The White House announced on August 31, 2026, that nine additional pharmaceutical manufacturers had signed most-favored-nation (MFN) pricing agreements with the federal government. The new signatories include Alcon, Astellas Pharma, BeOne Medicines, BridgeBio, CSL, Kyowa Kirin, Sun Pharma, Teva Pharmaceuticals, and UCB. With this third wave, the total roster of participating manufacturers has grown to 26, now representing approximately 89% of the branded prescription drug market, according to the administration. Teva, which on August 31 had announced only an intent to reach an agreement, finalized its agreement on October 22, 2026.
From Executive Order to 26 Agreements
President Trump signed Executive Order 14297, “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients,” on May 12, 2025, directing federal agencies to pursue an MFN price for drugs sold in the United States. The concept, loosely defined, calls for a price that approximates the lowest price a manufacturer receives in any economically comparable country, net of rebates, discounts, and similar concessions. The executive order did not itself set a price or create a payment rule. Instead, it directed the U.S. Department of Health and Human Services (HHS) to seek “significant progress” through voluntary manufacturer commitments, with the possibility of future rulemaking if progress stalled. President Trump sent letters to seventeen of the largest manufacturers on July 31, 2025, and the first agreement, with Pfizer, followed on September 30, 2025.
The Centers for Medicare & Medicaid Services (CMS) then opened a voluntary Medicaid pathway, the GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model, on November 6, 2025. A second wave of nine major manufacturer agreements came on December 19, 2025, followed by the launch of the direct-to-consumer TrumpRx.gov platform on February 5, 2026. On April 2, 2026, the administration added a Section 232 tariff proclamation tying tariff relief to MFN participation. The August 31 announcement marked the third wave. By September 18, 2026, every state had applied to join GENEROUS. On September 29, 2026, the Section 232 tariffs began applying to patented drugs from all remaining manufacturers.
The nine newest manufacturers have also committed to invest at least $19.6 billion collectively in U.S. manufacturing. Several of them will contribute active pharmaceutical ingredients to the Strategic Active Pharmaceutical Ingredients (APIs) Reserve, a stockpile meant to reduce reliance on foreign API sources. Contributors include UCB (levetiracetam), Sun Pharma (clindamycin and doxycycline), Teva (metronidazole and amlodipine), and Astellas (tacrolimus).
A Structure Built to Avoid the 2020 Model’s Fate
This is not the administration’s first attempt at MFN pricing, and the design of the current framework reflects lessons learned from the 2020 model.
CMS issued an interim final rule in November 2020 establishing a mandatory, nationwide MFN payment model for Medicare Part B drugs. That rule invoked Section 1115A of the Social Security Act, the same authority that established the CMS Innovation Center and authorizes CMS to test new payment and service-delivery models. Because CMS bypassed notice-and-comment rulemaking under the Administrative Procedure Act’s (APA) good-cause exception, manufacturers and trade associations sued in multiple federal courts. At least one court entered a nationwide preliminary injunction before CMS proposed to rescind the rule roughly a year later.
The current framework was built to avoid that vulnerability in three structural ways:
- First, rather than a single mandatory rule altering Medicare payment for all providers, the government has pursued individually negotiated bilateral commitments. This approach may reduce exposure to challenges involving the kind of generally applicable “final agency action” that gives rise to APA review.
- Second, the Medicaid-facing piece of the framework is voluntary at both the manufacturer and state level. Section 1115A itself limits administrative and judicial review of the selection, scope, and design of CMS Innovation Center models under 42 U.S.C. §1315a(d)(2).
- Third, the administration has recruited an entirely separate source of leverage: Section 232 tariff authority under the Trade Expansion Act. This authority operates independently of healthcare law and is subject to a distinct framework for judicial review.
On September 30, 2026, however, CMS finalized the Global Benchmark for Efficient Drug Pricing (GLOBE) Model, a mandatory Section 1115A model that, beginning in 2027, ties manufacturer rebates on certain Medicare Part B drugs to international prices. Unlike the 2020 rule, GLOBE went through notice and comment and applies only in randomly selected areas covering about a quarter of Original Medicare Part B beneficiaries. CMS intends to waive participation for manufacturers in GENEROUS, which it estimates will leave only four manufacturers subject to the model. On October 7, 2026, PhRMA sued in the U.S. District Court for the District of Columbia to vacate the rule, arguing that it exceeds CMS’s authority and that Section 1315a(d)(2) does not bar review. A companion Part D model, GUARD, has not been finalized.
Two Pricing Floors to Watch: Medicaid Best Price and Private Most-Favored-Customer Clauses
For pharmacies and manufacturers alike, one of the most consequential legal questions raised by these agreements is how they affect existing price floors.
Under the Medicaid Drug Rebate Program, a manufacturer’s rebate obligation is tied to “Best Price,” which is generally the lowest price available to any commercial purchaser, and to Average Manufacturer Price (AMP), which generally reflects manufacturer prices to wholesalers for drugs distributed to retail community pharmacies and prices to retail community pharmacies purchasing directly from manufacturers, subject to applicable adjustments and exclusions. If an MFN discount counted as Best Price, it would lower the reported Best Price and potentially increase Medicaid rebate obligations nationwide, because Best Price is a nationwide benchmark, not a state-by-state one.
