Healthcare & Life Sciences: Drug Pricing Digest — Number 56

Inflation Reduction Act, Healthcare Reform, and General Developments

TRUMP ADMINISTRATION ANNOUNCES MFN AGREEMENT WITH MAJOR MANUFACTURER, PAUSES PHARMACEUTICAL TARIFFS

On September 30, 2025, the Trump administration announced that a major US manufacturer has agreed to base its pharmaceutical prices in the US on most favored nation (MFN) pricing. According to a White House fact sheet, the agreement “will provide every State Medicaid program in the country access to MFN drug prices” on the company’s products, and requires the company “to offer medicines at a deep discount off the list price when selling directly to American patients.” The company’s own announcement highlights that the agreement “provides certainty from tariffs” and notes that the company “will also participate in a direct purchasing platform, TrumpRx.gov, that will allow American patients to purchase medicines … at a significant discount.”

Sources: The New York Times, The Washington Post, The Wall Street Journal, BloombergLaw (first, second), PoliticoPro, BioWorld, StatNews, Pink Sheet (first, second), InsideHealthPolicy (first, second, third), Scrip, 340B Report.

The agreement remains confidential, but commenters are speculating that disclosure may eventually be required.

Source: InsideHealthPolicy.

The agreement follows publication of an op-ed by PhRMA the day before, which did not refer to MFN pricing, and instead highlighted investments in US-based manufacturing. The op-ed also stated that PhRMA “is launching AmericasMedicines.com to connect patients to direct-purchase programs as well as resources offered by manufacturers.”

Sources: The Washington Post, Reuters, Scrip, InsideHealthPolicy, PoliticoPro (first, second), 340B Report.

President Trump has used the threat of tariffs as a way to coerce manufacturers into agreeing to MFN pricing, as discussed in issue No. 54 of this digest. On September 25, 2025, President Trump posted on his social media platform that beginning October 1, 2025, “we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America.” Following the announcement of the MFN agreement with the manufacturer, the administration is reportedly pausing its efforts to impose triple-digit tariffs on pharmaceuticals while it negotiates MFN agreements with additional manufacturers.

Sources: Law360, InsideHealthPolicy, PoliticoPro, StatNews, Reuters.

Commenters noted that a review of tariffs by the Supreme Court remains ongoing, but that President Trump is seeking to impose tariffs on pharmaceuticals on the basis of different authorities related to national security, and that these tariffs may not be implicated by the current Supreme Court case.

Sources: The New York Times (first, second), The Washington Post (first, second), BioWorld, PoliticoPro, InsideHealthPolicy, StatNews, Bloomberg.

Tune in to the latest episode of the Latham Drug Pricing Podcast, where Washington, D.C. partner Chris Schott, counsel Nicole Liffrig Molife, and associate Danny Machado share key takeaways from the recent Medicaid Drug Rebate Program Summit in Chicago. If you registered for the summit, recordings of many sessions are now available for streaming, including the panel hosted by Chris Schott, titled “Recent Legal Developments and Current Challenges: In-House and Outside Counsel Perspectives.”

TRUMP ADMINISTRATION SENDS TWO PAYMENT MODEL PROPOSED RULES TO OMB

On September 25, 2025, the website of the Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget (OMB), was updated to reflect that the Centers for Medicare & Medicaid Services (CMS) submitted a proposed rule to OMB for review. The proposed rule is titled “Global Benchmark for Efficient Drug Pricing (GLOBE) Model” and was submitted under Regulatory Information Number (RIN) 0938-AV66, which is associated in the Spring 2025 Unified Agenda with “rulemaking potentially related to new Center for Medicare & Medicaid Innovation (CMMI) models and/or to make updates to existing models.” 

On October 2, 2025, a second proposed rule appeared on the OMB website, titled “Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model.” The associated RIN, 0938-AV74, has apparently not previously been published in a unified agenda.

Generally, OIRA has 90 days to review proposed rules. At the end of the review, OIRA may clear the rule or return the rule to CMS with comments. The content of proposed rules is generally not disclosed while the OIRA process is under way. Once the OIRA process is complete, CMS may then, if it chooses to move forward, publish the proposed rule in the Federal Register, where it will initially appear on the Public Inspection pages.

Commenters noted that these proposed rules are likely related to the implementation of MFN drug pricing policy. The MFN executive order, discussed in issue No. 46 of this digest, called for CMS to “propose a rulemaking plan to impose most-favored-nation pricing.” During Trump I, CMS attempted to use a payment model to replace Medicare Part B reimbursement based on Average Sales Price (ASP) with MFN-based reimbursement, but that regulation was struck down in court due to procedural flaws.

Sources: InsideHealthPolicy (first, second), The New York Times, BioWorld.

Meanwhile, stakeholders continue to discuss the potential impacts of the MFN drug pricing policy, including on ex-US markets.

Sources: Scrip, Pink Sheet.

