On May 12, 2025, President Trump issued an Executive Order titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” and an accompanying “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.” The May 12 Executive Order is the latest action by the Trump Administration related to prescription drug pricing in the United States, following an Executive Order issued on April 15, 2025 (as discussed in a prior client alert). Today’s Executive Order criticizes the disparity between prices paid for drug products in foreign markets and the “enormously high prices” for the same drug products in the United States. To “end global freeloading” and “inflated prices in the United States [that] fuel global innovation,” the Executive Order calls for most-favored-nation (“MFN”) pricing in the United States.

The Executive Order explicitly calls for the Secretary of Commerce and the United States Trade Representative to take “all necessary and appropriate action” to ensure foreign countries do not engage in acts, policies, or practices that may be unreasonable or discriminatory; impair national security; or have the effect of shifting a disproportionate share of the cost of global pharmaceutical research and development onto American patients, including by “suppressing the price of pharmaceutical products below fair market value in foreign countries.” The Executive Order also mandates that the Secretary of the Department of Health and Human Services (“HHS”) facilitate direct-to-consumer purchasing programs for manufacturers that sell products to American patients at the MFN price.

Within 30 days of the date of the Executive Order, the HHS Secretary, in coordination with the Assistant to the President for Domestic Policy, the Administrator for the Centers for Medicare & Medicaid Services (“CMS”), and other relevant executive department and agency officials, must communicate MFN price targets to pharmaceutical manufacturers. If manufacturers do not make “significant progress” towards MFN pricing for American patients, then the Executive Order directs the following actions:

  • The HHS Secretary shall propose a rulemaking plan to impose MFN;
  • The HHS Secretary shall “consider” certification to Congress that implementation of Section 804(j) of the Federal Food, Drug, and Cosmetic Act will pose no additional risk to public health and safety, and result in a significant reduction in the cost of prescription drugs for American patients; and, if such certification is made, the Commissioner of Food and Drugs shall take action under Section 804(j)(2)(B) to describe circumstances under which the Food and Drug Administration (“FDA”) will consistently grant waivers for individuals’ drug importation from developed nations with low-cost prescription drugs;
  • The Attorney General and the Chairman of the Federal Trade Commission shall consider enforcement against anticompetitive practices by manufacturers following the report issued under the April 15 Executive Order (as described in this client alert);
  • The Secretary of Commerce and other agency heads shall review and consider necessary action regarding the export of drugs or precursor material that may be fueling “global price discrimination”;
  • The Commissioner of Food and Drugs shall review and potentially modify or revoke drug approvals for drugs that may be unsafe, ineffective, or improperly marketed; and
  • The Assistant to the President for Domestic Policy, with agency heads, shall take “all action available” to address “global freeloading and price discrimination.”

Notably, Section 804(j) enables the authorization of importation of prescription drugs and devices by individuals “for personal use” “under such conditions as the HHS Secretary determines to be appropriate,” and Section 804(j)(2)(B) requires FDA to publish guidance. This contrasts with other provisions of Section 804, which enable commercial importation from Canada.

The approach in today’s Executive Order echoes a similar MFN-related Executive Order issued by President Trump during his first Administration. As explained in this client alert, the first Trump Administration initially announced an Executive Order titled “Lowering Drug Prices by Putting America First” (commonly referred to as the MFN Executive Order) on July 24, 2020. However, President Trump withheld the July 24, 2020 Executive Order pending negotiations with industry on potential alternatives until he issued a new version of the MFN Executive Order on September 13, 2020. The September 13, 2020 Executive Order directed the HHS Secretary to “develop and implement a rulemaking plan” for payment models under the Center for Medicare and Medicaid Innovation (“CMMI”) regarding Medicare Part B and Part D. The prior Administration ultimately issued a CMMI model called the “Most Favored Nation Model,” which was enjoined by courts and rescinded by the Biden Administration.

Given prior actions by the first Trump Administration and their similarity to the May 12 Executive Order, including a directive to the HHS Secretary to consider rulemaking pathways for MFN pricing, it is feasible that more actions may be forthcoming from the Trump Administration regarding MFN pricing. There also may be further actions from the Commerce Department and the Office of the United States Trade Representative on trade-related issues.

Our team continues to monitor MFN pricing and related activity.

If you have any questions concerning the material discussed in this client alert, please contact the members of our Health Care practice.

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Photo of Kristie Gurley Kristie Gurley

Kristie Gurley advises life sciences clients on complex pricing, reimbursement, and market access issues. Kristie brings unique insight from her recent experience serving in the Office of the General Counsel of the U.S. Department of Health and Human Services (HHS), where she supported…

Kristie Gurley advises life sciences clients on complex pricing, reimbursement, and market access issues. Kristie brings unique insight from her recent experience serving in the Office of the General Counsel of the U.S. Department of Health and Human Services (HHS), where she supported the Centers for Medicare & Medicaid Services (CMS) on drug pricing issues, including implementation of the Inflation Reduction Act (IRA). In this role, Kristie served as a lead attorney on the IRA Medicare Drug Price Negotiation Program, including with respect to policy development, operations, and the first cycle of negotiations. She also supported the Medicare Prescription Drug Inflation Rebate Program and additional IRA implementation efforts, Medicaid Drug Rebate Program rulemaking and agency determinations, and the Center for Medicare & Medicaid Innovation’s development and launch of a model for cell and gene therapies.

Kristie’s practice involves strategic, policy, and regulatory advice supporting market access for drug and biological products. Kristie provides advice related to federal health care program coverage and reimbursement, Medicaid price reporting, agency engagement, payer contracting and formulary access, value-based contracting, and other issues under federal and state drug pricing regimes. In addition to regulatory counseling, Kristie advises on strategic commercial transactions, litigation opportunities, compliance and enforcement risk, and policy advocacy.

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Ryan joined Covington after…

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Ryan joined Covington after eight years of public service with the FTC, where he worked on antitrust investigations in a variety of industries, including technology, pharmaceutical and life sciences, retail, distribution, consumer goods, and healthcare. In addition to his investigation experience, Ryan also developed strong relationships with staff throughout the agency, routinely interacted with agency leadership, communicated directly with foreign competition agencies, and provided technical assistance on proposed legislation.

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Rx-to-OTC drug switches and OTC drug claims.
DEA requirements for controlled substances.

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