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On May 12, 2025, President Trump issued an executive order (EO) to align U.S. prescription drug prices with those of similar nations. A White House fact sheet highlights that Americans pay over three times more for brand-name drugs. In April, another order was signed to reduce drug prices, focusing on Medicare and the pharmaceutical industry, though changes will take time to take effect.
Key Directives
The latest EO aims to reduce prescription drug prices in the U.S. It directs:
- The U.S. Trade Representative and Secretary of Commerce to prevent unfair foreign pricing practices;
- The Trump administration to set price targets for pharmaceutical manufacturers; and
- The Secretary of Health and Human Services (HHS) to allow Americans to purchase drugs directly from manufacturers at a "Most-Favored-Nation" price.
If drug manufacturers do not offer most-favored-nation pricing, the EO instructs the Secretary of HHS to propose rules enforcing this pricing and take measures to lower prescription drug costs, including potential U.S. Federal Trade Commission enforcement.
Potential Legal Hurdles
The EO instructs the Secretary of HHS to set most-favored-nation price targets for pharmaceuticals within 30 days, but legal challenges are anticipated. A similar proposal during Trump's first term, linking Medicare payments to the lowest international prices, was blocked by courts for bypassing required procedures. Therefore, the immediate effect on drug costs is uncertain. Download the bulletin for more details.
