MFP Effectuation: Preventing a Duplicate 340B Discount

For drugs subject to both 340B and MFP discounts, the IRA requires manufacturers to charge 340B covered entities the lower of the two discounted prices, but not to provide both discounts for the same unit of drug dispensed. However, in practice, manufacturers risk awarding both discounts for the same unit of drug as no mechanism currently exists to coordinate the 340B and MFP processes. This gap creates substantial financial liability for manufacturers, who must evaluate their exposure to potential duplicate discount risk and pursue policy engagements to reduce that risk. Beginning in 2026, when MFPs become applicable, payers, pharmacies, and manufacturers will need new information-sharing channels (i.e., using new Medicare Transaction Facilitators as indicated in CMS guidance), tailored to MFP timelines and criteria, to effectuate MFP discounts accurately.

We first applied our understanding of the IRA and the Part D program, as well as associated guidance documents, to anticipate how CMS may effectuate MFP for IPAY 2026, highlighting areas that still required clarification by CMS. Then, to help the client understand its duplicate discount risks, we developed a series of animated diagrams illustrating, for both 340B replenishment and MFP effectuation, how information and funds would flow in different scenarios among stakeholders in the supply chain. We considered scenarios in which MFP is greater than 340B ceiling price, and vice versa, and in which MFP effectuation occurs prospectively versus retrospectively. For each scenario, we assessed how stakeholders in the supply chain may behave and analyzed implications for the client’s portfolio. We also identified strategic considerations for payers, covered entities, contract pharmacies, manufacturers, and wholesalers. We designed several processes that would reduce duplicate discount risks for manufacturers if implemented across the supply chain.

Our work helped the client understand and develop a detailed strategy to reduce its risk of providing duplicate discounts associated with 340B replenishment and MFP effectuation. We also prepared the client to engage CMS as it continues to chart its action plan, including coordinating among internal teams, to operationalize MFP for IPAY 2026. Moreover, the client now understands how different MFP effectuation scenarios will create incentives for stakeholders across the drug supply chain and is preparing proactively to adapt to those incentives and advocate for its preferred scenarios.