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Thursday, Oct 30, 2025
Outside the box.
White House MFN Drug Pricing Deals Raise Major Questions for Medicaid Cost Savings
Agreements with Pfizer and AstraZeneca touted as lowering state Medicaid costs, but details are scarce and key hurdles remain
The White House has announced agreements with Pfizer and AstraZeneca to extend “most-favoured-nation” (MFN) drug pricing to all U.S. state Medicaid programmes, yet pivotal implementation details remain undisclosed.
Under the terms highlighted by the Administration, both manufacturers will offer their products at prices no higher than those in other developed countries, a move intended to deliver “millions of dollars in savings”.
The agreements stem from a May 2025 executive order that directed manufacturers to align U.S. drug prices with those abroad.
The Pfizer deal was announced on 30 September and AstraZeneca’s followed on 10 October.
Each deal commits the company to MFN pricing for Medicaid and new product launches, investment in U.S. manufacturing and discounts for direct-to-consumer purchases via a forthcoming platform labeled TrumpRx.gov.
Despite the high-profile announcements, there is no public clarity on how the deals interface with the existing Medicaid Drug Rebate Program (MDRP), which already secures large mandated rebates from manufacturers—averaging rebate levels of 77 % of retail price for brand-name drugs in fiscal 2023. Without clarity, states cannot determine whether net prices under MFN will be lower than today or if brands will restructure rebate or formulary arrangements to offset losses.
Key open questions include whether MFN pricing replaces or supplements the MDRP basic and inflation-related rebates, and whether open-formulary protections for state Medicaid programmes will remain intact if MDRP obligations are altered.
Experts note that if AMP (average manufacturer price) is recalibrated based on MFN levels, inflation-linked rebates could shrink or disappear entirely.
Moreover, neither the Administration nor the manufacturers has provided standard terms such as whether states must favour certain drugs in exchange for lower rates, how long the pricing applies, or how savings are shared.
Industry analysis points out that the deals may signal a structural reset in drug-pricing strategy: the MFN model ties U.S. prices to the lowest overseas rates while encouraging domestic investment and manufacturing.
Yet several commentary pieces caution that Medicaid already obtains some of the lowest net drug prices in the world and that structural reforms rather than headline bargains may drive savings.
In the absence of full transparency, state Medicaid directors are left unable to assess the fiscal impact.
As the deals move toward implementation, the ultimate if-and-how of cost savings for the nation’s largest public drug-purchasing programmes remains an open question.
Under the terms highlighted by the Administration, both manufacturers will offer their products at prices no higher than those in other developed countries, a move intended to deliver “millions of dollars in savings”.
The agreements stem from a May 2025 executive order that directed manufacturers to align U.S. drug prices with those abroad.
The Pfizer deal was announced on 30 September and AstraZeneca’s followed on 10 October.
Each deal commits the company to MFN pricing for Medicaid and new product launches, investment in U.S. manufacturing and discounts for direct-to-consumer purchases via a forthcoming platform labeled TrumpRx.gov.
Despite the high-profile announcements, there is no public clarity on how the deals interface with the existing Medicaid Drug Rebate Program (MDRP), which already secures large mandated rebates from manufacturers—averaging rebate levels of 77 % of retail price for brand-name drugs in fiscal 2023. Without clarity, states cannot determine whether net prices under MFN will be lower than today or if brands will restructure rebate or formulary arrangements to offset losses.
Key open questions include whether MFN pricing replaces or supplements the MDRP basic and inflation-related rebates, and whether open-formulary protections for state Medicaid programmes will remain intact if MDRP obligations are altered.
Experts note that if AMP (average manufacturer price) is recalibrated based on MFN levels, inflation-linked rebates could shrink or disappear entirely.
Moreover, neither the Administration nor the manufacturers has provided standard terms such as whether states must favour certain drugs in exchange for lower rates, how long the pricing applies, or how savings are shared.
Industry analysis points out that the deals may signal a structural reset in drug-pricing strategy: the MFN model ties U.S. prices to the lowest overseas rates while encouraging domestic investment and manufacturing.
Yet several commentary pieces caution that Medicaid already obtains some of the lowest net drug prices in the world and that structural reforms rather than headline bargains may drive savings.
In the absence of full transparency, state Medicaid directors are left unable to assess the fiscal impact.
As the deals move toward implementation, the ultimate if-and-how of cost savings for the nation’s largest public drug-purchasing programmes remains an open question.
