Navigating the Most Favored Nation Terminology Maze

“Most Favored Nation” (MFN) has become one of the most frequently referenced – and most frequently misunderstood – terms in pharmaceutical pricing. Since President Trump’s executive order in May 2025, MFN has been used interchangeably to describe direct manufacturer agreements, a government-operated consumer platform, and proposed demonstration models from the Centers for Medicare and Medicaid Services (CMS) demonstration models. Each carries distinct implications for manufacturers, payers, and patients. Yet the industry continues to conflate them, creating confusion at a moment when strategic clarity matters most.

This article unpacks the current MFN landscape, distinguishing between policies and programs that share the label but operate through fundamentally different mechanisms.

Where MFN Began

The concept of “Most Favored Nation” in pharmaceutical pricing is not new. An MFN clause is a contractual provision guaranteeing one party terms – such as price, rebates, or other benefits – equal to or better than the most favorable terms offered to any comparable party.

The concept can be traced back to the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990), which established the Medicaid Drug Rebate Program.¹ Under OBRA, manufacturers must offer Medicaid rebates based on the “best price” extended to any commercial purchaser – effectively granting Medicaid most-favored-customer status. This can be considered the original MFN in US pharmaceutical pricing, and it had nothing to do with international pricing. It simply meant equal or better terms compared to any other party.

The 2025 Executive Order: MFN Meets International Reference Pricing

The term re-entered the spotlight in May 2025, when Executive Order 14,297, titled Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients, directed the administration to bring US drug prices in line with those of comparably developed nations.² The order contains six sections, two of which explicitly include the term “most favored nation” in their titles and established two government-led initiatives related to MFN pricing.

Section 5, “Establishing Most-Favored-Nation Pricing,” directed the Secretary of Health and Human Services to act within 30 days: “the Secretary shall, […] communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations.” ² In practice, the administration sent letters to 17 major pharmaceutical companies to initiate negotiations (discussed below). Section 5 further outlined escalation measures should manufacturers fail to make significant progress, including a rulemaking plan to impose MFN pricing, potential certification of drug importation under the Federal Food, Drug, and Cosmetic Act, and enhanced antitrust enforcement.²

Section 4, “Direct-to-Consumer Sales,” directed Health and Human Services to facilitate direct purchasing: “the Secretary of Health and Human Services (Secretary) shall facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price.” ² This is the provision that would ultimately give rise to the TrumpRx platform.

The remaining sections addressed the purpose and policy rationale (Sections 1 and 2), measures to address “foreign freeloading” through the Secretary of Commerce and US Trade Representative (Section 3), and standard general provisions (Section 6).²

These tracks have since evolved independently, each carrying the MFN label but with materially different structures and implications.

The Voluntary Manufacturer Agreements

The Letters

On July 31, 2025, President Trump published letters to 17 major pharmaceutical companies reiterating the requirements of Section 5 of the executive order.³ The 17 companies were: AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, EMD Serono, Genentech (Roche), Gilead Sciences, GSK, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron Pharmaceuticals, and Sanofi.³

The letters outlined four core demands with a 60-day compliance deadline:³

1. Extend MFN pricing to Medicaid
2. Guarantee MFN pricing for newly launched drugs
3. Return increased revenues earned abroad to American patients and taxpayers
4. Provide for direct purchasing at MFN pricing

The letters warned that the administration would “deploy every tool in our arsenal” if companies refused to comply, while emphasizing that collaboration would be the preferred approach. ⁴

The Agreements

To date, 16 of the 17 targeted manufacturers have executed agreements with the administration – all large pharmaceutical companies, with Regeneron Pharmaceuticals as the sole remaining holdout.⁵,⁶ No mid-size or specialty manufacturers have participated. Many products included are older therapies, some with existing generics or biosimilars, and several already subject to Inflation Reduction Act (IRA) negotiations.

