The expansion of Most-Favored-Nation (MFN) pricing agreements is creating a new consideration for pharmaceutical finance teams: how should lower reference pricing flow through gross-to-net models, revenue recognition, and financial reporting?
As of August 31, 2026, the White House announced agreements with 26 pharmaceutical manufacturers, covering 89% of the branded drug market. The agreements include provisions affecting Medicaid pricing, direct-to-patient sales, and pricing for certain new medicines.
For manufacturers participating in these agreements, the financial model needs to capture more than a new price. The underlying assumptions, deductions, channels, accruals, and true-ups all need to remain visible, making MFN pricing a gross-to-net and ERP consideration rather than simply a commercial pricing decision.
What MFN Changes for Gross-to-Net
Three areas are particularly important for finance. Participating manufacturers have agreements affecting Medicaid pricing, certain manufacturers are offering products through direct-to-patient channels at MFN-aligned prices, and participating companies have commitments related to pricing for certain new brand medicines.
Each can affect the relationship between list price, deductions, net revenue, and channel economics. For finance teams, the important question is how those changes should be represented in the gross-to-net waterfall and how the assumptions can be monitored as actual results become available.
Give MFN Its Own Deduction Category
A gross-to-net model already contains multiple deductions, including Medicaid rebates, commercial rebates, chargebacks, returns, and other adjustments. When MFN-related amounts represent a distinct obligation or estimation component, they should remain separately identifiable so finance can understand what is driving changes in the waterfall.
For example, a variance could come from Medicaid utilization, changes in the underlying rebate calculation, timing differences, or an MFN-related adjustment. Keeping these amounts distinct gives finance a clearer basis for variance analysis and provides auditors with a more traceable path from the underlying activity to the reported accrual.
The estimate should also have documented inputs and assumptions. Depending on the agreement and applicable program, these may include units dispensed, product or NDC, applicable pricing references, geographic information, and the timing between utilization and settlement. As actual data becomes available, the estimate can be updated through the normal true-up process.
Direct-to-Patient Sales Create a Different Channel View
Direct-to-patient sales can have a different economic structure from traditional wholesale and payer channels. A manufacturer selling directly to a patient at an MFN-aligned cash price may not have the same deduction profile as a traditional channel sale, which makes channel-level reporting increasingly important.
If direct-to-patient transactions are blended with wholesale or payer business, changes in average net price can reflect a shift in channel mix rather than a change in underlying pricing. Finance should therefore be able to analyze revenue and deductions by channel and product, while also considering fulfillment, customer support, technology, and other costs associated with the direct channel.
ASC 606 Makes the Estimate Important
MFN-related changes can also affect variable consideration under ASC 606. When a company has limited historical experience with a new pricing or rebate arrangement, finance needs a documented basis for estimating expected consideration and determining whether the estimate meets the revenue recognition constraint.
That means documenting the assumptions behind the initial accrual, the data sources used, the methodology, and the process for updating the estimate as actual results become available. A repeatable process gives finance a clearer way to explain the estimate and provides auditors with a consistent path from the underlying activity through the accrual and eventual settlement.
Where NetSuite Fits
NetSuite can provide the financial foundation for managing the resulting gross-to-net structure. With the appropriate configuration, it can support separate deduction categories, accrual accounts, transaction-level attribution, channel reporting, and period-end true-ups, allowing finance to analyze the waterfall by product, customer, payer, channel, or other relevant business attributes.
The calculation methodology itself may sit in a specialized model or application depending on the complexity of the organization's GTN requirements. NetSuite can remain the financial system of record, receiving the resulting accruals and adjustments with the appropriate supporting detail.
Archer Insights has covered the broader architecture in its Gross-to-Net waterfall in NetSuite: a specialty pharma walkthrough, which provides additional context on structuring GTN processes in NetSuite.
What Finance Should Model Now
Pharmaceutical companies should consider how MFN pricing could affect Medicaid rebates, direct-to-patient volume, competitive pricing, gross margin, and cash flow. A useful model should show not only the expected net revenue impact, but also the timing between the original sale, accrual, invoice, settlement, and eventual true-up.
For companies competing against manufacturers with MFN-aligned pricing, scenario planning can also help finance understand how changes in a competitor's net price could affect volume assumptions, commercial deductions, and overall revenue.
Build MFN Into the Gross-to-Net Architecture
MFN pricing does not require finance teams to rebuild their entire revenue model. It does require them to understand where the new economics belong within the existing gross-to-net structure and how those assumptions should flow into the financial system.
The practical approach is to establish the appropriate deduction categories, document the estimation methodology, capture the underlying drivers, and maintain a clear connection between the estimate, the general ledger, and the eventual settlement.
For pharmaceutical companies using NetSuite, this creates an opportunity to make gross-to-net reporting more transparent and easier to analyze as pricing models evolve. The objective is not simply to add another line to the waterfall, but to give finance a clearer view of how gross revenue becomes net revenue, what is driving the difference, and how those assumptions are changing over time.