Prescription drug pricing is again at the center of U.S. healthcare policy. The latest focus is Most-Favored-Nation (MFN) pricing, an approach that uses prices paid in other economically comparable countries as benchmarks for U.S. drug prices, payments, or rebates. The basic idea is simple: Americans should not always pay substantially more for the same medicines than patients in comparable countries.
But MFN is not a single policy. The current framework includes Executive Order 14297, the voluntary GENEROUS Medicaid model, and proposed GLOBE and GUARD models for Medicare Part B and Part D.¹⁻⁴ The executive order 14297 also directs the Department of Health and Human Services (HHS) to facilitate direct-to-consumer purchasing pathways for prescription drugs at MFN-aligned prices.¹ These initiatives operate alongside Medicare drug-price negotiation under the Inflation Reduction Act, Medicaid rebates, Medicare inflation rebates, commercial rebates, and pharmacy benefit manager contracting.²⁻⁵
Here are ten questions that explain what MFN is, what it may change, and where the policy risks are most concentrated.
1. What does MFN drug pricing mean?
At its core, MFN pricing ties U.S. drug prices, payment amount, or rebate to prices available in selected foreign countries.
The details matter. Some MFN approaches use international prices as benchmarks for calculating supplemental rebates. Others would integrate those benchmarks into Medicare payment or rebate formulas.²⁻⁴ The GENEROUS Medicaid model, for example, is designed to give participating states access to supplemental rebates that align Medicaid net prices with prices in selected other countries. GLOBE and GUARD, if finalized, would use international benchmarks to assess rebates for certain Medicare Part B and Part D drugs when U.S. prices exceed benchmark levels.
This distinction is important. A lower government net price does not automatically mean a patient pays less at the pharmacy counter. A rebate paid to Medicare or Medicaid may reduce government spending while having limited immediate effect on what patients pay out of pocket.
2. Why focus on medicines when the entire U.S. healthcare system is expensive?
Supporters of MFN point to one striking fact: the United States pays substantially more for many brand-name medicines than other high-income countries. Using 2022 data, RAND estimated that U.S. manufacturer gross prices for brand-name originator drugs were 422% of prices in comparison countries.⁶ After adjusting for estimated U.S. rebates, U.S. net prices for brand-name originator drugs remained more than three times as high as prices in other countries.⁶
At the same time, prescription drugs represent only a fraction of total U.S. healthcare spending. CMS reported that in 2024, retail prescription-drug spending was approximately $467 billion, compared with about $1.63 trillion for hospital care and $1.11 trillion for physician and clinical services.⁷
This means MFN could address an important pricing disparity, but it cannot solve the broader problem of high healthcare costs on its own.
3. Are international price comparisons genuinely fair?
Not necessarily. International comparisons are highly sensitive to methodology.⁶ The results can vary depending on:
- whether the analysis uses list prices, gross manufacturer prices, or net prices after rebates;
- which countries are included in the reference basket;
- whether prices are adjusted for purchasing power or GDP;
- how products are matched by molecule, formulation, dose, route of administration, package size, indication, and launch date;
- how confidential rebates and managed-entry agreements are handled.
RAND’s international drug-pricing work illustrates how large the gap can be, but also how methodology affects the estimate. The same report found that U.S. prices were much higher for brand-name originator drugs, while U.S. prices for unbranded generics were lower than in many comparison countries.
Broader economic adjustments also have limitations. Purchasing-power parity can help compare overall healthcare spending across countries, but the Organisation for Economic Co-operation and Development (OECD) notes that healthcare prices do not always move in parallel with prices in the broader economy because many healthcare services are delivered locally and operate under different market dynamics.⁸
For these reasons, international benchmarks are not purely objective measurements—they are the product of methodological choices. A credible MFN framework should clearly disclose which countries are included, whether list or net prices are used, how rebates are handled, how products are matched, and how frequently benchmarks are updated.
Without that transparency, a precise-looking number may create a false sense of precision while masking important assumptions.
4. What is the current status of MFN?
As of July 2026, MFN is best understood as a portfolio of related but distinct initiatives.
The GENEROUS Medicaid model launched in January 2026 and is voluntary for both manufacturers and states.² CMS describes the model as a five-year initiative intended to align Medicaid net prices for intended drugs with what selected other countries pay through supplemental rebates.
