Trump Signs Executive Order to Slash Prescription Drug Prices via ‘Most Favored Nation’ Policy
On May 12, 2025, President Donald Trump signed an executive order mandating that pharmaceutical companies have 30 days to voluntarily lower U.S. prescription drug prices. If they fail to comply, the administration plans to implement federal regulations tying U.S. drug prices to the lowest prices paid by other developed nations—a strategy known as the “most favored nation” (MFN) pricing model .
The order directs Health Secretary Robert F. Kennedy Jr. to negotiate reduced prices with drugmakers. Should negotiations falter, the Department of Health and Human Services (HHS) is authorized to pursue rulemaking to enforce MFN pricing across Medicare, Medicaid, and potentially the commercial market. Additionally, the Food and Drug Administration (FDA) is instructed to expand drug reimportation programs beyond Canada to include other nations .
President Trump asserts that this policy could lead to significant reductions in drug prices, potentially between 30% and 80%, by aligning U.S. prices with those in countries like Germany and Canada. However, no detailed savings projections have been provided .
The pharmaceutical industry, represented by the lobbying group PhRMA, has criticized the executive order, arguing that it threatens innovation and equates to importing “socialist” pricing models. PhRMA estimates that MFN pricing for Medicaid could cost the industry $1 trillion over the next decade. Despite this, the group supports efforts to pressure other countries to pay more for U.S.-developed drugs .A
Legal experts caution that the implementation of MFN pricing may face significant challenges, including potential court battles similar to those that blocked a similar initiative during Trump’s previous term. Analysts also note that the executive order’s immediate impact on drug prices is uncertain, particularly for Americans with private insurance .
This move marks a significant step in the Trump administration’s efforts to address high prescription drug costs, a longstanding concern among American consumers. As the 30-day deadline approaches, the pharmaceutical industry and policymakers alike will be closely monitoring the developments and potential implications of this policy shift.
Read More: Martindox