On May 12, President Trump signed an Executive Order (EO) that directs drug manufacturers to reduce US drug prices to align with those paid in economically comparable countries, a concept known as most favored nation (MFN) pricing. The EO outlines a series of near-term steps the federal government may take to make manufacturers lower their US drug prices. One of these steps is implementing a direct-to-consumer (DTC) purchasing program to enable manufacturers to make MFN pricing available to consumers.

The EO provides limited detail on how a DTC program would be structured and operationalized or what the role of government would be. Additionally, there is a fundamental question of whether the goal is to establish a DTC channel that affects the physical distribution model of a product, enables patients to directly benefit from MFN pricing, or a combination of the two. There is also uncertainty on whether it applies to medical and pharmacy benefit products and the subsequent operationalization, channel and reimbursement implications. Avalere Health has identified a range of potential approaches for setting up a DTC program in the context of MFN – ranging from incremental in nature and building on existing market models to the establishment of a new government-facilitated purchasing channel.

Below, we outline the spectrum of potential approaches for structuring a DTC program to facilitate MFN access and pricing. Implementation considerations and potential policy and market access pathways for these approaches will likely vary based on drug-specific factors (retail vs. specialty, pharmacy benefit vs. physician administered) and by market segment (commercial, Medicare Parts B and D, Medicaid).

Figure 1. Potential Approaches for Structuring a Direct-to-Consumer Program to Facilitate MFN Access and Pricing 

Next Steps

Biopharmaceutical companies and payers face key decisions in the upcoming months, including deciding whether to participate in a voluntary MFN model, developing and executing policy and access strategies to shape these changes, and evolving their business and portfolio strategies to reflect new market realities.

Avalere Health’s seasoned experts in market access, US and global pricing strategy, and federal and state policy support organizations with a range of tailored activities, including:

• Analysis of the feasibility and opportunity of participating in a voluntary MFN program
• MFN implementation scenarios and implications for both policy and business strategy
• DTC strategies landscape, benchmarking assessment and program design
• Portfolio impact and risk assessments
• Assessment of the implications of MFN program participation on IRA Medicare negotiation
• Stakeholder mapping and engagement planning
• Support for public comments and federal engagement
• Product level access and pricing strategy, both US and global

With robust access to domestic and international pricing data, latest Medicare utilization data, and in-country experts across several key markets, we are well-positioned to support you across a number of areas. Connect with us to learn more.