On May 12, 2025, President Trump signed an Executive Order (“EO” or “Order”) “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” aimed at significantly reducing U.S. prescription drug prices by aligning them with the lowest prices paid by other developed nations. According to the EO, drug manufacturers “deeply discount their products to access foreign markets and subsidize that decrease through enormously high prices in the United States.” Seeking to rectify this “egregious imbalance,” the EO announced the following policy: “Americans must therefore have access to the most-favored-nation price for these products… [and] should drug manufacturers fail to offer American consumers the most-favored-nation lowest price, [the] Administration will take additional aggressive action.”
The “Most-Favored-Nation” pricing concept, initially proposed during the first Trump administration, aims to ensure that U.S. government payors do not pay more than other countries’ payors. To implement this policy, the Order directs the Secretary of Health and Human Services (“HHS”) to establish pricing targets for pharmaceutical manufacturers at these most-favored-nation prices, including by proposed rulemaking. The Order further directs the Department of Justice, Federal Trade Commission, Food and Drug Administration (“FDA”), and Department of Commerce to take appropriate enforcement action, including against anticompetitive practices. The Order also directs the Secretary of Health and Human Services to establish a mechanism through which U.S. consumers can buy their drugs directly from manufacturers at “Most-Favored-Nation” prices.
The Order also directs HHS and FDA to take certain actions if “significant progress” towards “Most-Favored-Nation” pricing for Americans is not delivered. These include taking steps to facilitate prescription drug importation under section 804(j) of the Federal Food, Drug, and Cosmetic Act and reviewing—and potentially modifying or revoking—approvals for drugs that may be unsafe, ineffective, or improperly marketed. These actions, if taken, could have a significant impact on life sciences companies.
Gibson Dunn is monitoring regulatory developments and executive orders closely. Our attorneys are available to assist clients as they navigate the challenges and opportunities posed by the current, evolving legal landscape.