For Medicare, GLOBE and GUARD remain proposed mandatory models. GLOBE would apply to selected Part B drugs administered in clinical settings and, as proposed, would launch on October 1, 2026. GUARD would apply to selected Part D drugs and, as proposed, would begin on January 1, 2027. Both models would run through 2031, with rebate invoicing and reconciliation continuing into 2033.³,⁴
TrumpRx is separate from the CMS payment models. It is a direct-to-consumer pricing portal that lists discounted cash-purchase options for selected medications and directs consumers to manufacturers or other purchasing pathways. The current public browse page shows a named list of available medications and displayed discounts, rather than a comprehensive prescription-drug pricing system.⁹
5. Does MFN make IRA drug price negotiation redundant?
No. The two approaches use different tools to address high drug costs.
Under the IRA Medicare Drug Price Negotiation Program, CMS and participating manufacturers negotiate maximum fair prices for selected Medicare drugs. CMS has published selected drugs and negotiated prices for applicable price years, with negotiated prices updated and expanded over time.⁵
MFN, by contrast, uses prices in other countries as benchmarks. In the proposed GLOBE and GUARD models, those benchmarks would be used to calculate rebates rather than to negotiate a drug-specific price directly.
The practical takeaway is that one policy does not replace the other. Manufacturers, payers, providers, and patients may face several overlapping pricing rules over the life cycle of a drug: launch pricing, commercial rebates, Medicaid rebates, Medicare negotiation, inflation rebates, MFN-based rebates, and direct-purchase offers.
6. Will MFN lower what patients actually pay?
That depends on benefit design and implementation.
A lower price for Medicare or Medicaid does not always translate directly into a lower patient bill. Patient costs can depend on deductibles, coinsurance, formulary placement, pharmacy networks, prior authorization, step therapy, site of care, and whether a medicine is purchased through insurance or with cash.
GLOBE creates a more direct link for some Part B patients because CMS states that the model is expected to lower out-of-pocket drug costs for Medicare beneficiaries using included Part B drugs. GUARD is also described as intended to reduce costs for Part D enrollees, but Part D benefit design, plan formularies, and rebate flows make the patient-level effect more complex.³,⁴
Direct-purchase options may help some uninsured patients, cash-paying patients, or people with high deductibles. But a discounted brand-name medicine may still cost more than a generic alternative, and a cash purchase may not count toward an insurance deductible or out-of-pocket maximum.
The simplest test is whether patients actually pay less without facing new barriers to treatment.
7. Where do pharmacy benefit managers (PBMs) fit?
PBMs remain central to U.S. drug access and affordability. MFN may change the benchmark price for selected drugs, but PBMs still influence formulary placement, utilization management, pharmacy networks, rebate flows, spread pricing, and patient steering.
The Federal Trade Commission reported that pharmacies affiliated with the three largest PBMs generated more than $7.3 billion in dispensing revenue above estimated acquisition costs for the specialty generic drugs studied between 2017 and 2022. The report also estimated that the three largest PBMs generated about $1.4 billion in spread-pricing income on those drugs.¹⁰
These findings do not mean PBMs explain every drug-pricing problem. They do show why changing a manufacturer benchmark may not be sufficient. Savings can be diluted or redirected as they move through the supply chain.
For employers, health plans, policymakers, and patients, the key question is whether savings are passed through or absorbed elsewhere.
8. What could MFN mean for pharmaceutical innovation?
The innovation concern is straightforward: if manufacturers expect lower U.S. revenue for selected drugs, they may change investment, licensing, launch, or evidence-generation strategies.
Lower expected revenue could affect:
- therapeutic-area prioritization;
- willingness to invest in high-risk or high-cost technologies;
- licensing and acquisition valuations;
- late-stage development decisions;
- post-approval evidence commitments;
- launch sequencing across countries.
The size of any effect depends on which drugs are included, how benchmarks are calculated, whether confidential net prices are used, and how broadly the policy expands.
