 per person among those affected. However, this cost-sharing reduction shifts financial burden to plans and the Medicare program itself, accelerating the need for underlying price reductions. Medicare Part B spending of $46.9 billion in 2022 on physician-administered drugs, growing 8.9% annually since 2009, demonstrates that pricing pressures extend beyond retail pharmacies. The GENEROUS Model (GENErating cost Reductions fOr U.S. Medicaid) launching in 2026 represents CMS’s structured approach to implementing MFN pricing for state Medicaid programs, offering participating states access to negotiated prices aligned with international benchmarks while establishing uniform, transparent coverage criteria.

Direct-to-Consumer Platform and Drug Price Reductions in the US 2025

Data sources: White House Fact Sheets (December 20, 2025; November 6, 2025), CNN, CNBC, NPR

The direct-to-consumer price reductions in the US 2025 through the TrumpRx platform represent substantial discounts ranging from 58% to 90% off previous list prices. The most dramatic reductions appear in specialty medications like Gilead’s Epclusa, which treats Hepatitis C, dropping from $24,920 to $2,425—a 90% price cut that could transform access to curative therapy for the estimated 2.4 million Americans with Hepatitis C. Similarly, the GLP-1 receptor agonists (Ozempic, Wegovy, Zepbound) seeing reductions of 65-74% addresses affordability barriers for drugs treating diabetes, obesity, and cardiovascular disease, conditions affecting tens of millions of Americans. Merck’s Januvia reduction from $330 to $100 (70% discount) benefits Type 2 diabetes patients, though questions remain about whether these savings materialize for insured patients whose copays may already be lower than the cash prices. The $35 per month standardized insulin pricing from Novo Nordisk continues the insulin affordability initiatives begun earlier, ensuring consistent access to life-sustaining medication. Critically, the Medicare negotiated price of $245 for GLP-1 drugs like Wegovy and Zepbound—less than half the Biden Administration’s proposed pricing—enables Medicare coverage for obesity treatment for the first time, with $50 monthly copays for beneficiaries. However, experts note that many of these “reductions” compare against list prices that few insured Americans actually pay, and some drugs like GSK’s Advair already have generic competitors available at lower costs, raising questions about the practical impact of TrumpRx pricing for most patients.

Prescription Drug Spending Growth and Utilization Trends in the US 2025

Data sources: Health Affairs Journal (National Health Expenditure Projections 2024-33), Drug Channels Institute, IQVIA Institute (2025), American Journal of Health-System Pharmacy (July 2025)

The prescription drug utilization and spending trends reveal complex dynamics shaping pharmaceutical expenditures in the US 2025. Total spending approaching $540-550 billion with 9-11% growth substantially outpaces general healthcare inflation and GDP growth, driven primarily by increased utilization of high-cost medications rather than price increases per se. Notably, brand-name list price growth reached a historic low of 2.3% in 2024, down dramatically from the 10-15% annual increases seen from 2010-2015, reflecting manufacturers’ strategic responses to political pressure and policy changes. Net price growth of just 0.1% indicates that rebates and discounts are nearly matching list price increases, creating an essentially flat pricing environment for brand-name drugs. However, the 215 billion days of therapy provided annually demonstrates that volume and drug mix shifts—particularly toward expensive specialty medications—drive spending growth more than per-unit price increases. The 43% surge in specialty drug spending among non-low income Medicare Part D beneficiaries in early 2025 compared to 2024 reflects the impact of the Inflation Reduction Act’s benefit redesign, which restructured cost-sharing in ways that potentially increase utilization. GLP-1 receptor agonists for diabetes and obesity exemplify utilization-driven spending growth, with utilization and gross spending nearly doubling annually from 2019-2022, a trend continuing into 2025. The 27% unfilled prescription rate—including 34% in Medicaid, 24% in Medicare, and 28% in commercial insurance—highlights ongoing access barriers despite price reductions, with payer rejections and patient abandonment creating a significant gap between prescribed and actually utilized medications.

State Medicaid Programs and MFN Implementation in the US 2025

Data sources: KFF.org (Medicaid Budget Survey 2024-2025; August 2025), MACPAC.gov, CMS.gov

The state Medicaid program landscape demonstrates diverse implementation approaches for MFN drug pricing in the US 2025. With 31 of 42 states that contract with managed care organizations (MCOs) including pharmacy benefits in those contracts (“carve-in”), versus 8 states maintaining fee-for-service pharmacy programs (“carve-out”), the pathway for MFN pricing implementation varies significantly by state. The GENEROUS Model launching in 2026 provides a structured framework where participating states can access CMS-negotiated MFN prices while implementing uniform coverage criteria, potentially simplifying the complex patchwork of state-by-state formularies and prior authorization requirements. For the 50.5 million Medicaid enrollees as of FY 2023—a 12% increase since 2018—MFN pricing could generate billions in savings. However, the impact depends heavily on whether manufacturers’ MFN commitments represent meaningful reductions below Medicaid’s existing statutory rebates, which already reduce gross drug spending by over 50%.

