Analysis of the MFN Executive Order

In a video interview with Pharma Commerce, LeAnn Boyd, PharmD, Liviniti’s founder and CEO, discusses the deeper, systemic issues behind rising healthcare and drug costs that are not fully addressed by the MFN (Most-Favored Nation) executive order. She acknowledges that the healthcare landscape has seen incredible advancements in therapies that significantly improve patient outcomes and well-being. As more people utilize pharmacy benefits—rising from 50% to around 70% in recent years—overall drug spending has naturally increased. While greater access to treatments is positive, Boyd emphasizes that this doesn't fully explain the sharp rise in costs.

She views the MFN executive order as a useful initial step—a spark that brings attention to the issue, especially considering that the US pays significantly more for medications than other countries. However, Boyd expresses concern that the order lacks the depth needed to address all the systemic contributors to high drug prices.

A key issue, she argues, lies in the misaligned incentives within the drug pricing ecosystem. Many stakeholders, such as pharmacy benefit managers (PBMs) and other intermediaries, have compensation structures that are tied to the list price of medications. This creates a perverse incentive to favor higher-priced drugs, as higher costs directly translate into greater profits for these players. As long as stakeholders are financially rewarded based on drug prices rather than patient value or outcomes, upward pressure on prices will persist. Boyd concludes that unless these incentive structures are realigned to reflect value-based compensation, rather than price-driven earnings, any reform—like the MFN rule—will fall short of creating lasting change in the healthcare cost landscape.

Boyd also comments on how PBMs will be significantly impacted by the EO; why PBMs that operate on flat admin fee model rather than rebates createmore transparency and value for both payers and patients; what meaningful drug pricing reform looks like in her view; and much more.

A transcript of her conversation with PC can be found below.

PC: As both a pharmacist and CEO, what do you believe are the most critical root causes of rising healthcare and drug costs that this MFN executive order doesn’t address?

Boyd: Just to set the stage on the rising drug costs, there are some great, wonderful therapies that can do amazing things, and help patients treat diseases, find better healthcare, better well-being overall. I do think in one sense, the utilization of those is great, and we're going to see those costs continue to rise as people become more and more utilizers of those therapies.

Just a few years ago, we would look at our block of business, and only about 50% of people utilized their pharmacy benefits. Now, it's closer to 70%, so you're seeing more people being treated and utilizing therapies. With that being said though, the price and the cost are continuing to rise, so it is nice to see something like the executive order come out and hopefully be that spark to really dive into and address why the price still is an issue, especially when our prices are much higher than other comparative countries. I do think that it's a spark, and it's an attempt to push things in the right direction, but I don't know if it's comprehensive enough that you're truly going to address all players in the system that are contributing to the cost.

Fundamentally, I believe it's how many of those stakeholders in the whole pricing of medications, their compensation is linked very, very closely to the price of the drug. There's this misalignment that says you get paid more, you earn more if you have higher cost therapies in the mix, versus if you have people lying and getting paid fair rate for the value that they're bringing. I think that's a fundamental issue that we're still missing, [the fact that] the different stakeholders continue to drive compensation based on the cost of medication, and until that's fixed, you're always going to have people promoting or you're going to see drug prices continue to climb.