News
Article
HHS Sets Pricing Target for Trump’s Most Favored Nation Drug Price Model
Key Takeaways
- The Most Favored Nation pricing model targets drug prices in Organisation for Economic Co-operation and Development countries with a gross domestic product per capita of at least 60% of the US.
- The order aims to reduce drug prices by 30% to 80% but faces criticism from the pharmaceutical industry.
Following President Donald Trump's most favored nation executive order, HHS and CMS have released the target price for pharmaceutical manufacturers to meet.
Following President Trump's most favored nation executive order, HHS and CMS have released the target price for pharmaceutical manufacturers to meet.
Image credit: Kenishirotie - stock.adobe.com
One week after President Donald Trump signed an executive order to bring back the Most Favored Nation (MFN) idea he introduced at the end of his first term,1,2 HHS announced it is proceeding with implementing the order on prescription drug pricing.3 The goal of the order is to set price targets for pharmaceutical manufacturers for products that do not have generic or biosimilar competition.
HHS Secretary Robert F. Kennedy Jr and CMS Administrator Mehmet Oz, MD, have set the target price of the lowest price in an Organisation for Economic Co-operation and Development country with a gross domestic product (GDP) per capita of at least 60% of the US’s GDP per capita.
“For too long, Americans have been forced to pay exorbitant prices for the same drugs that are sold overseas for far less,” Kennedy said in a statement.3 “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.”
The Trump administration claims establishing the MFN pricing will reduce the price of drugs by 30% to 80%.1 In his first term, the policy Trump introduced specifically covered Medicare Part B drugs, although it has not been established if this new order covers the same drugs.2
Shortly after the order was signed, the pharmaceutical industry criticized it, with Stephen J. Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, known as PhRMA, redirecting attention to pharmacy benefit managers (PBMs), insurers, and hospitals as the reason prices are high in the US.
“Importing foreign prices from socialist countries would be a bad deal for American patients and workers,” Uble said in statement.4 “It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America—threatening jobs, hurting our economy and making us more reliant on China for innovative medicines.”
Similarly, John F. Crowley, the president and CEO of the Biotechnology Innovation Organization, called the proposal “deeply flawed” and devastating to small and mid-sized biotechnology companies.
“Applying other countries’ antiquated approach to how they value—and pay—for medicines will stall investment across America’s biotech companies, risk access to vital treatments and cures for millions of American patients, and lead to fewer American jobs,” he said in a statement.5 “Patients and families are not a bargaining chip in a trade war, but that’s exactly how they are being treated—first through proposed tariffs on our nation’s medicines, now with foreign reference pricing in the name of fairness.”
However, there is optimism for the impact this pricing model may have. AARP Executive Vice President and Chief Advocacy and Engagement Officer Nancy LeaMond said this order will help rein in prices. AARP fought for Medicare to have the ability to negotiate prices.
“For too long, big drug companies have been ripping off America’s seniors—charging the highest prices in the world for lifesaving prescriptions, padding their profits at the expense of American lives, and forcing older adults to skip medications they can’t afford,” she said in a statement.6 “We look forward to reviewing the details and understanding how these changes will affect seniors’ pocketbooks.”
Ronna Hauser, PharmD, the senior vice president of policy and pharmacy affairs at the National Community Pharmacists Association, said this may be a step in the right direction to make drugs more affordable but was skeptical.
“We know that some groups are talking about pushing back against this order and question the authority of the president to implement such a program without congressional authority,” she said in an interview with Drug Topics®.7 She noted that it should have minimal impact on community pharmacies.
Per the executive order, the Trump administration will pursue a series of policies if it doesn’t see significant progress from drug manufacturers to offer drugs to consumers at the price set by HHS. In an interview with The American Journal of Managed Care®, John Barkett, MBA, managing director in BRG's Healthcare Transactions and Strategy practice, noted that all or many of the policies would be unprecedented, such as reviewing export programs of US-based manufacturers to send drugs to other countries.
“I'm certain that the legality of [these policies] will be tested by manufacturers and potentially others who aren't so sure that the president's allowed to do these things,” Barkett said.
References
1. Bonavitacola J. Trump executive order could reduce pharmaceutical costs by 59%. AJMC®. May 12, 2025. Accessed May 20, 2025. https://www.ajmc.com/view/trump-executive-order-could-reduce-pharmaceutical-costs-by-59-
2. Trump administration announces prescription drug payment model to put American patients first. News release. CMS; November 20, 2020. Accessed May 20, 2025. https://www.cms.gov/newsroom/press-releases/trump-administration-announces-prescription-drug-payment-model-put-american-patients-first
3. HHS, CMS set most-favored-nation pricing targets to end global freeloading on American patients. News release. HHS; May 20, 2025. Accessed May 20, 2025. https://www.hhs.gov/press-room/cms-mfn-lower-us-drug-prices.html
4. PhRMA statement on most favored nation executive order. PhRMA. May 12, 2025. Accessed May 20, 2025. https://phrma.org/resources/phrma-statement-on-most-favored-nation-executive-order
5. BIO CEO releases statement regarding executive order on most favored nation. BIO. May 13, 2025. Accessed May 20, 2025. https://www.scbio.org/john-f-crowley-president-and-ceo-of-the-biotechnology-innovation-organization-bio-released-the-following-statement-regarding-executive-order-on-most-favored-nation/
6. AARP responds to the most favored nation executive order. AARP. May 12, 2025. Accessed May 20, 2025. https://press.aarp.org/AARP-Statement-Most-Favored-Nation-Executive-Order
7. Nowosielski B. Q&A: What the Most-Favored-Nation Drug Pricing Executive Order Means for Community Pharmacy. Drug Topics. May 15, 2025. Accessed May 20, 2025. https://www.drugtopics.com/view/what-the-most-favored-nation-drug-pricing-executive-order-means-for-community-pharmacy
