On May 12, 2025, the President signed an Executive Order (EO), .鈥� The EO calls for or, in some cases, presumes a range of manufacturer, administrative and regulatory actions to reduce drug prices, but ultimate outcome remains unclear.
黑料不打烊 experts, including Leavitt Partners, an 黑料不打烊 company, are closely following executive agency and stakeholder responses to the EO. In this article, our experts summarize the EO and identify key considerations for healthcare stakeholders.
Policy Overview
Since his first administration, President Trump has consistently criticized disparities in brand-name prescription drug prices between the United States and other developed countries. In 2018, the previous Trump Administration issued a to institute an International Pricing Index (IPI) model targeting Medicare payments for a subset of clinician-administered drugs. The IPI model would have set a Medicare payment amount for select Part B drugs at a lower amount to align with international prices and allow for negotiation of prices, while still providing a drug add-on payment to providers consistent with historical drug costs. In November 2020, the administration issued an interim final rule (IFR) instituting an escalated version of this concept, entitled the . Both the IPI proposal and the MFN final rule, the latter of which was enjoined by the courts on largely procedural grounds and later rescinded by the Biden administration, would have been implemented under the Center for Medicare and Medicaid Innovation鈥檚 (CMMI) demonstration authority.
On May 12, 2025, the President signed an EO, , which reaffirms the Administration鈥檚 concerns regarding what it perceives to be American funding of pharmaceutical research and development 鈥渨hile foreign health systems get a free ride.鈥� In an effort to address the Administration鈥檚 concerns, the EO notes that the Administration 鈥渨ill take immediate steps to end global freeloading鈥� and that 鈥渟hould drug manufacturers fail to offer American consumers the most-favored-nation lowest price, my Administration will take additional aggressive action.鈥�
The EO outlines efforts to implement this policy, including:
- Trade Efforts.聽The US Department of Commerce and United States Trade Representative (USTR) are directed to ensure that foreign countries are not engaged in actions with the effect of forcing Americans to 鈥減ay for a disproportionate amount鈥� of R&D costs.
- Direct-to-Consumer (DTC) Sales at MFN Price.聽The US Department of Health and Human Services (HHS) is directed to facilitate DTC sales programs for manufacturers to offer MFN prices.
- MFN Targets.聽The HHS Secretary is directed to provide MFN targets to manufacturers within 30 days with the expectation that manufacturers will 鈥渂ring prices for American patients in line with comparably developed nations.鈥�
- If 鈥渟ignificant progress鈥� toward MFN pricing is not made, HHS will be directed to propose a rulemaking plan to impose it.
- The order suggests that the HHS Secretary certify, on a case-by-case basis, that reimportation will pose no additional risk to public health and will result in savings, as well as to create standard mechanisms for importation. It is unclear how this direction aligns with the current statutory framework, which is focused on Canada.
- Federal Trade Commission/Department of Justice Action.聽The EO calls for efforts 鈥渃onsistent with law鈥� to undertake enforcement action against anticompetitive practices identified in the prior drug pricing EO, including use of the Sherman Antitrust Act.
Key Considerations
At this stage, the scope and practical effects of the EO remain uncertain, as the administration has not yet provided details regarding the regulatory and subregulatory actions envisioned under the document. With respect to trade policy, for instance, the EO does not outline explicitly what particular tools it expects USTR or the Commerce Department to leverage in combating 鈥渇oreign freeloading.鈥�
Similarly, the EO does not elaborate on the steps that the administration plans to take in 鈥渇acilitat[ing]鈥� voluntary MFN target pricing under DTC purchasing arrangements. Such efforts could theoretically bring waivers or other regulatory flexibilities to bear, or else they could take a more hands-off approach, simply encouraging drugmakers to take action on their own.
Without further clarifications around how the administration might define or assess 鈥渟ignificant progress鈥� towards MFN pricing targets on the part of manufacturers, nor the form, manner, or timeline that 鈥渁ggressive action鈥� in the absence of such progress might take, the EO serves principally as an illustration of the President鈥檚 posture, perspective, and priorities with respect to prescription drug affordability and access.
Even in the absence of immediate pricing or payment interventions, the EO could provide a preview of future executive actions aligned with the document鈥檚 focus. Such actions could include CMMI models building on the IPI or MFN initiatives from the first term, explicit trade negotiation priorities, regulatory measures related to DTC purchasing arrangements, FDA reimportation program flexibilities, or any number of other drug-related policies.
Our experts will continue to monitor these activities as they progress.
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For details regarding the EO and potential impact on the healthcare sector, contact our featured experts below at聽[email protected]
