On May 20, 2025, the U.S. Department of Health and Human Services (HHS) announced the implementation of Most Favored Nation (MFN) pricing targets for prescription drugs, following an executive order by President Donald Trump. This policy aims to align U.S. drug prices with the lowest prices found in Organisation for Economic Co-operation and Development countries with a GDP per capita of at least 60% that of the U.S.

While MFN is not yet finalized and many details remain uncertain, it signals a renewed federal interest in tying U.S. drug prices to international benchmarks. For 340B-covered entities, it’s important to stay informed—even if the direct impact of this model is still taking shape.

What Is the MFN Model?

The MFN model proposes to limit Medicare reimbursement for certain high-cost drugs to the lowest price available in other nations with similar economic status. Specifically, it targets brand-name drugs without generic or biosimilar competition—often the same drugs that are central to both specialty care and 340B program operations.

Although the rule was initially blocked in court and later withdrawn, HHS has now indicated it is taking immediate steps to enforce the executive order, potentially reviving a modified version of the policy

What Does This Mean for 340B-Covered Entities?

While the MFN model does not directly modify 340B pricing or participation, it could have indirect consequences for hospitals, health centers, and other 340B-covered providers. Some key considerations include:

1. Reimbursement Pressure

If Medicare reimbursement is reduced through MFN pricing, it could affect the spread between acquisition costs and reimbursement amounts for covered drugs. This may result in tighter margins on medications that help support patient care programs under the 340B model.

2. Manufacturer Behavior

Manufacturers may respond to federally imposed price ceilings by reevaluating their strategies across payer types. This could include more aggressive restrictions on contract pharmacy arrangements or further changes to data reporting expectations—particularly if drug revenue is being reduced elsewhere.

3. Policy Signaling

Even if MFN itself is not fully implemented, it reinforces a broader policy direction: one where price transparency, international benchmarking, and tighter reimbursement are central to federal cost containment. This could influence future rulemaking related to drug pricing, reimbursement methodologies, or even 340B program oversight.

What’s Concrete—and What’s Not

It’s important to note that no final rule has been published, and HHS has not outlined a specific timeline or implementation mechanism. While public messaging around the executive order is active, the policy is not yet in effect—and may continue to evolve through legal, legislative, or regulatory channels.

At this time, covered entities are not required to make any changes to their pricing or billing processes in response to MFN. However, we recommend monitoring developments closely.

Final Thoughts

The MFN model may still be in flux, but it reflects a growing national emphasis on affordability and transparency in drug pricing. While 340B is not directly implicated, the downstream effects of pricing reforms are worth watching.

If your organization has questions about how MFN-related policy or similar efforts could affect your program performance, RxTrail is here to support you with proactive strategy and ongoing guidance.

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