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.”

The potential impact of the order on U.S. drug prices remains uncertain. Experts are divided: critics contend that drug manufacturers may simply raise drugs prices in the targeted countries to align with U.S. prices and that there is no enforcement mechanism for drug manufacturers who do not voluntarily change their prices.[1] However, the Order’s legality is sure to be challenged by the pharmaceutical industry. In September of 2020, Trump issued a similar, though less aggressive, MFN drug pricing order, which was challenged by pharmaceutical and healthcare industry trade groups. A federal judge blocked the order via a nationwide injunction since the Centers for Medicare & Medicaid Services (“CMS”) failed to follow notice-and-comment procedures. Therefore, the previous order failed to take effect.

On May 20, Representative Ro Khanna (D-Calif.) introduced legislation in the House which would codify Trump’s current Order — using Trump’s exact language. Two republican representatives have since joined as cosponsors. If enacted by Congress, the Order would have firmer legal footing.

That same day, the U.S. Department of Health and Human Services (“HHS”) announced it would be taking “immediate steps” to implement the Order, explaining that it “expects each manufacturer to commit to aligning US 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.”[2] HHS further set the MFN target price as “the lowest price in an OECD country with a GDP per capita of at least 60 percent of the U.S. GDP per capital.”[3]

[1] See Fact-checking Trump’s claim that prescription drug price drops could happen ‘almost immediately’, PBS (May 16, 2025), available at https://www.pbs.org/newshour/politics/fact-checking-trumps-claim-that-prescription-drug-price-drops-could-happen-almost-immediately;  Emma Freer, Trump’s order on drug prices isn’t what it seems, MSNBC, available at https://www.msnbc.com/opinion/msnbc-opinion/trump-drug-price-executive-order-big-pharma-rcna206289.

[2] HHS, CMS Set Most-Favored-Nation Pricing Targets to End Global Freeloading on American Patients, Department of Health and Human Services, available at https://www.hhs.gov/press-room/cms-mfn-lower-us-drug-prices.html.

[3] Id.