A new Trump Executive Order seeks to slash US prescription drug prices by mandating they match the lowest costs in comparable OECD countries, a significant policy shift facing legal and industry challenges.
In May 2025, the US Department of Health and Human Services (HHS) announced immediate steps to implement President Donald Trump’s Executive Order, ‘Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients’. A cornerstone of the Administration's strategy, the order aims to lower US healthcare costs by aligning domestic prescription drug prices with those in comparable nations.
The Order tasks the US Trade Representative and Secretary of Commerce with preventing foreign countries from undercutting US market prices and fuelling domestic price hikes. It also instructs the Administration to communicate firm pricing expectations to pharmaceutical companies to secure better deals for American patients.
As outlined in President Trump’s statement [1], the Secretary of HHS will create a system for Americans to purchase drugs directly at ‘Most-Favored-Nation’ (MFN) prices. Should companies refuse to comply, HHS must propose rules to enforce MFN pricing and take further action to cut costs and halt anti-competitive practices.
President Trump has stated his goal is to end the practice of Americans paying over three times more for the same drugs than other OECD countries. A White House ‘Fact Sheet’ [2] frames this as America effectively subsidizing foreign healthcare and manufacturer profits, noting that while the US makes up less than 5% of the global population, it funds 75% of pharmaceutical profits.
The factsheet further contrasts this initiative with the previous administration, stating that while the Biden Administration reversed Trump-era reforms and accepted prices 78% higher than in 11 comparable nations, Trump is renewing his efforts. Recent Executive Orders, for example, expand pricing reforms to Medicaid, enable drug importation, increase generics access, and boost price transparency [3].
The high cost of drugs in the US is often attributed to a complex negotiation system involving middlemen between drugmakers and employer clients and health insurers, unlike in nations like the UK where a single payer negotiates directly with manufacturers. To address this, the new order seeks to allow patients to buy drugs directly from manufacturers. Critically, it also mandates that US pharmaceutical companies charge no more than the lowest price paid by patients in any other OECD country with a per capita GDP of at least 60% of the US's. This could lead to significant price convergence across developed markets, with the Administration threatening tariffs to secure compliance.
This Executive Order is expected to face significant legal challenges and will require intense congressional support. The pharmaceutical industry has also voiced strong opposition, warning that the financial impact could lead to a reduction in R & D spending, potentially stifling long-term innovation and progress.
Critics, such as the Alliance for Safe Biologic Medicines (ASBM), warn the MFN model imports European-style price controls. They question if U.S. patients, who currently enjoy premier access to new therapies, are prepared to accept the potential trade-offs: delayed access, limited formularies, reduced innovation, and poorer health outcomes.
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References
1. Delivering most-favored-nation prescription drug pricing to American patients. Available from: https://www.whitehouse.gov/presidential-actions/2025/05/delivering-most-favored-nation-prescription-drug-pricing-to-american-patients/
2. Fact Sheet: President Donald J. Trump Announces Actions to Put American Patients First by Lowering Drug Prices and Stopping Foreign Free-riding on American Pharmaceutical Innovation. Available from: https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-president-donald-j-trump-announces-actions-to-put-american-patients-first-by-lowering-drug-prices-and-stopping-foreign-free-riding-on-american-pharmaceutical-innovation/
3. GaBI Online - Generics and Biosimilars Initiative. President Trump issues executive order to lower drug prices [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2025 Oct 3]. Available from: www.gabionline.net/pharma-news/president-trump-issues-executive-order-to-lower-drug-prices
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