Most-Favored-Nation Prescription Drug
Pricing Executive Order: Legal Issues
June 5, 2025
On May 12, 2025, the Trump Administration issued an executive order titled “Delivering Most-Favored-
Nation Prescription Drug Pricing to American Patients” (the 2025 EO). Both the 2025 EO and the
accompanying fact sheet outline a plan to reduce prescription drug prices for Americans. The 2025 EO
states that consumers in the United States are overcharged for prescription drugs and that “Americans
must therefore have access to the most-favored-nation price.” The 2025 EO directs multiple federal
agencies, including the U.S. Department of Health and Human Services (HHS), to take specific actions
aimed at compelling drug manufacturers to lower drug prices in the United States in a manner comparable
with other “developed nations.”
On May 20, 2025, HHS issued a press release stating that the Department “expects each [drug]
manufacturer to commit to aligning [United States] pricing for all brand products across all markets that
do not currently have generic or biosimilar competition with the lowest price of a set of economic peer
countries.” From this statement, it appears that HHS intends to apply the most-favored-nation (MFN)
pricing only to single-source drugs (i.e., “brand-name” drugs without any approved generic or biosimilar
versions). In its May press release, HHS also advised that it will calculate the MFN price as the lowest
price in a country that is part of the Organisation for Economic Co-operation and Development and that
has a per capita gross domestic product (GDP) of at least 60% of the U.S. per capita GDP.
In some respects, the 2025 EO resembles a 2020 MFN drug pricing executive order (the 2020 EO) from
President Trump’s first term, which also directed the HHS Secretary to implement MFN pricing, but
which was limited in application to Medicare Part B. This Legal Sidebar provides relevant background
about HHS’s efforts to implement the 2020 EO and analyzes selected legal issues related to the HHS
Secretary’s authority to implement MFN pricing as directed in the 2025 EO. Because the May 20, 2025,
press release from HHS mentions that the agency expects manufacturers to offer MFN pricing “across all
markets,” this Legal Sidebar also explores the HHS Secretary’s authority to impose MFN pricing for
drugs in federal health care programs (e.g., Medicare, Medicaid, and the Children’s Health Insurance
Program (CHIP)) as well as in private markets. The Sidebar concludes with an analysis of how the MFN
prices might interact with other existing federal programs, particularly the Medicare Drug Price
Negotiation Program, which Congress created in the Inflation Reduction Act of 2022 (IRA).
