President Trump signs Executive Order aimed at reducing prescription drug prices

President Donald Trump signed an Executive Order (EO) titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” aimed at reducing prescription drug prices for Americans by ensuring they do not pay more than the lowest prices set in other developed nations.

This approach, known as most favored nation (MFN), was a key initiative during President Trump’s first term to address “global freeloading.” The approach appears to target drug pricing and market access practices outside of the US that allow other countries to set low prices and benefit from US investment in research and development. The EO is short on details regarding how the MFN prices would be achieved for US patients.

The EO states that within 30 days, the Secretary of Health and Human Services (HHS) will communicate MFN price targets to biopharmaceutical manufacturers to align US prices with those paid in other developed nations.

To facilitate the shift to MFN pricing from biopharmaceutical companies in the US, the EO commits to establishing a pathway for companies to provide medicine direct-to-consumers (DTC) in the US at MFN prices. While it is unclear how this would be implemented, it could include regulation or effort to facilitate direct purchasing from pharmaceutical companies rather than wholesalers and insurance companies, presumably for people who don’t have access to the medicine in their insurance plan (details unclear).

The EO directs the Secretary of Commerce and the US Trade Representative to take action to ensure foreign countries are not engaged in unreasonable or discriminatory actions that jeopardize US national security or that may have “the effect of forcing Americans to pay for a disproportionate amount of global pharmaceutical research and development, including by suppressing the price of pharmaceutical products below fair market value in foreign countries.” While short on details, this could create an opportunity for the pharmaceutical industry to achieve priorities for pricing reforms in other major markets that could be elevated in multinational trade negotiations.

The specific actions the Administration may take if pharmaceutical manufacturers do not act to make significant progress towards implementing MFN pricing in the US include the following:

1) Rulemaking: The Secretary of HHS shall propose a rulemaking to impose MFN pricing.

• Rulemaking could be done through the Center for Medicare and Medicaid Innovation (CMMI) or potentially under the Inflation Reduction Act (IRA) Medicare Drug Price Negotiation program.

2) Personal drug importation: The Secretary shall consider certification to US Congress that personal importation of drugs will pose no additional risk to public health and safety – and will result in significant reduction in the cost of prescription drugs to the American consumer – and the Commissioner of Food and Drugs will take action to describe circumstances under which waivers will be granted to individuals for the personal importation of prescription drugs on a case-by-case basis from developed nations.

3) Enforcement against anti-competitive practices: The Attorney General and Chairman of the Federal Trade Commission shall undertake enforcement action against anti-competitive practices identified the report issued under Section 13 of EO 14273 of April 15, 2025. Such enforcement actions may include Sections 1 and 2 of the Sherman Antitrust Act and Section 5 of the FTC Act.

• These enforcement actions could focus on drug patents, and the industry could also consider this as an opportunity to raise anti-competitive practices related to pharmacy benefit managers and insurance companies, such as not putting biosimilars on formulary.

4) Export actions: The Secretary of Commerce, and heads of other relevant agencies, shall consider actions regarding the export of pharmaceutical drugs or precursor material that may be fueling the global price discrimination.

• While short on details, this action may be focused on export of drugs that are in shortage in the US.

5) Review unsafe or ineffective drugs: The US Food and Drug Administration (FDA) Commissioner shall review and potentially modify or revoke approvals granted for drugs that may be unsafe, ineffective, or improperly marketed.

• The scope of this action is unclear and does not have sufficient details; however, the FDA could take action to evaluate certain vaccines, drugs considered for importation, or other drugs.

6) Other potential actions: Heads of agencies shall take all action available to address “global freeloading” and price discrimination against American patients.

As HHS and other agencies take action to implement and execute the directives under this EO, additional details will come to light regarding its full impact. DLA Piper will be closely monitoring any communication regarding MFN drug pricing targets. It is important to note that this EO may be setting up a framework for broader trade negotiations, similar to the tariff executive actions.

The Administration has broad latitude to implement price changes under CMMI and the full scope of pharmaceuticals that may be implicated by this EO remains to be seen.

During President Trump’s first term, he initiated rulemaking in November 2020 to propose a pilot program under CMMI to link the price of drugs offered under Medicare Part B to MFN pricing. This rulemaking was challenged in the courts and ultimately not implemented under the Biden Administration.

The DTC concept is relatively new, although some biopharma companies do offer that type of a model for drugs that do not have insurance coverage. While it remains to be seen what circumstances the FDA Commissioner may identify for purposes of granting personal importation waivers, this concept could be applied in select cases where pharmaceutical manufacturers do not make pricing changes to equalize with other developed nations.

Potential reconciliation and legislative threats

Congress is focused on completing its goal of passing reconciliation legislation to ensure President Trump’s tax policy priorities become law. The US House and US Senate Committees of jurisdiction are working to review and report out legislation that does not increase the deficit and has the support of the majority in both Republican-led chambers. MFN policies have the potential to be considered as part of this legislative process; in fact, a proposal to tie the price of drugs under Medicaid to MFN prices has already been debated as part of this process.

Additionally, Senators Josh Hawley (R-MO) and Peter Welch (D-VT) introduced the Fair Prescription Drug Prices for Americans Act (S. 1587), which would lower drug costs by barring drug companies in the US from charging higher prices than the international average. It is a very broad-sweeping policy that could impact drugs in both public and commercial markets, and it would impose civil monetary penalties on pharmaceutical companies that violate this rule.

For more information

DLA Piper will be closely monitoring legislative proposals and committee activity in the House and the Senate related to MFN policies as the reconciliation process continues. For more information, please contact the authors.