The Executive Order on MFN Pricing: An Ambitious Goal Lacking Necessary Details

On May 12, 2025, President Trump signed an executive order aiming to reduce U.S. prescription drug prices by aligning them with the lowest prices paid in other developed countries—a strategy known as the "Most Favored Nation" (MFN) pricing model. Trump claims that Americans will "almost immediately" see their drug prices fall by 30% to 90%, but overlooks the challenges in asking a fragmented HHS to make any decisions in 30 days. This is also overlooking the next step of implementing the formal rulemaking process, which can take years. While the intent is to alleviate the financial burden on American patients and, according to Trump, “equalize” prices among countries, the order's lack of specificity raises concerns about its feasibility and potential impact. It also includes no details on how this order would interact with other drug pricing programs like 340B, Medicaid, Part D, and upcoming changes brought on by the Inflation Reduction Act.

Ambiguity in Implementation

The executive order directs HHS to initiate rulemaking to implement the MFN policy within 30 days if manufacturers don’t voluntarily reduce prices per HHS targets. However, it fails to define critical components, such as the exact drugs affected, the criteria for selecting comparator countries, and the methodology for price adjustments based on volume and GDP differences. It also ignores the fact that most rule making takes three years plus. But, most notably, it overlooks how every other country in the world governs drug pricing through universal health care, price controls, and limited formularies. MFN as a policy is a concept borrowed from international trade to ensure that one country won't be treated less favorably than others regarding tariffs and terms. In concept, when applied to drug pricing, MFN would mean the U.S. government would benchmark the prices it pays for certain drugs to the lowest prices paid by other economically comparable countries. However, the US drug market is a universe of one, making comparisons very challenging. According to a 2024 HHS report, drug prices in the US are nearly three times those of 33 comparison countries.

Potential Legal and Operational Hurdles

Historically, similar initiatives have faced legal obstacles. MFN drug pricing is not a new idea in American healthcare policy; it has been proposed multiple times but has struggled to advance for several reasons, including legal challenges, administrative barriers, and strong opposition from the pharmaceutical industry. For instance, a 2020 attempt to implement MFN pricing during Trump's first term was blocked by federal courts due to procedural issues. The current 2025 executive order reopens this conversation, but unless the administration provides significantly more detail and stakeholder engagement than it did in 2020, the MFN model risks repeating history—ambitious in rhetoric, but stalled in reality.

Furthermore, industry experts are also reminded of failures to achieve price equity with Canada or successfully implement a “re-importation” program. The concept of “equality” is tough when our economy is massive and our regulation is quite loose compared to others.

Conclusion

Trump's executive order on drug pricing sets a bold objective to lower costs for American patients. However, its success hinges on the development of clear, actionable guidelines and the navigation of potential legal and operational challenges. This action failed in 2020 because it did not take into account how very different the US is in regulating drug prices and insurance than every other country. Even if we ignore that major difference, there are so many questions. We do not know which drugs or which manufacturers are ins scope and have no sense of what the discounts would look like or how HHS would enforce such pricing. Is this order for all Americans are will it be merit-based? How might it intersect with insurance—private or public? How would manufacturers track and report these price concessions knowing it needs to report average and best price to HHS? Without details like these, the order risks becoming more of a political statement than a catalyst for meaningful reform.