The obesity medication challenge exemplifies implementation complexities: with 40% of Medicaid adults and 26% of children affected by obesity, expanding coverage of GLP-1 drugs could simultaneously improve health outcomes and strain state budgets, even with MFN pricing. States’ statutory authority to exclude obesity drugs for adults creates coverage inconsistencies that the GENEROUS Model could potentially address through standardized coverage criteria. The emergence of high-cost cell and gene therapies—some priced at hundreds of thousands or millions per patient—represents a particularly acute challenge, prompting CMS’s development of specific financing models to enable state access while managing budget impact. Projected Medicaid spending growth of 6.8% annually for 2026-27 may moderate if MFN pricing delivers promised savings, though the interaction between MFN prices, existing Medicaid rebates, and supplemental rebates remains complex.

Pharmaceutical Industry Response and Economic Implications in the US 2025

Data sources: Jones Day Legal Analysis, USC Schaeffer Center, PharmExec, Congressional Research Service, various industry publications

The pharmaceutical industry’s response to MFN pricing in the US 2025 reflects a pragmatic adaptation to political and economic realities. While the trade association PhRMA publicly maintains that pharmacy benefit managers (PBMs) rather than manufacturer prices drive costs, the 14 major manufacturers signing agreements demonstrate recognition that some accommodation was necessary. The 3-year tariff exemption provides regulatory certainty valuable to companies operating in an administration that has threatened pharmaceutical-specific import duties. The newly created Commissioner National Priority Voucher (CNPV) program, offering 1-2 month FDA review times instead of standard 10-12 months, represents a significant regulatory incentive that could accelerate pipeline asset commercialization worth billions. The $150 billion manufacturing investment commitment addresses both political demands for reshoring and legitimate national security concerns about API supply chain vulnerabilities exposed during the COVID-19 pandemic. However, economic analyses warn of potential innovation impacts: research from institutions like the USC Schaeffer Center suggests that adopting European pricing models could lead to “shorter, less healthy lives” and “loss of trillions of dollars” in economic value from foregone medical innovation.

The December 2025 UK agreement requiring a 25% net price increase for new prescriptions demonstrates the administration’s two-pronged strategy—reducing U.S. prices while pressuring other nations to pay more, potentially rebalancing the innovation financing burden. Critics note that MFN pricing is “easily gamed” through confidential rebates that create the appearance of higher overseas prices while maintaining lower net costs. For smaller and mid-size pharmaceutical companies not among the 17 targeted manufacturers, the implications remain uncertain, potentially creating competitive disadvantages if they lack leverage to negotiate similar tariff exemptions and priority review access. The acceleration of biosimilar development and value-based contracting may represent market-driven pricing reforms that complement or compete with government-imposed MFN structures.

Legal Challenges and Implementation Uncertainties in the US 2025

Data sources: Congressional Research Service (LSB11319), Jones Day Legal Analysis, Sidley Austin Legal Review (December 2025)

The legal and implementation framework for MFN drug pricing in the US 2025 remains notably uncertain despite the policy’s aggressive rollout. The 2020 MFN Interim Final Rule was successfully challenged in both Maryland and New York federal district courts, which rejected CMS’s “good cause” justification for bypassing notice-and-comment rulemaking and raised questions about the Secretary’s authority under Section 1115A of the Social Security Act. Courts found the rationale of “alleviating general financial instability” insufficient compared to traditional good cause circumstances like “national security or life-threatening safety issues.” The current approach through voluntary manufacturer agreements circumvents these Administrative Procedure Act (APA) requirements temporarily, but a mandatory implementation would likely require either successful rulemaking or legislation. The GENEROUS Model launching in 2026, while structured as a voluntary CMMI payment model for states, may face similar legal scrutiny if it effectively becomes mandatory through economic pressure or if manufacturers challenge its authority. Critical implementation details remain undisclosed or undefined: which specific countries comprise the reference basket of OECD nations with GDP per capita ≥60% of U.S. levels; whether referencing uses list (gross) prices or net prices after rebates and discounts; and how “most favored nation” status is calculated when different countries use different pricing methodologies. The fact that agreements primarily affect Medicaid and direct-to-consumer sales but not private commercial insurance—where most Americans receive coverage—means the majority of pharmaceutical spending remains outside MFN pricing.

Disclaimer: This research report is compiled from publicly available sources. While reasonable efforts have been made to ensure accuracy, no representation or warranty, express or implied, is given as to the completeness or reliability of the information. We accept no liability for any errors, omissions, losses, or damages of any kind arising from the use of this report.

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