The terms of these agreements are not publicly available. What is known has been pieced together from White House fact sheets and manufacturer press releases. Based on available information, participating manufacturers appear to receive several incentives:

1. Tariff Exemptions: Three-year exemptions from any pharmaceutical import tariffs Trump may impose.⁵ Given that the administration has signaled intent to impose tariffs on pharmaceutical imports to encourage domestic manufacturing, these exemptions represent significant potential value.
2. Food and Drug Administration (FDA) Fast-Track Vouchers: Access to the Commissioner’s National Priority Voucher (CNPV) program, a pilot initiative allowing expedited FDA reviews of 1 to 2 months for qualifying products.⁷ Standard FDA review timelines are 10 months while priority reviews are 6 months, ⁸, although there may be some slippage due to FDA staff cut-backs. Vouchers allowing 1 to 2 month reviews represent an enormous competitive advantage in racing competitors to market.
3. Manufacturing Investment Commitments: Collective commitment of over $150 billion in US manufacturing and R&D investments. Notable individual pledges include Novo Nordisk ($10 billion), Eli Lilly ($27 billion), and AbbVie ($100 billion over the next decade).⁹,¹⁰,¹¹ While these investments may have been planned regardless of the MFN agreements, the announcements provided favorable political optics for both the administration and the manufacturers.

Some agreements reportedly extend to a manufacturer’s entire future portfolio, though how this would be operationalized remains unclear.

Despite the high-profile debut of MFN agreements and increased direct-to-consumer access, these initiatives are unlikely to have a significant impact on the prices most individuals and health plans will pay. According to a White House spokesperson, the negotiated discounts are primarily limited to state Medicaid programs (which already receive discounts for certain high-cost drugs), Medicare Part D beneficiaries, and consumers who pay cash for their prescriptions.¹²

Despite the often erroneous use of the term “MFN” across the policy landscape, the MFNs established in these voluntary direct manufacturer agreements are the only true MFN provisions that have been published to date since Trump’s executive order in 2025. Yet significant questions remain about what the fine print in these contracts state, the effects these contracts will have on drug spending, and whether additional agreements will be signed in the future.

TrumpRx: The Direct-to-Consumer Platform

TrumpRx.gov (TrumpRx), which launched on February 5, 2026, is the direct-to-consumer platform envisioned under Section 4 of the executive order. It is intended to facilitate patient access to MFN prices, but what was launched currently functions more as a search aggregator that directs patients to existing manufacturer channels to access direct-to-consumer prices.¹³

According to a White House fact sheet published on February 5, 2026, TrumpRx currently includes drugs from five of the manufacturers that have executed MFN agreements with the administration: AstraZeneca, Eli Lilly, EMD Serono, Novo Nordisk, and Pfizer.¹³ The platform features approximately 40 branded medications at reduced prices.¹²

TrumpRx is exclusively cash-pay – purchases do not count toward insurance deductibles or out-of-pocket maximums. For the roughly 92% of Americans with some form of health insurance,¹⁴ the practical benefit may be limited.

Adding to the confusion, TrumpRx prices do not necessarily reflect the MFN prices from the voluntary manufacturer agreements. For example, Novo Nordisk negotiated an MFN price for Ozempic of $245 per month, while TrumpRx lists a cash-pay price of approximately $350.¹⁵,¹⁶

Independently of TrumpRx, there has been a notable increase in manufacturers launching their own direct-to-consumer programs for specific products – some at price points even lower than the MFN or TrumpRx prices. Pfizer launched PfizerForAll, a digital platform providing same-day telehealth appointments, home delivery of medicines, and access to 15 of Pfizer’s most commonly prescribed medications.¹⁷ Eli Lilly’s LillyDirect, launched in January 2024, provides direct access to treatments including its obesity therapy Zepbound (tirzepatide), effectively circumventing traditional industry intermediaries.¹⁸ These manufacturer-driven programs illustrate that competitive market dynamics are already driving some prices below government-negotiated levels, further complicating the pricing landscape for patients trying to determine their best option.

This proliferation of price points for a single molecule across MFN agreements, TrumpRx, and manufacturer direct-to-consumer programs illustrates how opaque the landscape has become.

