HHS is taking “immediate steps” to implement President Donald Trump’s executive order, Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients — a key initiative aimed at reducing healthcare costs.
The department said it has established specific “pricing targets” that pharmaceutical manufacturers are expected to meet under the order. President Trump and HHS Secretary Robert F. Kennedy Jr. will publicly outline these commitments in the coming weeks.
Six things to know:
1. HHS aims to prevent Americans from paying more for prescription drugs than patients in economically comparable countries, citing a commitment to easing the financial burden on U.S. patients. Drugmakers will be expected to align U.S. prices for brand-name drugs without generic or biosimilar competition to the lowest price available in select peer countries.
2. Under the executive order, HHS has until June 11 to develop and communicate drug pricing reduction goals with pharmaceutical manufacturers. If meaningful progress is not made, the department is instructed to begin the rulemaking process to enforce most-favored-nation pricing. However, the order does not outline a clear legal mechanism for mandating lower drug prices, and it remains uncertain how the directive would intersect with ongoing Medicare drug price negotiation efforts under the Inflation Reduction Act.
3. The most-favored-nation price benchmark is defined as the lowest drug price in any member of the Organization for Economic Cooperation and Development with a gross domestic product per capita at least 60% that of the U.S.
4. During his first term, President Trump sought to implement a most-favored-nation pricing model that would have capped the cost of certain Medicare drugs based on prices paid in high-income countries. That effort was blocked by a federal court, which ruled the administration had circumvented required rulemaking procedures. The new order revives the concept but expands its scope to include drugs covered not only by Medicare, but also by Medicaid and private insurance plans.
5. These changes will substantially lower U.S. drug prices — which can be three to five times higher than in other countries — while maintaining incentives for innovation and reducing cost disparities, according to HHS.
6. President Trump said the executive order could reduce prescription drug prices by 50% to 90%. However, pharmacy and biotechnology industry groups have criticized the most-favored-nation pricing model as “flawed,” warning that it could stifle medical innovation in the U.S.
“For too long, Americans have been forced to pay exorbitant prices for the same drugs that are sold overseas for far less,” Mr. Kennedy said in a May 20 news release. “That ends today. We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do.”