CMS has taken the position that supplemental rebates paid under the GENEROUS Model are excluded from Best Price and AMP calculations. This treatment is consistent with the long-standing statutory treatment of supplemental Medicaid rebates. The exclusion also helps explain the use of supplemental-rebate architecture for Medicaid rather than simply directing manufacturers to cut list prices. It allows the administration to pursue deep MFN discounts without triggering a nationwide Best Price cascade that could also affect 340B ceiling prices.
That protection, however, is specific to the rebate pathway. Where a manufacturer instead implements an MFN commitment through a direct reduction to WAC (the wholesale acquisition cost, or list price, a manufacturer charges wholesalers before rebates), ordinary Best Price mechanics apply in full. The downstream effects on 340B pricing and Medicaid rebate obligations can be significant, and manufacturers should model them carefully before finalizing pricing.
Pharmacies, group purchasing organizations (GPOs), and 340B covered entities should ask, product by product and channel by channel, which implementation path a given manufacturer used. “MFN pricing” does not mean the same thing everywhere, and the compliance and economic consequences vary significantly depending on the mechanism.
There is a second, less-discussed price floor these agreements can trigger: the most-favored-customer clause. Many manufacturer agreements with GPOs, wholesalers, and even some payors and pharmacy benefit managers (PBMs) contain contractual MFN or “most-favored-customer” provisions guaranteeing the counterparty pricing no less favorable than that offered to any other purchaser.
These contractual definitions may be broader than the federal Best Price framework, reaching “any purchaser” or “any customer” rather than limiting themselves to purchasers within the Medicaid Drug Rebate Program. CMS’s exclusion of GENEROUS rebates from statutory Best Price says nothing about whether that same price independently triggers a private contract’s repricing clause. As more manufacturers layer MFN commitments onto their pricing structures, counterparties holding these clauses have a strong incentive to invoke them.
Manufacturers should audit existing GPO, wholesaler, and payor agreements now, before the next round of MFN announcements compounds the exposure.
What MFN Drug Pricing Means for Pharmacies and Manufacturers
For pharmacies, the temptation is to assume a manufacturer’s MFN commitment will translate into lower acquisition costs at the point of dispensing. It often will not, at least not on the same timeline. The GENEROUS Model’s supplemental rebates flow from manufacturers to states after the fact. They do not directly change WAC, and they do not directly change the National Average Drug Acquisition Cost (NADAC) survey data that drives most state Medicaid reimbursement benchmarks. A pharmacy filling a Medicaid prescription for an MFN-covered product may still be buying, and being reimbursed, based on pre-MFN benchmarks for months after the underlying agreement takes effect, even as the state ultimately captures rebate savings that never reach the dispensing pharmacy.
Pharmacies dispensing the specialty and rare-disease products that the August 31 announcement specifically targeted (hemophilia, Parkinson’s disease, macular degeneration, and oncology therapies, among others) should track WAC and NADAC movement independently of MFN headlines rather than assume improved economics without confirming the mechanism behind a given commitment.
For manufacturers, the priority is mapping. Each product covered by an MFN commitment should be mapped to its implementation path: bilateral pricing letter, GENEROUS supplemental rebate, direct WAC reduction, or Section 232 onshoring combination. The compliance obligations, Best Price exposure, and disclosure considerations differ meaningfully across paths. Publicly traded manufacturers should also assess whether their MFN agreements, onshoring commitments, or Strategic API Reserve contributions trigger disclosure obligations under Securities and Exchange Commission (SEC) rules, particularly where the agreement’s terms have not otherwise been made public.
Looking Ahead
Lawmakers have already requested copies of the executed MFN agreements, along with details on how commitments will be enforced and how they are expected to interact with Medicare and Medicaid spending. Senate Finance Committee Ranking Member Ron Wyden renewed that request in September 2026. Patient advocacy groups have specifically noted that the terms of the August 31 agreements, including how the reduced prices will be implemented and enforced, have not been disclosed.
That lack of transparency raises a fundamental question that neither the administration nor most commentary has fully addressed: what recourse exists if a manufacturer’s pricing or investment commitments are not honored? Many of these arrangements appear to operate outside the grant, contract, or regulatory frameworks that ordinarily carry built-in enforcement tools. The administration has said it is working with Congress to codify elements of the framework into law, which could resolve some of this uncertainty, but could also convert a flexible, manufacturer-by-manufacturer negotiation into a fixed statutory obligation. That is a tradeoff most manufacturers have not yet had to weigh.
How Frier Levitt Can Help
Frier Levitt represents pharmacies, specialty pharmacies, 340B covered entities, and pharmaceutical manufacturers navigating complex regulatory changes. We help manufacturers map MFN commitments to their applicable legal frameworks, assess Best Price and AMP exposure, and audit GPO, wholesaler, and payor contracts for most-favored-customer clause risks. Our attorneys also help pharmacies and covered entities evaluate the practical effects of MFN and GENEROUS Model rebates on acquisition costs, reimbursement benchmarks, and 340B pricing, and we advise on the contracting and compliance issues that arise as direct-to-consumer channels like TrumpRx.gov continue to expand. Contact Frier Levitt today.
