Executive Order Seeks Most-Favored-Nation Drug Pricing and HHS Announces Price Targets

On May 12, 2025, President Trump issued an Executive Order titled "Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients," which aims to reduce the costs of prescription drugs and biologics for American consumers and other payers. This Order revives a plan from President Trump’s first term and follows his April Executive Order, “Lowering Drug Prices by Once Again Putting Americans First,” which also sought to reduce drug prices. With drug prices in the United States nearly three times higher than many other countries, this second Order asks drug manufacturers to adopt Most-Favored-Nation (MFN) pricing for drugs sold in the United States or face potential regulation. MFN pricing would tether drug prices offered in the United States to the lower-cost prices offered in other comparably developed nations, such as Canada, Germany, or the United Kingdom.

The Order provides for two phases for attempting to achieve MFN pricing. First, within 30 days of the Order, the Secretary of Health and Human Services must “communicate” MFN pricing “targets” to drug manufacturers, “to bring prices for American patients in line with comparably developed nations.” Second, if drug manufacturers do not make “significant progress towards most-favored-nation pricing” soon after the Secretary communicates the targets, the Secretary must propose an MFN pricing rulemaking plan.

The Order also instructs several government agencies and officials to act to complement its MFN pricing goal:

• The Secretary of Health and Human Services and the Commissioner of Food and Drugs must consider permitting importation of lower cost drugs;
• The Secretary of Health and Human Services must “facilitate” direct-to-consumer sales of drugs;
• The Secretary of Commerce must “consider all necessary action” to prevent drug exports from fueling what the Order calls “global price discrimination”; and
• The Attorney General and the Chairman of the Federal Trade Commission must evaluate enforcement actions against drug manufacturers engaging in anticompetitive acts.

On May 20, 2025, HHS began taking steps to implement the Order and announced that it “expects” drug manufacturers “to commit to aligning [U.S.] pricing for all brand products across all markets that do not currently have generic or biosimilar competition with the lowest price of a set of economic peer countries.” HHS also confirmed that “[t]he MFN target price is the lowest price” in a country that is a member of the Organization for Economic Cooperation and Development (OECD) “with a GDP per capita of at least 60 percent of the U.S. GDP per capita.” And HHS indicated it “look[s] forward to highlighting commitments” from manufacturers within the coming weeks.

Though the Order outlines several actions that theoretically could help curb drug prices if implemented, it is unclear how the Administration will implement the Order if manufacturers do not agree to reduce prices. For example, it is unclear what regulations the Administration would promulgate. Some health policy experts have suggested that the Administration could try to leverage the Center for Medicare and Medicaid Innovation (CMMI) model.

It is also unclear how the Administration would increase drug imports or restrict drug exports. Given differences in launch dates, dosing and packaging, price setting metrics across countries, and the opaqueness of net prices, it may also be difficult to create a price index that accurately reflects costs in the U.S. versus other countries.

Conclusion

The Order has several implications for drug manufacturers and payers such as health insurance plans.

• Without more information, it is unclear how the Trump Administration will motivate drug manufacturers to adopt MFN pricing.
• Trump’s Attorney General and the FTC may ramp up antitrust enforcement actions involving drug pricing.
• Direct-to-consumer sales of drugs are likely to pose significant implementation concerns for both manufacturers and payers.
• Payers should:
  • Monitor whether drug manufacturers offer to reduce drug prices in response to the MFN “targets,” and whether they offer proposals for facilitating direct-to-consumer drug purchases; and
  • Analyze how MFN pricing, if achieved, may or may not impact their formulary and coverage decision-making.