On May 20, the Department of Health and Human Services (HHS) released further details on its plan to implement President Trump’s May 12 executive order aimed at lowering drug prices by requiring pharmaceutical companies to sell their products to U.S. customers at “most-favored-nation” pricing. As a refresher, that order does the following:
- Section 3: Directs the Secretary of Commerce and the U.S. Trade Representative to take steps to ensure that foreign nations are not engaging in drug price discrimination
- Section 4: Directs the Secretary of HHS to facilitate direct-to-consumer purchasing programs for pharmaceuticals at most-favored-nation pricing
- Section 5: Directs HHS to communicate most-favored-nation price targets to pharmaceutical manufacturers
For more information about the May 12 order, please see “How Trump’s Latest Drug Price EO Could Impact Pharma.”
HHS’s press release provides further details on how it plans to implement Section 5. According to the release, most-favored-nation pricing targets apply only to branded products that do not currently have generic or biosimilar competition in either the U.S. or foreign markets. The most-favored-nation target price is the lowest price in an Organization for Economic Co-operation and Development (OECD) country with a per capita GDP of at least 60% of the U.S. per capita GDP.i The release notes that President Trump and HHS Secretary Robert F. Kennedy, Jr., will announce secured pricing commitments in the coming weeks.
Takeaways
With this press release, it seems clear that the HHS is committed to carrying out the edicts of the May 12 executive order. And while the short release is sparse on details, it provides some clarity that the top of the HHS’s list for price alignment with a set of economic peer countries will be brand products that do not currently have generic or biosimilar competition.
We will continue to monitor and report on this issue as it develops.
i According to OECD data, countries with per capita GDPs of at least 60% of the U.S.’s per capita GDP as of 2023 are Australia, Austria, Belgium, Canada, Czechia, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Japan, Korea, Lithuania, Luxembourg, the Netherlands, New Zealand, Norway, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom.
