On Monday, May 12, 2025, President Trump signed an Executive Order (EO) calling for Most-Favored-Nation (MFN) pricing for prescription drugs. The EO has the stated purpose of addressing what it describes as price discrimination borne by American consumers who pay more for pharmaceuticals than consumers in other developed nations. The EO outlines a process whereby President Trump intends to reduce the prices American consumers pay for pharmaceuticals. The U.S. Department of Health & Human Services (HHS) released a subsequent press release stating that it had identified MFN targets for manufacturers of products that do not face generic or biosimilar competition.

MFN pricing targets

Central to the EO is a directive for the HHS secretary (Secretary), in coordination with other officials, to develop and communicate MFN price targets to pharmaceutical manufacturers within 30 days. The EO expressly states that the development and communication of these targets is intended to engender “significant progress” toward MFN pricing.

The HHS press release, issued eight days after the EO, indicates that the administration has identified the price targets they expect manufacturers to meet. According to the press release, “The MFN target is the lowest price” for a product within the set of economic peer countries defined as having per capita gross domestic product (GDP) that is at least 60% of the United States’ per capita GDP.

If significant progress is not made by manufacturers toward the MFN targets, the EO outlines six subsequent administrative actions the Trump administration may take. These actions range from pursuing MFN through rulemaking to importing drugs from other countries to reconsidering the FDA approval of certain drugs already on the market.

Six considerations for life science companies

1. Next first step: The EO builds thematically on President Trump’s MFN EO from 2020 and the April 2025 prescription drug EO to outline additional actions his administration is taking toward the stated goal of reducing pharmaceutical prices in the United States. However, this MFN EO starts with a different approach than the previous MFN EO by calling on the Secretary to establish MFN targets and engage with pharmaceutical manufacturers to make significant progress toward MFN pricing.
2. Countries used for MFN targets: The HHS press release clarified that the MFN targets would be based on the lowest price available to countries that are members of the Organisation for Economic Co-operation and Development (OECD) and have per capita GDP at least 60% of the United States’ GDP. Based on data from the World Bank, 15 of the 37 ex-U.S. OECD countries meet this threshold. However, the previous Trump administration used an alternative version of GDP per capita to calculate illustrative MFN prices in 2020, as detailed in the supporting documentation from November 2020. Using GDP data normalized to reflect purchasing power, as many as 24 ex-U.S. OECD countries could be used as a benchmark. Manufacturers should consider how their product offerings in those countries are influencing the MFN targets the administration is pursuing.
3. Significant progress: The EO calls for “significant progress“ toward MFN pricing targets; however, neither the EO nor the HHS press release defines what the administration considers significant progress. This leaves open the opportunity for pricing moves or alternative product strategies that may be aligned with manufacturer priorities more broadly. Additionally, it is unclear how progress will be measured or if progress will be assessed on a product, manufacturer, therapeutic area, or industry level.
4. Potential rulemaking: If progress is not deemed significant, the May 2025 EO calls for subsequent rulemaking, which could start it down a similar path as the 2020 EO. The Centers for Medicare and Medicaid Services (CMS) issued an interim final rule with comment period in November 2020 to implement the first EO. However, that rule was not finalized, in part due to legal challenges related to compliance with the federal rulemaking process. Having observed the process from 2020, CMS may choose a different rulemaking approach to better withstand procedural scrutiny.
5. Market differentiation: The HHS press release states that MFN target pricing would apply to all markets, which represents a departure from the 2020 EO and rulemaking that focused on drug reimbursement through Medicare Part B. This expansion could represent increased risk for manufacturers; however, it also carries with it additional legal (e.g., Medicare’s non-interference clause) and administrative hurdles for the administration if it were to fully carry out this proposed policy.
6. Interaction with other government programs: The May 2025 EO and press release do not articulate how MFN pricing would impact or be influenced by the existing pharmaceutical reimbursement landscape. For example, manufacturers should consider how MFN pricing targets could play out for products selected for Medicare negotiation under the Inflation Reduction Act. Further, there are considerations to be had as it relates to the Medicare Manufacturer Discount Program, the Medicaid Drug Rebate Program, and 340B.

Conclusion

President Trump’s MFN EO set into motion a series of conversations and negotiations about the prices of U.S. drugs relative to those in other countries. While the subsequent press release provided more detail, substantial questions remain around the process and potential outcomes. As life science companies assess potential MFN pricing targets, they should consider how this proposed policy intersects with their broader pricing philosophy and reimbursement strategy. Additionally, while this EO specifically focuses on pharmaceutical manufacturers, stakeholders across the healthcare spectrum—patients, healthcare providers, insurance carriers, and pharmacies—should consider the implications of MFN pricing.