White House Introduces Most Favored Nation EO

It’s no secret that for years, critics have commented about the prices for medication in the UnitedStates being exorbitantly high. In response to this issue, President Donald Trump yesterday unveiled a new executive order (EO)—Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients”1—meant to provide an equal playing field by having drug companies match the lower prices they pay for pharmaceuticals in developed countries.2

The president believes that that the order could help decrease drug prices by 30% to 80%.3

Similar to tariffs in which Trump felt that the United States was not treated fairly when it came to be taxed on certain imports, the EO notes that Americans “unwittingly sponsor” drug manufacturers and other nations.

“The United States has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits,” explained the executive order. “This egregious imbalance is orchestrated through a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets, and subsidize that decrease through enormously high prices in the United States.

“ … Drug manufacturers, rather than seeking to equalize evident price discrimination, agree to other countries’ demands for low prices, and simultaneously fight against the ability for public and private payers in the United States to negotiate the best prices for patients. The inflated prices in the United States fuel global innovation while foreign health systems get a free ride. This abuse of Americans’ generosity, who deserve low-cost pharmaceuticals on the same terms as other developed nations, must end. Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories. As the largest purchaser of pharmaceuticals, Americans should get the best deal.”

Although drugmakers’ cooperation is voluntary, if changes aren’t seen within 30 days, government programs such as Medicare and Medicaid will work to enable—as Pharm Exec describes—DTC purchasing programs for pharma companies to sell medications at most-favored-nation prices. There are also possible tariff implications and action by FDA that could be taken along the avenue of revoking approvals if companies refuse to comply.4 The US market—per Trump—is also considering imports from other nations.2

Ways to decrease healthcare costs are encouraged, but industry organizations—including the Healthcare Distribution Alliance (HDA)—are concerned about the pharma supply chain’s lasting future.

“As a sector saving the healthcare system approximately $63 billion annually, HDA and the nation’s pharmaceutical distributors share the Trump administration’s desire to reduce the cost of healthcare for all Americans. However, we are deeply concerned that the MFN approach—including the broadly referenced direct-to-consumer and importation provisions—could negatively impact access for providers and patients, as well as the long-term stability of the supply chain,” commented the organization in a formal statement.5

“ … While we have significant concerns about the EO as currently proposed, HDA and all of our members are committed to working with the White House to review and consider policies that lower out-of-pocket costs for American patients while improving access to quality care, supporting innovation, and maintaining a strong and resilient supply chain.”

References

1. Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients. The White House. May 12, 2025. Accessed May 13, 2025. https://www.whitehouse.gov/presidential-actions/2025/05/delivering-most-favored-nation-prescription-drug-pricing-to-american-patients/

2. Lupkin S. Trump signs an order to reduce drug prices, but it's unclear how it would work. NPR. May 12, 2025. Accessed May 13, 2025. https://www.npr.org/sections/shots-health-news/2025/05/12/nx-s1-5395625/trump-lower-drug-prices

3. Hollan M. President Trump Announces Most-Favored-Nation Policy for Pharma Prices. Pharmaceutical Commerce. May 12, 2025. Accessed May 13, 2025. https://www.pharmaceuticalcommerce.com/view/president-trump-announces-most-favored-nation-policy-for-pharma-prices

4. Hollan M. White House Unveils Pharma Most-Favored-Nation Executive Order. Pharmaceutical Executive. May 12, 2025. Accessed May 13, 2025. https://www.pharmexec.com/view/white-house-most-favored-nation-executive-order

5. HDA Statement on “Most-Favored-Nation” Executive Order. HDA. May 12, 2025. Accessed May 13, 2025. https://hda.org/newsroom/2025/hda-statement-on-most-favored-nation%E2%80%9D-executive-order/