RAND’s analysis of 2018-2022 launch data found that more than half of the new medicines launched first in the United States, with an average lag of about one year before launch in other major markets.¹¹
If a low foreign price can reduce a U.S. benchmark, manufacturers may respond by delaying launches in smaller markets, limiting public price concessions, or relying more heavily on confidential agreements. That is a plausible strategic response, not a guaranteed outcome. Regulation, market size, health technology assessment, supply constraints, and reimbursement timelines also influence launch timing.
9. What could MFN mean outside the United States?
MFN could shift pricing pressure rather than simply eliminate it.
Countries that have historically negotiated lower drug prices may face pressure from manufacturers to accept higher prices if those prices are used to set U.S. benchmarks. In response, foreign health systems may negotiate harder, delay coverage decisions, expand confidential discounts, or narrow access criteria. Manufacturers may also rethink launch sequencing.
RAND’s 2018–2022 analysis documented that many new medicines reached the U.S. market earlier than other major markets.¹¹ That does not prove pricing is the only or main reason for launch timing. It does show why international reference pricing can have consequences beyond U.S. spending.
The key question is whether MFN causes prices to converge across countries, or whether it mainly changes how prices, discounts, and product launches are managed.
10. How should MFN success be measured?
MFN should be evaluated on whether it improves affordability while preserving appropriate access and sustaining incentives for future innovation. Key measures should include:
- patient out-of-pocket costs;
- treatment initiation and abandonment rates;
- adherence and persistence;
- formulary restrictions, prior authorization, and step therapy;
- Medicare and Medicaid net savings;
- premium effects;
- employer and commercial-market spillovers;
- provider acquisition and reimbursement effects for Part B drugs;
- availability and timing of new drug launches;
- uptake of generics and biosimilars;
- manufacturer investment and pipeline changes.
These outcomes will take time to assess because manufacturers, insurers, PBMs, providers, patients, employers, and foreign governments will all respond strategically.
Early savings estimates will be useful, but the real test is whether lower prices translate into durable affordability gains without undermining access to clinically appropriate medicines.
The Bottom Line
MFN is an ambitious attempt to address a real problem: the high prices Americans pay for many brand-name medicines compared with patients in other countries.
Drug pricing, however, is not a single transaction. Manufacturers, government programs, insurers, PBMs, employers, providers, and patients all influence who ultimately pays what.
The most important questions are practical:
- Will patients pay less?
- Will access improve or become more restricted?
- How will MFN interact with IRA negotiation, Medicaid rebates, and Medicare inflation rebates?
- Will savings reach patients, employers, and taxpayers, or remain elsewhere in the system?
- Will manufacturers change launch timing, contracting, or investment strategy?
- Will international pricing become more transparent, or more confidential?
MFN should ultimately be judged not by the size of an announced discount, but by whether it delivers sustainable savings while preserving access to medicines and supporting continued innovation.
References
1. The White House. “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” Executive Order 14297, May 12, 2025.
2. Centers for Medicare & Medicaid Services, CMS Innovation Center. “GENEROUS: Generating Cost Reductions for U.S. Medicaid Model.”
3. Centers for Medicare & Medicaid Services, CMS Innovation Center. “GLOBE: Global Benchmark for Efficient Drug Pricing Model.”
4. Centers for Medicare & Medicaid Services, CMS Innovation Center. “GUARD: Guarding U.S. Medicare Against Rising Drug Costs Model.”
5. Centers for Medicare & Medicaid Services. “Medicare Drug Price Negotiation Program: Selected Drugs and Negotiated Prices.”
6. Mulcahy, Andrew W., Daniel Schwam, and Susan L. Lovejoy. “International Prescription Drug Price Comparisons: Estimates Using 2022 Data.” RAND Corporation, 2024.
7. Centers for Medicare & Medicaid Services, Office of the Actuary. “National Health Expenditure Fact Sheet.”
8. Organisation for Economic Co-operation and Development. “Prices in the Health Sector.” In Health at a Glance 2025: OECD Indicators. OECD Publishing, 2025.
9. The White House. “President Donald J. Trump Announces Expansion of TrumpRx.gov to Bring Americans Transparency and Choice on Everyday Medicines.” May 18, 2026.
10. Federal Trade Commission. “Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers.” Second Interim Staff Report, January 2025.
11. Mulcahy, Andrew W. “Comparing New Prescription Drug Availability and Launch Timing in the United States and Other OECD Countries.” RAND Corporation, 2024.
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