This transcript has been lightly edited for grammar and clarity using artificial intelligence.
Pharmacy Times: How do you interpret the legal risks and challenges of the most favored nation policy for manufacturers, pharmacies and payers?
Lanton: There's definitely both legal risk and challenges. And I think the way I'm going to answer this question is it's going to include everybody that we just mentioned: the manufacturers, the pharmacies, and the payers. So I think the legal risk for all is that, number one, there's a lack of clear enforcement rules and procedures. When you look at MFN, it's not a mandate or requirement. It's more of a veiled threat almost—where if you don't do these things, you know you're either going to get a tariff, there's a Section 232 investigation, there's some kind of negative reaction if you don't comply. So I think that we're going to start seeing a lot of compliance questions from companies. Just how are they going to comply? There's a lot of questions around exactly what some of these enforcement mechanisms are in order to make sure there is satisfactory compliance. So that's definitely a legal risk.
Key Takeaways
- MFN lacks clear enforcement mechanisms, leaving manufacturers and downstream entities unsure how to comply—pharmacies should monitor policy developments closely.
- MFN-driven price shifts could compress margins for wholesalers, PBMs, and pharmacies, and may lead to volatile supply or product delistings if margins become unsustainable.
- MFN expectations may force steeper discounts for biosimilars and alter launch sequencing for specialty drugs, potentially limiting product availability and complicating contracting and reimbursement negotiations.
Two, I think another legal risk is probably antitrust issues. And when people say, "How so?" it's like, well, if a company lowers the price in the U.S. for a drug, but then ships it over to the EU or somewhere else overseas, then that's a classic example of antitrust concerns. So that's definitely a legal risk that a company is going to have to figure out how they maneuver.
The third legal risk that I can think of is some of these—again, we don't have a metric or a standard for MFN yet. Maybe it's just early; maybe it's intended to make companies lower prices, and we never get that standard that we're looking for. But as it is now, there are going to be some conflicts with best-price calculations, with 340B, and with Medicare's noninterference clause.
I think some of the challenges when you ask is that, probably one, it might have an overall chilling effect on innovation. When you have a standard that forces you to get a certain profit, and you were used to a higher profit, you start thinking, well, there was a lot of R&D that went into that, and we've got to recoup our investment. So maybe I don't want to launch things in certain countries because of MFN acting like some of these European price controls. I think challenges would be tariffs and other trade issues. Three, probably lower IP valuation for U.S. manufacturers—see how that plays out. Four is going to be less reimbursement for everybody involved. And then five, it could force lower margins for PBMs, too.
Pharmacy Times: What are the implications of MFN for biosimilars and specialty drugs, especially in terms of contracting and reimbursement?
Lanton: While MFN pricing targets brand-name drugs that are lacking a biosimilar or generic alternative, I think it sets a precedent ultimately for lower drug prices. That expectation can trickle down to biosimilars, which typically offer a discount to the reference product, and that may force them to adapt to an even steeper discount to remain competitive. When you have complex biosimilars—especially monoclonal antibodies—I think the pressure from shrinking profit margins could make continued market presence less sustainable. Historically, the early market for filgrastim suggests a trend where competitive pressure can rapidly change market access over a few years. I think lastly, companies might delay or alter their launch sequencing for specialty drugs in places that might become a reference country or benchmark for MFN pricing. That could ultimately mean drugs prioritized in certain countries might instead launch elsewhere to avoid strict price controls.
Pharmacy Times: Could MFN status lead to unintended consequences in drug access or supply for community and specialty pharmacies?
Lanton: If a drug’s price goes below a certain threshold, the manufacturer may raise the price somewhere else—in another country—to affect the price that they're getting from the MFN. That could lead to more drastic price fluctuations. Or wholesalers may stop buying drugs that are priced too low because they already have thin margins. So we're going to see some definite negative consequences from the policy.