CMMI Models: MFN by Another Name

Between December 2025 and January 2026, the Center for Medicare and Medicaid Innovation (CMMI) introduced three demonstration models that reference international pricing to establish lower US prices.¹⁹

The Global Benchmark for Efficient Drug Pricing Model (GLOBE): would target Medicare Part B drugs and biologics – typically physician-administered in an outpatient setting in select categories. GLOBE is proposed as a mandatory model using prices from 19 reference countries. If implemented, the 5 year performance period would extend from October 1, 2026 through September 30, 2031, with a 7 year payment period extending through September 30, 2033 to allow time for rebate calculation, invoicing, collection, and reconciliation. During the initial trial period, GLOBE would be applied to approximately 25% of Medicare Part B beneficiaries in randomly selected geographic areas. CMS estimates the model would generate $11.9 billion in federal savings.¹²,¹⁹

The Guarding US Medicare Against Rising Drug Costs Model (GUARD): would target Medicare Part D prescription drugs – typically self-administered medications obtained through pharmacy benefits and covered under Medicare’s outpatient prescription drug program. GUARD is proposed as a mandatory model targeting specific therapeutic classes. Similar to GLOBE, if implemented, the 5 year performance period would extend from January 1, 2027 through December 31, 2031 with the payment period extending through December 31, 2033 and would apply to approximately 25% of Medicare Part D beneficiaries in randomly selected areas. CMS estimates GUARD would generate $14.1 billion in federal savings.¹²,¹⁹

Both GLOBE and GUARD would exclude drugs subject to a negotiated Maximum Fair Price (MFP) under the Medicare Drug Price Negotiation Program during their MFP price applicability period.¹²

The GENErating cost Reductions fOr US Medicaid Model (GENEROUS Medicaid): is a voluntary program under which participating manufacturers can offer MFN pricing for covered outpatient drugs currently part of the Medicaid Drug Rebate Program. The model benchmarks against the second-lowest net price across the G-7 plus Denmark and Switzerland, adjusted by gross domestic product (GDP) per capita using a purchasing power parity method.²⁰ Participation is voluntary for both manufacturers and states, with the pre-implementation application period running through March 31, 2026, and a 5 year implementation period that began on a rolling basis on January 1, 2026.²⁰

Notably, none of these models use the term “MFN,” yet their methodologies align with the MFN definition. These models remain proposals that have not yet been finalized. The public comment period for GLOBE and GUARD closed on February 23, 2026, and CMS must review comments before issuing final rules.¹² It remains unclear how the models would be operationalized in practice, and enactment is not certain. If finalized, both GLOBE and GUARD are likely to face legal challenges from pharmaceutical manufacturers and other concerned entities – especially given that participation is mandatory and manufacturers have no avenue to appeal CMS-calculated drug rebates aside from submitting a Suggestion of Error. Both rules will likely prompt challenges under the Administrative Procedure Act, which may impede or ultimately prohibit implementation.¹²

It is also unclear how prices under these models would interact with existing MFN agreements or IRA Maximum Fair Prices – though the prevailing assumption is that manufacturers with MFN agreements may be exempt from mandatory CMMI participation.

What this Means for Manufacturers

Even before the latest policy proposals, MFN had become a catch-all term used sometimes erroneously across multiple contexts. Four considerations stand out:

1. Patient confusion demands proactive engagement. Multiple price points, programs, and eligibility criteria will leave patients struggling to understand their options. Manufacturers should develop resources to support informed decision making without delaying access to care.
2. Reassess US and global pricing strategies. MFN (direct, voluntary agreements) and “MFN-like” (GLOBE, GUARD, GENEROUS) linked policies force a re-evaluation of domestic revenue forecasts and international pricing architectures. US pricing commitments may ripple through reference pricing systems in other markets, particularly for products approaching launch.
3. Evaluate the case for a direct MFN agreement. Manufacturers without a direct MFN agreement should assess whether the potential benefits – tariff relief, regulatory positioning, possible CMMI exemptions – outweigh the pricing concessions. The first 16 agreements suggest that early participation may carry advantages that become less available over time.
4. Build mechanisms for rapid response. The policy landscape is shifting quickly and 2026 in particular may represent a significant year of change. Organizations need cross-functional pathways to monitor developments and activate the appropriate commercial, regulatory, and legal teams.

Conclusion

MFN is the defining pricing topic in our industry, yet the term itself has become a source of confusion rather than clarity. Different programs, methodologies, and price points all travel under the same banner. For manufacturers, the first step is to understand precisely which MFN they are dealing with – and what it means for their business.