Trump to Sign Executive Order Targeting Foreign Drug Pricing, Reviving ‘Most Favored Nation’ Concept
Former President Donald Trump is poised to sign an executive order on Monday, May 12, directing his administration to take aggressive action against what he characterizes as discriminatory policies in foreign countries that artificially suppress drug prices. The move, unveiled by a White House official, signals a renewed effort to tackle high prescription drug costs in the United States, a long-standing political issue.
The executive order is expected to instruct the Department of Health and Human Services (HHS) to adopt a policy that aligns U.S. prescription drug prices with those of comparable nations. Trump, in a post on Truth Social on the same day, declared, "DRUG PRICES TO BE CUT BY 59%," echoing a strategy he initially pursued during his first term in office. The day prior, he had suggested even more significant reductions, stating that prices would "be REDUCED, almost immediately, by 30% to 80%."
In a background call with reporters, the White House official elaborated on the order’s scope, stating that the United States Trade Representative and the Department of Commerce will also be tasked with taking action against unreasonable and discriminatory foreign policies that contribute to lower drug prices abroad.
Adding another layer to the plan, the official indicated that HHS Secretary Robert F. Kennedy Jr. will be responsible for setting specific targets for price reductions across all U.S. markets within 30 days of the order’s signing. Failure to achieve adequate progress toward these targets would trigger the implementation of "most favored nation" (MFN) pricing through a formal rulemaking process.
The MFN concept, previously explored by Trump during his first term, aims to ensure that the U.S. pays no more for prescription drugs than the lowest price paid by other developed nations. In 2020, Trump attempted to implement an MFN rule that would have applied to Medicare payments, but the policy was later rescinded by the Biden administration.
The MFN approach has drawn criticism from various quarters. Some argue that drug companies could circumvent the system by negotiating confidential rebates with foreign governments to maintain high drug prices in the U.S. Others contend that it could stifle pharmaceutical innovation by reducing industry profits, potentially leading to fewer investments in research and development of new medicines.
Data from a 2024 HHS report reveals that drug prices in the U.S. are nearly three times higher than those in 33 comparable countries. This discrepancy has fueled concerns about affordability and access to essential medications for millions of Americans, particularly the approximately 67 million individuals enrolled in Medicare.
Trump’s plan represents a stark departure from the Biden administration’s strategy for lowering Medicare drug prices. The Inflation Reduction Act, signed into law in 2022, empowers Medicare to negotiate prices directly with pharmaceutical companies for a limited number of medications.
The Biden administration has already negotiated lower prices for 10 widely prescribed drugs, including Xarelto and Eliquis, with these changes set to take effect in 2026. In January, Medicare announced another 15 drugs subject to negotiation this year, including blockbuster diabetes and weight loss drugs like Ozempic and Wegovy, with cost savings expected to materialize in 2027.
When questioned about the potential impact of Trump’s plan on the Inflation Reduction Act and existing drug price negotiations, the White House official acknowledged that even after the first round of negotiations, U.S. drug prices often remain significantly higher than those in other countries. The official argued that the Trump administration’s approach is necessary to go beyond the achievements of the Inflation Reduction Act and achieve more substantial price reductions.
The executive order and its potential consequences have sparked debate among healthcare experts and policymakers. Supporters argue that it is a bold step toward addressing the high cost of prescription drugs in the U.S. and ensuring that Americans have access to affordable medications. Critics, on the other hand, raise concerns about potential unintended consequences, such as reduced pharmaceutical innovation and the gaming of the system by drug companies.
The implementation of the executive order and its long-term effects on drug pricing and access to medications remain to be seen. However, the move underscores the ongoing political pressure to address the high cost of prescription drugs in the United States and the diverse approaches being considered to tackle this complex issue. The debate is likely to continue as the Trump administration moves forward with its plan and stakeholders weigh the potential benefits and risks.
