Healthcare & Life Sciences: Drug Pricing Digest — Number 50

Inflation Reduction Act, Healthcare Reform, and General Developments

Trump Policy Legislation Enacted Without MFN, But With IRA Orphan Drug Fix

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, his signature policy legislation. Two aspects of this legislation are particularly relevant for drug pricing.

First, as expected, the legislation does not address so-called most favored nation (MFN) pricing for pharmaceuticals. Earlier in the legislative process, President Trump had reportedly suggested to House members that imposing MFN pricing in Medicaid could help pay for expenditures under the legislation, as reported in issue No. 45 of this digest. But lawmakers did not embrace that proposal at the time, and MFN pricing is not included in the final legislation. However, MFN pricing may still advance through executive action (such as in regulation from federal agencies, or a mandatory “payment model”) or other legislation.

Second, the legislation makes a positive change to the price negotiation program that was imposed by the Inflation Reduction Act (IRA). The IRA originally provided that drugs designated for only one rare disease or condition and approved only for such disease or condition are exempted from the IRA price negotiation program. The legislation expands the orphan drug exclusion, so that now drugs designated for “one or more rare diseases or conditions” and approved only for “one or more rare diseases or conditions” are exempted from negotiation.

In addition, the legislation clarifies how the orphan drug exclusion interacts with the negotiation eligibility timeline. A small molecule drug is first eligible for negotiation seven years after Food and Drug Administration (FDA) approval, while a biologic is first eligible 11 years after FDA approval (in each case, if other circumstances exist). The legislation makes clear that for a drug that satisfies the orphan drug exclusion at the time it is approved, the seven- or 11-year clock begins to run not at the time of approval, but at the time the drug no longer qualifies for the orphan drug exclusion (such as because the drug was approved for an indication that is not orphan designated).

These changes to the orphan drug exclusion apply starting with initial price applicability year 2028. The 15 drugs that will be subject to the negotiation process for 2028 will be published on Feb. 1, 2026. The negotiation process for 2026 and 2027 is not affected.

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

FDA Links National Priority Review Vouchers to Drug Pricing

FDA announced a new Commissioner’s National Priority Voucher (CNPV) program last month, which is intended to reward applicants with faster FDA review times. Vouchers will be available to companies “that are aligned with the national health priorities,” with the announcement listing the priorities as “addressing a health crisis in the U.S., delivering more innovative cures for the American people, addressing unmet public health needs, [and] increasing domestic drug manufacturing as a national security issue.” Reportedly, FDA had considered including making drugs more affordable in the US as one of the priorities, but it was not included in the published announcement.

Now, FDA Commissioner Marty Makary has suggested in public remarks that “we are including the affordability of drugs as a national priority.” In what may be a reference to President Trump’s MFN Executive Order, discussed in issues No. 46 and No. 47 of this digest, Commissioner Makary explained that “we can issue a national priority review voucher for companies that are promising to equalize the price between OECD countries and the United States, even with other products that they currently have.” Commissioner Makary stated that President Trump is “very adamant that he would lower drug prices for Americans, and he doesn’t like it that Americans are getting ripped off with drugs that are [priced] two, five, 10 times higher” in the US than in other countries. The Commissioner also noted that “we want to incentivize good behavior in the marketplace, and these priority vouchers are worth a lot of money.”

Sources: BloombergLaw, CNBC, Endpoints News, InsideHealthPolicy, PoliticoPro, Wall Street Journal.

MFN Drug Pricing Policy Discussions Continue

The Trump administration is reportedly “in negotiation” with pharmaceutical manufacturers to voluntarily lower prices based on MFN pricing, with GLP-1 drugs possibly being a focus of price reductions. Reportedly, officials from the Department of Health and Human Services (HHS) have discussed direct-to-consumer drug distribution models with retailers.

Source: BloombergLaw.

Check out this Latham Client Alert on legislation introduced in the Senate that would restrict direct-to-consumer advertising for pharmaceuticals.

DOJ and HHS Announce New False Claims Act Working Group

The Department of Justice (DOJ) and HHS have formed a new working group. One of the group’s “priority enforcement areas” is “drug, device or biologics pricing, including arrangements for discounts, rebates, service fees, and formulary placement and price reporting.” DOJ attorney Brenna Jenny, one of the new group’s co-heads, is quoted as saying, “And as always, we welcome qui tam complaints — but we are not content to rely on them.”

Sources: Law360, InsideHealthPolicy.

Stakeholder Comments to IPAY 2028 Proposed Guidance

The comment period for the IPAY 2028 draft guidance that was published by the Centers for Medicare & Medicaid Services (CMS) on May 12, 2025, closed on June 26, 2025. One topic commenters reportedly viewed negatively is the revised approach to fixed dose combination products.

Source: Citeline.

IRA Policy Discussions Continue

Stakeholders continue to discuss how the implementation of the IRA’s maximum fair price may affect the pharmaceutical industry.

Sources: BloombergLaw (first, second).

Medicaid Drug Rebate Program (MDRP)

CMS Reminds Technical Contacts to Monitor Branded Prescription Drug Fee Data

CMS, which operates the Medicaid Drug Program system (MDP) through which enrolled manufacturers report pricing data, sent an email to technical contacts, reminding them to monitor the data that is used to calculate the branded prescription drug fee. CMS stated: “It is the expectation that Manufacturers routinely monitor MDP product (e.g., drug category, product termination date, etc.) and pricing (e.g., AMP, BP) to ensure accuracy. Additionally, manufacturers should verify correctness of [state drug utilization data (SDUD)] units and reimbursement amounts reported to CMS in comparison to their state rebate invoices. If a manufacturer has reached agreement on an adjustment and/or dispute with a state and that agreement is not reflected in MDP by the due date of the next quarterly data transmission from the state, the manufacturer should contact the state to confirm that the adjusted data has been reported to CMS.”

With contributions to technical updates from Riparian.

340B Program 

Rebate Model Guidance at OMB; Litigation Continues

Health Resources and Services Administration (HRSA) guidance regarding rebate models remains in review at the Office of Management and Budget (OMB). Reportedly, stakeholders continue to meet with the Trump administration to discuss the issue.

Source: 340B Report.

Litigation regarding 340B rebate models, which was discussed in in issues No. 46 and No. 47 of this digest, continues at the appellate level, with the US Court of Appeals for the D.C. Circuit granting an emergency motion for certain drug manufacturers to expedite their appeal of the ruling issued May 15 that favored HRSA. An opinion issued by the US District Court of the District of Columbia in a parallel case follows the earlier opinion and also upholds the authority of HRSA to preapprove manufacturer rebate models.

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

Court Sides With HRSA in Nevada Covered Entity Challenge of STD Clinic Terminations

The US District Court for the District of Columbia issued an opinion in a Nevada healthcare system’s litigation against HRSA that challenged the agency’s termination of some of its STD clinics from the 340B program. This litigation was discussed in issues No. 43 and No. 44 of this digest. The court sided with HRSA, stating that the terminations were not unlawful. Shortly before the opinion was issued, HRSA reinstated eight of the affected clinic locations.

Sources: BloombergLaw, 340B Report.

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.

Source: 340B Report (first, second, third, fourth).

Manufacturer Challenges to State 340B Laws Continue

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

Sources: BloombergLaw, PoliticoPro, 340B Report (first, second, third).

Medicare Part B

No developments to report.

Medicare Part D

No developments to report.

State Law Developments

No developments to report.