On May 12, President Trump signed an executive order entitled “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients” (the “Order”). At the core of the executive order is a commitment to most-favored nation (“MFN”) pricing for drugs sold in the U.S. Under MFN pricing, Americans would pay no more for prescription drugs than the lowest prices for which those drugs are sold in other developed countries. To implement MFN pricing, the Order directs the U.S. Trade Representative and Secretary of Commerce to take steps against foreign nations that the Administration believes to be suppressing drug prices abroad in ways that unfairly shift higher costs onto American consumers. It also instructs the Administration to communicate clear pricing targets to pharmaceutical companies, reinforcing that U.S. consumers should receive the most favorable pricing. Further, it directs the Secretary of Health and Human Services to establish a mechanism through which American consumers can buy drugs directly from manufacturers rather than intermediaries. Lastly, the Order instructs the Secretary of Health and Human Services to impose MFN pricing through regulations on drug manufacturers that do not voluntarily adopt MFN pricing and to take other steps to reduce the costs of drugs for U.S. consumers.
The Order cites a global imbalance in drug pricing, alleging that “The United States has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits.” The Order attributes this imbalance to drug manufacturers offering discounts in foreign markets while imposing higher costs on U.S. consumers for drugs. The Order argues that U.S. drug manufacturers are thereby subsidizing global drug innovation and that “As the largest purchaser of pharmaceuticals, Americans should get the best deal.”
