Rare-disease drugmakers are stacking three legal shields against Trump's price pilots

Rare-disease drugmakers are stacking three legal shields against the Trump administration's Medicare drug price pilots: a federal orphan-drug carve-out, a wave of state pharmacy benefit manager (PBM) reform laws, and a new employer-direct-sales path. Each neutralizes a different piece of the pricing machinery the administration is trying to build.

The first layer came in July 2025, when Congress passed the One Big Beautiful Bill Act (OBBBA) with a carve-out exempting drugs that hold an FDA orphan designation for any indication from the new Medicare drug price pilot programs. A companion STAT+ story this month reports that rare-disease drugmakers are now pushing for additional orphan-drug exemptions from the pilots on top of the OBBBA carve-out. Morgan Lewis called the original OBBBA exemption "the quiet carve-out" in an advisory at the time, and Bloomberg Law reported this month that rare-disease companies have begun shifting post-launch plans in response to the win.

The second layer sits in the states. STAT+ reported this month that rare-disease drugmakers are now lobbying state legislatures on PBM-reform bills — transparency rules, rebate-pass-through requirements, and similar statutes. PBMs are the middlemen who negotiate rebates between drugmakers and health plans, and the federal price pilots are designed in part to reach past the rebate flow. State PBM-reform laws do not stop a federal pilot directly, but they can entrench the existing rebate architecture at the state level and make the pilot's reach narrower in practice. The layer is uneven, because which state moves first matters.

The third layer is the newest. In February 2026, STAT reported on a new PBM law that opens a direct-sales channel between drugmakers and self-funded employer health plans, bypassing PBM rebate structures entirely. Any sale that flows outside the PBM channel is harder for the rebate-based pilot to reach. For a rare-disease therapy whose only commercial channel used to be the rebate flow, the new path is a real option.

None of the three layers fully neutralizes the administration's other pricing tool: most-favored-nation (MFN) drug pricing, which ties U.S. drug prices to the lowest price a manufacturer charges in peer countries. MFN has been built through a series of executive actions and individual manufacturer agreements rather than legislation. Sidley's April 2026 advisory and Arnold & Porter's March 2026 advisory both flag growing Congressional scrutiny of the executive-action path. The orphan carve-out does not extend to MFN, and state PBM-reform laws do not reach it either. MFN exposure is the open flank.

The lobbying effort around these layers is running into a public-opinion problem the industry has not solved. The STAT+ newsletter that flagged the state-law strategy also cited a KFF poll showing out-of-pocket health costs remain voters' top health priority, while Republican voters are more likely to call fraud in government health programs the top concern. Industry legal arguments against the pilots have been consolidating since at least February 2026, but the messaging has not. The industry's pitch — that rare-disease drug prices reflect the cost of developing therapies for very small patient populations — has not displaced the affordability frame.

Two things to watch in the second half of 2026: whether any state PBM-reform bill passes with language that explicitly cites the federal pilot as the statute it is meant to blunt, and whether the MFN executive-action agreements face a Congressional vote before year-end. Either would tell readers how solid the three-layer shield actually is.