America’s drug pricing crisis is real. Patients skip doses, seniors split pills, and employers shoulder rising health costs year after year. That frustration has made the idea of Most Favored Nation drug pricing politically attractive: if other wealthy countries pay less, why shouldn’t the United States? The problem is that codifying MFN into law would be a blunt and ultimately incomplete solution to a much more complicated problem.
The appeal of MFN lies in its simplicity. It promises lower prices by tying what Americans pay to prices in other countries. But simplicity can be a trap. Drug pricing in the United States is not driven by manufacturers alone. It is shaped by a sprawling middle layer of pharmacy benefit managers, health systems, insurers, and government programs that often make the final cost borne by patients and employers far higher than the sticker price suggests.
That is why turning MFN into law would risk locking in a policy that sounds tough but leaves the real cost drivers untouched.
The most powerful intermediaries in the prescription drug market are the pharmacy benefit managers, or PBMs. These companies sit between drugmakers, insurers, pharmacies, and patients, and they control formularies, rebates, and patient access. In theory, they are supposed to negotiate lower prices. In practice, their business model often rewards complexity rather than savings.
PBMs frequently prefer drugs that generate the richest rebates, not necessarily the lowest net cost. That can steer patients toward medicines that look cheaper to insurers on paper but cost more at the counter. Employers that sponsor health plans may believe they are getting a bargain, only to find that rebates, spread pricing, and opaque fees have eaten up the savings before they reach workers and families. For the patient with a chronic condition who needs a monthly prescription, that distinction is not academic. It is the difference between adherence and abandonment.
MFN does nothing to fix that. If anything, it risks distracting lawmakers from the PBM practices that most directly shape what patients and employers actually pay.
A similar problem exists in the 340B drug pricing program. Created to help safety-net providers stretch scarce resources, 340B now operates far beyond its original purpose. Hospitals and their affiliated clinics can acquire drugs at deeply discounted prices, then bill insurers, employers, and patients at much higher rates. What began as a targeted support program has too often become a source of financial arbitrage.
The growth of 340B has been accelerated by hospital acquisition of physician practices and the expansion of contract pharmacy arrangements. That means more medications flow through entities eligible for the discount, and more patients end up paying prices that bear little relation to the underlying acquisition cost. Employers and privately insured patients are left to absorb the difference.
This is the central flaw in the MFN debate: it focuses almost entirely on what manufacturers charge, while ignoring what middlemen and systems collect. A policy can lower the official price of a drug and still fail to lower the amount patients pay at the pharmacy. It can sound like reform while preserving the very distortions that make drug coverage so maddeningly expensive.
There is also a practical concern. Codifying MFN into law would make the policy far more rigid than a temporary administrative experiment. A statute is difficult to revise, even when it produces unintended consequences. If MFN discourages product launches, complicates access to medicines, or creates new incentives to game the system, Congress may find itself stuck with a law that is politically durable but economically flawed.
None of this is an argument for doing nothing. It is an argument for doing the right thing. If lawmakers want to reduce drug costs in a meaningful way, they should begin with transparency and accountability. PBMs should be required to pass rebates through to patients and employers rather than retaining hidden margins. Spread pricing should be curbed. 340B should be narrowed back toward its original mission, with tighter oversight of hospital markups and contract pharmacy expansion. And patients should be able to see, plainly and early, what their medicines actually cost.
That approach would be less glamorous than a headline-grabbing MFN law. It would also be more honest.
America does not need another policy that makes drug pricing sound simpler than it is. It needs reform that confronts the full chain of cost inflation, from manufacturer to middleman to hospital billing department. Codifying Most Favored Nation pricing may feel like action. But unless Congress is willing to tackle PBMs and 340B with the same seriousness, it would be action without accountability.
Patients cannot afford more slogans. They need a system that rewards lower prices, not higher markups. Until lawmakers are willing to fix the middle of the supply chain, MFN will remain what it has always been: a political answer to a structural problem.
Mike Essen —Public Policy Podcaster and former Radio host focusing on Public Affairs –Mike Essen Show
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