The Trump administration Executive Order 14297, “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients,” aims to reduce prescription drug prices for Medicare patients, getting them closer to the prices that patients in other countries pay. Studies have revealed that U.S. patients pay, on average, nearly three times the price for prescription drugs when compared to other Organization for Economic Cooperation and Development (OECD) countries.
The EO is not the first attempt to lower drug prices, with previous administrations introducing the concept of Most Favored Nation (MFN) pricing to tie Medicare drug prices to the lowest price paid by OECD countries, and others enacting provisions that capped the price of insulin and allowed the Centers for Medicare and Medicaid Services (CMS) to negotiate directly with drug manufacturers for high-cost, single-source medications (brand-name drugs without a generic alternative).
While the steps and timeline to implement the EO are still not clear, the main message of the order is clear – Medicare prices are too high in the U.S., and we need to take steps to reduce them. It also introduces the question of whether lower prices on Medicare drugs will lead to higher prices for commercially insured patients taking the same drugs – rather than lowering total drug costs in the U.S., will the burden simply shift from Medicare to privately insured patients and commercial payers?
As healthcare organizations navigate these changes, and others likely to come in the next few years, there are some important tools that can help.
“Policy shifts like the MFN model and other Medicare pricing reforms are transforming how drugs are reimbursed,” said Ashay Thakur, VP of Data Strategy at Cedar Gate. “At the same time, coverage structures are growing more intricate. Members move between plans, maintain overlapping eligibility, or fall into specialized segments like Medicare Advantage (MA) or dual coverage.”
In this environment, payers, providers, consultants, and PBMs face mounting pressure to reconcile financial and clinical performance under increasingly complex conditions. But the best way to adapt and succeed, says Ashay, is with a data platform that can accurately attribute cost, utilization, and outcomes across fragmented coverage journeys.
“Cedar Gate’s platform is uniquely equipped for this data environment,” said Ashay. “Our platform connects the dots across financial, clinical, and pharmacy domains – ensuring that each claim, each member-month, and each contract is grounded in a single source of truth.”
Key among Cedar Gate’s capabilities are:
“With these tools, organizations can align pricing policy, member behavior, and reimbursement mechanics with clarity and confidence,” said Ashay.
As an example, think about a member with overlapping coverage under two or more plans in the same period – such as Medicare Advantage for Part B coverage, and a commercial insurance plan through a spouse’s employer.
Traditional systems may incorrectly merge or drop one of the plans, causing:
Cedar Gate’s platform identifies and tracks overlapping eligibility, preserves the correct context for each claim, and ensures clean attribution across all downstream analytics. This results in accurate episode bundling, benefit-level reporting, and member-specific insights – even when coverage isn’t linear.
As performance and compliance increasingly center around attribution accuracy, Cedar Gate’s clients can leverage the platform for:
Cedar Gate’s architecture is designed for change. Whether you’re adapting to CMS policy updates, entering a value-based drug contract, or serving complex member populations, our platform ensures:
We don’t simplify complexity – we organize it.
As Medicare drug pricing reform continues, organizations also need tools that can accurately track the impact of those changes on their own member populations. That is especially true for commercial payers, whose populations and prices won’t be directly impacted by changes in Medicare drug prices, but may be indirectly affected.
“There are many players in this space including manufacturers, wholesalers, pharmacy benefits managers, payers, pharmacies and of course the patients who could be impacted, negatively or positively, depending on the actions taken,” said Ginger Pape, PharmD and VP of Product at Cedar Gate.
Two metrics, in particular, are essential for payers to track and follow through these changes, says Ginger.
“However, it’s important to remember that payer reimbursement doesn’t show up in the WAC, which means medications are still billed at the highest allowable amount to each payer,” said Ginger.
Having access to accurate, near-real-time information on your own member populations is an essential part of understanding the implications of MFN pricing and drug reform. For payers concerned that lowering Medicare prices will lead to higher commercial prices, customized reports that track these important baseline metrics and costs for your member populations will make it easier to spot trends and prepare for changes in the future.
There are still a number of hurdles to overcome and challenges that we face in trying to reduce costs, even with actions like those taken by the last three administrations to tackle this complex issue. From legal hurdles to industry pushback, and ever-shifting political priorities, one thing is certain – you need a software partner you can trust to help you optimize efficiency, keep costs down, and improve patient and member outcomes. Cedar Gate is that partner for whatever is coming in our value-based care future.
