The Price Reckoning Series: Part 1: The Price Convergence

Lance Grady | EVP, Managing Partner
Greg Gregory, PhD | Executive VP, Partner

Drug pricing is no longer one of many levers in a commercialization strategy. It has become the central axis around which access, contracting, and lifecycle management turn. Recent reforms in the U.S. are converging to reshape the economics of drug launches, narrow post-launch flexibility, and intensify scrutiny of contracting models. 

• The Inflation Reduction Act (IRA) introduces Medicare drug price negotiations and Part D redesign, compressing net revenue opportunities. 

• The One Big Beautiful Bill Act (OBBBA) introduces Medicaid eligibility and financing reforms that may increase manufacturer liabilities and shift utilization dynamics. 

• Tariffs and trade policy are now part of the pricing equation, with Section 301 tariffs raising supply chain costs and Section 232 tariff relief increasingly tied to domestic manufacturing commitments. 

• Health Resources and Services Administration’s (HRSA) new 340B Rebate Model Pilot Program is testing a rebate-based approach in place of upfront discounts, creating operational and compliance challenges that could set new precedents. 

• The Most-Favored-Nation (MFN) executive order signals a future where U.S. prices may be tethered to international benchmarks resulting in many manufacturers negotiating agreements directly with the Executive Administration. 

• At the same time, PBMs face mounting scrutiny, creating pressure for new contracting models that reduce reliance on rebate-driven economics. 

For manufacturers, this convergence represents not just incremental policy shifts but a structural change in how pricing strategies must be conceived, defended, and executed. 

How U.S. Drug Pricing Policies Are Converging

The current U.S. environment reflects a decisive shift from pricing flexibility to pricing containment. Each policy lever reshapes a different corner of the market, and together they tighten the walls around manufacturers’ pricing latitude. 

• CMS Price Negotiation via the Medicare Drug Price Negotiation program has moved into execution with 25 Part D products being deemed eligible for repricing. Manufacturers now face a revamped negotiation window with CMS, limited ability to challenge methodologies, and penalties for noncompliance that essentially force participation. Stakeholders are anxiously awaiting publication of 2026 Part D formularies that will provide insights into how Part D plans and CMS will avail repriced drugs to Medicare beneficiaries. The ripple effect extends well beyond the selected drugs: as the MFP benchmarks now cast a valuation on therapeutic areas and may also influence commercial formulary negotiations pulling federal pricing logic into the private commercial market. 

• OBBBA & Medicaid Changes: The One Big Beautiful Bill Act introduces stricter Medicaid eligibility checks, work requirements, and redeterminations expected to significantly reduce enrollment. It also limits provider taxes and state-directed payments, raising financing pressure on states. While the Medicaid Drug Rebate Program’s core formulas remain unchanged, these shifts will alter utilization patterns, shrink covered populations, and complicate forecasting for rebate obligations and 340B interactions. 

• 340B Rebate Model Pilot Program: HRSA’s voluntary pilot moves 340B from upfront discounts to a rebate-based model. This brings greater administrative overhead, new data-reporting requirements, and potential “best price” landmines. If widely adopted, it would not only transform compliance burdens but also shape how commercial contracts are structured to maintain rebate integrity. 

• Most-Favored-Nation Pricing: While operational details remain unsettled, MFN-style tethering of U.S. prices to international comparators would hardwire external reference pricing into U.S. regulations. Even absent full implementation, the policy signal is clear: manufacturers are already considering ex-U.S. list prices or delaying launches to shield U.S. pricing from downward pull. Moreover, manufacturers are also voluntarily lowering prices for certain products in domestic markets as well.  

Emerging Manufacturer Strategies in Response to Pricing Pressure

Within just the past week, large manufacturers have begun to pivot visibly in response to MFN and broader pricing pressure. Themes and strategies include:

Direct-to-Patient Expansion

Companies are standing up new consumer-facing platforms that bypass traditional pharmacy benefit chains, offering discounts and reframing how patients access medicines. 

Cash-Pay and Affordability Programs

Deeply discounted cash-pay models, including flat monthly caps for chronic therapies, are moving from niche pilots to mainstream offerings. 

Global Price Harmonization

New launches are promised to be set at parity across developed markets, signaling that the longstanding premium U.S. price corridor is narrowing. This can play out in two ways: either U.S. prices move closer to ex-U.S. levels, or ex-U.S. list prices rise to maintain global balance and shield U.S. economics. 