IRA IMPLEMENTATION CONTINUES WITH FINAL NEGOTIATION GUIDANCE FOR IPAY 2028

On September 30, 2025, in the shadow of the announcement of the MFN agreement with a major manufacturer, CMS published final guidance implementing the negotiation program under the Inflation Reduction Act (IRA) for Initial Price Applicability Year (IPAY) 2028. The agency also issued a press release and fact sheet. The final guidance follows the proposed guidance in that CMS will publish not only the selected drugs, as in prior years, but also the ranked list of negotiation-eligible drugs. 

CMS did not make changes to the treatment of fixed-dose combination products, as it had suggested in the proposed guidance, but notes that “the current fixed combination drug policy could create a gaming opportunity.” CMS states that it “intends to address this program integrity risk and is continuing to consider the appropriate policy to implement in rulemaking beginning in initial price applicability year 2029.” 

The final guidance also addresses the statutory change made to the IRA that expanded the orphan drug exclusion, beginning with IPAY 2028, which we discussed in issue No. 50 of this digest.

Sources: BloombergLaw, Pink Sheet, Endpoints News, InsideHealthPolicy, StatNews.

IRA LEGAL CHALLENGES CONTINUE

Drug manufacturer litigation against the IRA drug pricing negotiation program continues, with a petition for Supreme Court review of one manufacturer lawsuit currently pending. The Supreme Court has full discretion over whether to hear the case. Additional manufacturers are likely to seek review by the Supreme Court. 

Sources: BloombergLaw, InsideHealthPolicy.

MANUFACTURERS RE-EVALUATE PARTICIPATION IN MDRP AND 340B PROGRAM

Manufacturers are reportedly re-evaluating their participation in the MDRP and the 340B program, with certain manufacturers removing their medications and multiple labeler codes from both programs.

Source: 340B Report.

BIPARTISAN BILL WOULD EXPAND SUNSHINE ACT REPORTING

On September 4, 2025, Senators Charles Grassley and Maggie Hassan reintroduced the bipartisan Open Payments Expansion Act, S. 2710. The law would expand Sunshine Act reporting obligations of manufacturers and group purchasing organizations to include direct and indirect payments to tax-exempt patient advocacy organizations. Senator Grassley had introduced a similar proposal in December 2024 amid his concern that industry funding may influence advocacy activities. 

If enacted, the new disclosures would be due starting March 31, 2027. Pharmaceutical manufacturers and group purchasing organizations would face new compliance burdens to capture non-traditional payment flows and heightened scrutiny of relationships with advocacy groups. 

For additional context and further detail, check out this Latham Client Alert.

Medicaid Drug Rebate Program (MDRP)

CMS RELEASES UPDATED MDRP DATA GUIDE FOR LABELERS

CMS has released an updated version of the “Medicaid Drug Rebate Program Data Guide.” The guide is only accessible to users with log-ins to the Medicaid Drug Programs (MDP) system. According to CMS, the guide “is intended to provide information and guidance on data reporting and processes” and “is not intended as a revision or modification of the requirements” in statute or regulation. However, in practice, manufacturers can report product and pricing data only in the way the software coding of the MDP system allows, so that the guide is in effect a direct regulation of manufacturers.

With contributions to technical updates from Riparian.

340B Program

STAKEHOLDER DISCUSSION OF 340B PROGRAM CONTINUES

The Wall Street Journal editorial board published an opinion piece on September 21, 2025, criticizing the 340B program and noting that “hospital prices have increased 88% over the last 15 years, compared to 48.4% for the overall consumer-price index, 38.4% for prescription drugs and 29.5% for physician services.” The editorial board is in favor of legislation “that would ensure the 340B program benefits low-income hospitals and patients,” concluding with a “Memo to President Trump: This is a better way to lower healthcare costs than importing foreign drug price controls.”

Sources: The Wall Street Journal, 340B Report.

340B REBATE MODEL LITIGATION CONTINUES

Litigation regarding 340B rebate models continues at the appellate level, with the US Court of Appeals for the D.C. circuit issuing an order on September 19, 2025, to reschedule oral arguments from October to November 17, 2025.

Source: 340B Report.

MORE STATES ADOPT CONTRACT PHARMACY LAWS

Additional states have adopted or proposed legislation that would bar drug manufacturers from restricting contract pharmacy access, with some bills including other requirements. 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.

MANUFACTURER CHALLENGES TO STATE 340B LAWS CONTINUE

Drug manufacturer litigation challenging the 340B laws enacted by various states continues.

Sources: BloombergLaw, Law360 (first, second), 340B Report (first, second, third, fourth, fifth, sixth, seventh, eighth).

Medicare Part B

Medicare Part D

No developments to report.

State Law Developments

COLORADO PDAB ADOPTS NATION’S FIRST UPL

On October 3, 2025, the Colorado Prescription Drug Affordability Board (PDAB) voted to impose an upper payment limit (UPL) on a popular drug indicated for rheumatoid arthritis (among others). This marks the first time a PDAB has imposed a UPL. Reportedly, the UPL is equal to the maximum fair price that the drug will be subject to beginning in 2026 as a result of IRA forced negotiations. 

Meanwhile, the Maryland PDAB staff is developing policies regarding UPLs for two drugs, as well as other policies to reduce drug costs.

Sources: StatNews, InsideHealthPolicy.