On May 12, 2025, President Trump issued an executive order aimed at lowering prescription drug prices titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.”1
Generally, the order directs the administration to address alleged drug price discrimination by allowing U.S. consumers to access drugs at “most-favored-nation” pricing (i.e., the lowest price drugmakers charge to comparable countries). The order notes that the U.S. has less than 5% of the world’s population, yet funds about 75% of global pharmaceutical products. According to the president, that imbalance is the result of a pricing scheme wherein drugmakers discount their products in foreign markets while subsidizing those discounted rates through higher prices in the U.S. A White House fact sheet released with the order states that Americans pay more than three times the price for brand-name drugs as customers in peer nations.
The order directs administration officials to take the following actions:
“Addressing Foreign Nations Freeloading on American-Financed Innovation”
The order first directs the Secretary of Commerce and U.S. Trade Representative to take all necessary and appropriate steps to ensure foreign nations are not engaged in acts, policies, or practices “that may be unreasonable or discriminatory or that may impair United States national security” and that have “the effect of forcing American patients to pay for a disproportionate amount of global pharmaceutical research and development.”
“Enabling Direct-to-Consumer Sales to U.S. Patients at the Most-Favored-Nation Price”
The order Directs the Secretary of Health and Human Services (“Secretary”) to facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price.
“Establishing Most-Favored-Nation Pricing”
Within 30 days of the issuance of the order, the Secretary, in coordination with other administration officials, must communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with similar nations.
If significant progress toward most-favored-nation pricing for U.S. customers is not delivered, the order directs the following next steps:
- The Secretary shall propose a rulemaking plan to impose most-favored-nation pricing.
- The Secretary shall consider certification to the Congress that importation under section 804(j) of the Federal Food, Drug, and Cosmetic Act will pose no additional risk to the public’s health and safety and result in a significant reduction in the cost of prescription drugs to the American consumer.
- The Attorney General and the Chairman of the Federal Trade Commission shall commence enforcement action against any anti-competitive practices identified within the report commissioned under Section 13 of the April 15, 2025, executive order.
- The Secretary of Commerce shall review and consider all necessary action regarding the export of pharmaceutical drugs or precursor material that may be fueling the global price discrimination.
- The Commissioner of Food and Drugs shall review and potentially modify or revoke approvals granted for drugs, for those drugs that maybe be unsafe, ineffective, or improperly marketed.
- The heads of agencies shall take all action available, in coordination with the Assistant to the President for Domestic Policy, to address “global freeloading and price discrimination against American patients.”
Takeaways
The administration intends to lower U.S. drug costs to something comparable to what other developed nations pay for the same drugs. The executive order directs federal agencies to take up this effort and makes clear that pharmaceutical companies selling prescription medicines in the U.S. should expect outreach from the Secretary and other administration officials regarding most-favored-nation price targets. The administration expects voluntary compliance with the proposed most-favored-nation drug pricing, but it is unclear what the consequences will be for companies that fail to abide by its requests. It is also unclear which companies and drugs the administration will target first in its renewed effort to cut drug prices. This executive order could also impact some drug companies’ practice of making their drug products available to developing nations at a lower price as a public service. While the enforcement and impact of this executive order has not yet been crystallized, the administration has directed its officials to propose new rules and issue reports aimed at implementing its goals for drug price reductions.
We will continue to monitor and provide updates as regulations and reports responsive to this executive order issue.