Industrial Policy Trade-Offs

In return for tariff relief and regulatory flexibility, manufacturers are committing tens of billions in new U.S. manufacturing investment, aligning corporate strategy with national policy priorities. 

Industry Signaling

Trade associations are actively cataloging and promoting these access initiatives, underscoring that direct channels and affordability programs are now positioned as part of the industry’s public narrative. 

Together, these actions mark a structural shift: pricing pressure is no longer abstract policy debate, but a driver of immediate, consumer-facing moves that blend affordability, globalization, and industrial policy in ways the market has not seen before. 

PBM Reform

Policymakers at federal and state levels are challenging PBM spread pricing, rebate opacity, and formulary control. Proposals span rebate pass-through mandates, transparency reporting, and structural separation of benefit and distribution functions. The direction of travel is unmistakable: PBM leverage is eroding, and with it the rebate-driven contracting model that has dominated the past two decades. 

Each lever is important in isolation. But their combined effect is unmistakable: the era of flexible, U.S.-centric pricing strategies is over. Pricing has become the immovable center of gravity for every access decision. 

Implications for Manufacturers 

The convergence of these reforms is not simply changing line items on rebate calculations in GtN forecast models — it is restructuring how manufacturers must think about value protection across the entire lifecycle. Several implications stand out: 

• Launch Pricing as a Global Equation: U.S. launch prices may no longer be determined in isolation. With MFN risk and ex-U.S. spillovers, manufacturers are beginning to treat launch pricing as part of a global corridor—considering raising list prices abroad, delaying launches, or tailoring sequencing to protect U.S. economics. This requires embedding cross-market modeling into launch planning from day one. 

• Lifecycle Compression: The traditional U.S. ability to rely on post-launch list price increases is waning. While not disappearing entirely, those increases are becoming more constrained by inflationary rebate penalties, price transparency, likelihood of CMS negotiations, commercial spillovers, and hypothetical MFN-style tethering narrow the corridor. Because many ex-U.S. markets prohibit price increases after launch, international rigidity is increasingly capping U.S. flexibility. The strategic implication: lifecycle planning must lean less on across-the-board price lifts and more on indication expansion, contracting design, and ex-U.S. sequencing that avoids downward pull on U.S. market revenue potential. 

• Contracting Innovation: As rebate compression intensifies, manufacturers must explore models once considered niche — indication-based pricing, outcomes-linked agreements, and even direct sale or subscription approaches In parallel, pressure to reduce dependence on PBMs is pushing experimentation with Direct-to-Patient models, particularly visible in metabolics where affordability programs, telehealth distribution, and cash-pay channels are being scaled. These approaches won’t replace traditional contracting overnight, but they are moving from pilots to strategic levers that reshape patient access and payer dynamics. 

• PBM Reform and the Post-Rebate World: The erosion of PBM power could reshape manufacturer–payer dynamics more radically than IRA reforms themselves. If rebates cease to be the organizing principle of contracting, manufacturers must be ready to negotiate on total cost of care, adherence outcomes, and distribution models. Companies that continue to rely solely on rebate economics risk being caught flat-footed when PBM unbundling accelerates. 
  
  
• Evidence as Currency: In this new environment, payer-ready evidence becomes the most valuable solution. Robust clinical differentiation, real-world data, PICO-framed trials, and outcomes tracking will increasingly shape coverage decisions and inform contract terms. Manufacturers who underinvest in evidence generation will struggle to defend pricing corridors, regardless of policy or contracting creativity. 

Strategic Takeaways for Life Sciences 

While uncertainty remains, “no-regret” actions can be taken to get ahead:

1. Define price corridor guardrails across launch and lifecycle scenarios, informed by policy modeling, payer insights, and global spillover risk. 
2. Develop payer-ready evidence early, leveraging real-world evidence and PICO framing to strengthen value communication. 
3. Pilot alternative contracting and distribution structures that balance compliance with flexibility, from indication-based models to outcomes-linked agreements and direct-to-patient approaches. 
4. Stress-test gross-to-net assumptions across all mandatory and discretionary discounts considering policy reforms and market (payer) responses 
5. Prepare for PBM reform by designing contracting and data architectures that perform under transparency mandates, hybrid disintermediation, or structural unbundling. 

The convergence of U.S. drug pricing reforms is rewriting the rules of market access. For manufacturers, the challenge is to anticipate how these reforms will reshape contracting, evidence, and global strategy. 

Precision AQ partners with clients to build forward-looking pricing strategies — integrating policy scenario modeling, innovative contracting, and real-world evidence planning — to protect value from launch through lifecycle.