Healthcare & Life Sciences: Drug Pricing Digest — Number 47

Inflation Reduction Act, Healthcare Reform, and General Developments

Implementation of Trump Most Favored Nation Executive Order Seemingly Begins

On May 20, 2025, the Department of Health and Human Services (HHS) issued a press release announcing that it “is taking immediate steps” to implement the executive order issued May 12, 2025, that threatens to impose a so-called most favored nation (MFN) pricing policy. The executive order was discussed in issue No. 46 of this digest.

The HHS press release includes a single substantive sentence: “HHS expects each manufacturer to commit to aligning US pricing for all brand products across all markets that do not currently have generic or biosimilar competition with the lowest price of a set of economic peer countries. The MFN target price is the lowest price in an OECD [(Organisation for Economic Co-operation and Development)] country with a GDP per capita of at least 60 percent of the U.S. GDP per capita.”

Then, on May 22, 2025, Customs and Border Protection (CBP) posted a document on its website to remind the “pharmaceutical trade community of their legal obligations in light of ‘most-favored-nation’ drug-pricing requirements,” stating that HHS “has published price targets for prescription drugs to lower health care costs for Americans.” CPB also states that “declaring incorrect value on import or export documentation submitted to CBP is considered trade evasion, and CBP will pursue any violations to the fullest extent possible.”

Sources: Bioworld, InsideHealthPolicy, Pharma Intelligence.

The MFN pricing policy also enjoys support in Congress. Senator Bernie Sanders reintroduced a bill imposing MFN pricing, and reportedly, HHS Secretary Robert F. Kennedy Jr. has indicated his willingness to collaborate with Senator Sanders on this legislation.

Source: InsideHealthPolicy (first, second).

Meanwhile, Senators Josh Hawley and Peter Welch introduced their own legislation focusing on international reference pricing using an average across different countries.

Source: InsideHealthPolicy.

Stakeholders are also discussing how an MFN pricing policy in the US might affect non-US markets.

Source: Pink Sheet.

IRA Implementation Continues With 2028 Draft Negotiation Guidance For IPAY 2028

As discussed in issue No. 46 of this digest, on May 12, 2025, on the same day President Trump issued his MFN executive order but without similar fanfare, the Centers for Medicare & Medicaid Services (CMS) published draft guidance implementing the negotiation program under the Inflation Reduction Act (IRA) for Initial Price Applicability Year 2028.

Sources: InsideHealthPolicy, Scrip, Pink Sheet.

Medicare Prescription Payment Plan Update

Stakeholders are evaluating to what extent beneficiaries took advantage of the Medicare Prescription Payment Plan (M3P), which allows them to spread insurance costs over the plan year period. The IRA introduced the M3P option, which became available this year.

Source: Pink Sheet. 

Medicaid Drug Rebate Program (MDRP)

No developments to report. 

340B Program

First 340B ADR Panel Decision Favors Drug Manufacturer

The first published decision under the revamped 340B Administrative Dispute Resolution (ADR) process sided with a drug manufacturer on May 15, 2025, rejecting a Texas hospital’s challenge to contract pharmacy restrictions. The panel marks the initial ruling since HRSA’s revised ADR rule took effect in June 2024.

Source: 340B Report.

District Court Rules in Favor of HRSA in Litigation About Rebate Models

As discussed in issue No. 46 of this digest, on May 15, 2025, the District Court for the District of Columbia issued an opinion favoring the Health Resources & Services Administration (HRSA) in litigation brought by manufacturers to defend their 340B rebate models against threats of government enforcement. On May 20, 2025, two drug manufacturers appealed the decision with the US Court of Appeals for the D.C. Circuit.

Sources: InsideHealthPolicy, Law360, 340B Report (first, second).

Additional States Adopt Contract Pharmacy Laws

More states have enacted or proposed legislation that would bar drug manufacturers from restricting contract pharmacy access. Some bills would require covered entities to make disclosures regarding 340B discounts. We note that legislative action related to the 340B program may have occurred in other states but has not yet been reported in the trade press.

Sources: 340B Report (first, second, third, fourth, fifth, sixth, seventh, eighth).

Manufacturer Challenges To State 340B Laws Continue

Lawsuits challenging the 340B laws enacted by various states continue.

Sources: Bloomberg, 340B Report (first, second, third, fourth, fifth).

Litigation Regarding GPO Prohibition Continues

As discussed in issue No. 46 of this digest, litigation filed on November 1, 2024, by a group purchasing organization (GPO) challenging how HRSA has implemented the GPO prohibition remains ongoing.

Source: 340B Report.

Medicare Part B

No developments to report.

Medicare Part D

No developments to report.

State Law Developments

Colorado PDAB Implementation Proceeds

Colorado continues to implement its Prescription Drug Affordability Board (PDAB) as the panel reviews drugs to develop a payment cap.

Source: Bloomberg.