/>iIn follow-up to the May 12th “Delivering Most Favored Nation Prescription Drug Pricing to American Patients” Executive Order, President Trump issued letters to seventeen manufacturers (Letters), reiterating the mandate for manufacturers to provide the United States with most-favored-nation pricing for drugs.
The Executive Order gave manufacturers 180 days to negotiate most-favored-nation drug pricing terms with the Department of Health and Human Services (HHS) before the Attorney General and the Chairman of the Federal Trade Commission (FTC) can bring enforcement action against manufacturers for anti-competitive practices. The Executive Order also warned manufacturers that the HHS Secretary and heads of other agencies would consider alternative measures to compel manufacturers to modify drug prices if “significant progress toward most-favored-nation pricing for American patients [was] not delivered.” These measures include, but are not limited to, issuing rulemaking to impose most-favored-nation pricing, certifying to Congress that importation is a viable drug cost-reduction strategy, and modifying or revoking existing drug approvals.
Lack of Progress in Most-Favored-Nation Pricing Negotiations
It appears that manufacturers have not made significant progress towards negotiating the most-favored-nation drug pricing terms. The Letters make clear that President Trump and his Administration are not satisfied with the responses received from manufacturers to date. Specifically, Trump states that the manufacturers’ proposals are primarily “shifting blame and requesting policy changes that would result in billions of dollars in handouts to industry.” In response to the stalled negotiations, President Trump further articulates the Administration’s expectations, stating it will only entertain manufacturer proposals that result in “immediate relief from vastly inflated drug prices” that disadvantage patients in the United States.
In an effort to move the ball forward, the Letters require manufacturers to take the following actions by September 29, 2025:
- Provide most-favored-nation pricing for all drugs within such manufacturers’ portfolio to all Medicaid patients;
- Enter into a contract with the United States to provide most-favored-nation pricing for newly launched drugs to Medicare, Medicaid, and commercial payers.
- Enter into a contract with the United States whereby such manufacturer agrees to repatriate increased revenue earned abroad to lower drug prices for United States patients and taxpayers.
- Participate in direct-to-consumer and/or direct-to-business distribution models for high-volume, high-rebate prescription drugs to enable all United States patients to obtain drugs at the lowest cost.
Scope of the MFN Executive Order Requirements
The Letters also seem to narrow the scope of the most-favored-nation pricing requirements. While the Executive Order left ambiguity around its intended applicability, the Letters suggest the most-favored-nation pricing would be limited to (i) drugs used by Medicaid patients across a manufacturer’s portfolio, and (ii) newly launched drugs used by patients whose prescriptions are paid for by Medicaid, Medicare, and commercial payers.
Notably, and in contrast with the narrowed scope of the September 29th requirement for most-favored-nation pricing, the applicability of the direct purchasing requirement is even less clear. The Letters suggest that the September 29th direct purchasing requirement will apply to manufacturers and payers across the board, but only for “high volume, high rebate prescription drugs.” The Letters are silent as to what would be considered the threshold for “high volume” and/or “high rebate” prescription drugs and also fail to clarify who would be entitled to make this determination.
Conclusion
The Letters offer insight into the challenges the administration faces in its efforts to compel manufacturers to change drug pricing practices in a way that lowers costs for United States patients. President Trump emphasizes that the Administration is prepared to “deploy every tool in [its] arsenal to protect American families from continued abusive drug pricing practices.”
Nonetheless, a critical question remains unresolved: what authority, if any, does the Trump Administration have to implement the most-favored-nation requirements without Congressional action?
Although the Letters appear to narrow the scope of the May 12th Executive Order mandates, we expect manufacturers to continue to resist and challenge these requirements.
