Executive Order 14297
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Executive Order on Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients is an executive order (EO) signed by U.S. president Donald Trump on May 12, 2025. The order aims to reduce the cost of prescription drugs by directing federal agencies to link U.S. prices to the lower prices paid for the same drugs in a group of other developed countries. This approach is referred to as "most favored nation" (MFN) pricing, likening it to certain trade deals.
Content
Trump signed Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients, an executive order, on May 12, 2025.[1] He stated that the policy would reduce prescription drug prices significantly and end the U.S. "subsidizing the health care of foreign countries." He claimed prices could fall by 30% to 80% or even more.[2][3] The order directs the Department of Health and Human Services to communicate price targets to pharmaceutical manufacturers and, if necessary, pursue rulemaking to impose MFN pricing across the U.S. healthcare system, including commercial markets, Medicare, and Medicaid.[2][3] It also instructs the Department of Commerce, along with the U.S. Trade Representative, to take action against other nations that Trump claims are pursuing unfair practices to keep down drug prices. A different EO, which Trump signed in April 2025, directed the Food and Drug Administration to open up a re-importation process to bring drugs from Canada to the United States. This new EO directs the FDA to expand the reimportation program to other nations.[2]
Background
Prescription drug prices in the United States are much higher than costs abroad.[4][2] Many other countries have a centralized drug negotiation in which pharmaceutical companies are forced to give a single deal to the whole country. Trump has framed the resulting system as the U.S. being forced to subsidize the cost of pharmaceutical research.[2]
The Biden administration passed the Inflation Reduction Act, which allowed Medicare to negotiate prices for some drugs.[2]
The order revives a policy first attempted during the final months of Trump's previous administration, which sought to apply MFN pricing to certain Medicare Part B drugs as a demonstration program.[2][3] The original MFN pricing policy was quickly shut down by courts because the first Trump Administration failed to follow the Administrative Procedures Act.[3][4] JP Morgan's analyst stated that the new policy would also be difficult to implement due to expected legal challenges. The Biden administration subsequently removed the original MFN policy.[2]
During the announcement for Executive Order 14297, Mehmet Oz, the Medicare and Medicaid administrator, noted that prices negotiated under existing Medicare rules still tend to be higher than what European systems pay.[5]
Implementation
Prior to this Executive Order, the Trump administration tried to pressure Congress to include MFN pricing for Medicare in legislation, but Republican representatives opposed cutting Medicaid costs.[2][better source needed][4] PhRMA, the largest political force for the pharmaceutical industry, estimated that MFN pricing for Medicaid would cost the industry $1 trillion over the next decade. Stephen Ubl, the group's leader, particularly opposed the re-importation expansion.[4][2] He said, "importing foreign prices from socialist countries would be a bad deal for American patients and workers".[2] PhRMA did support Trump for targeting other countries that they believe are not paying enough for drugs.[2]
AARP released a statement supporting the new EO,[2] but the Wall Street Journal called out that important details were missing on how it could be implemented.[6] Pharmaceutical industry executives and Republican representatives warned that reducing drug prices could stifle innovation.[7][8]
In a follow-up interview, HHS Secretary Robert Kennedy stated he expects price reductions to apply to Medicare and private markets.[9] It is unclear how these changes will impact the existing agenda for Medicare price negotiations.[10]
A Dutch expert noted that it may be difficult to compare US drug prices to prices paid by European countries as the specific price negotiated for a given drug is often kept secret.[11] The impact on foreign drug manufacturers is unclear.[12]
References
- ↑ "Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients". The White House. 12 May 2025. Retrieved 13 May 2025.
- ↑ 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 2.12 2.13 Constantino, Annika Kim (12 May 2025). "Trump signs order aiming to cut some U.S. drug prices to match lower ones abroad". CNBC. Retrieved 13 May 2025.
- ↑ 3.0 3.1 3.2 3.3 Gardner, Jonathan; Pagliarulo, Ned (May 12, 2025). "Trump revives 'most favored nation' plan in effort to cut US drug prices | BioPharma Dive". www.biopharmadive.com. Retrieved 13 May 2025.
- ↑ 4.0 4.1 4.2 4.3 Bettelheim, Rebecca Falconer,Adriel (12 May 2025). "Trump signs order to cut drug prices by up to 80%". Axios. Retrieved 13 May 2025.
- ↑ Lupkin, Sydney (May 12, 2025). "Trump signs an order to reduce drug prices, but it's unclear how it would work". NPR. Retrieved 17 May 2025.
- ↑ Wainer, David (May 13, 2025). "Trump's Drug-Price Crackdown, Like His Trade War, Could Be More Bark Than Bite". WSJ. Retrieved 14 May 2025.
- ↑ Gardner, Jonathan (May 13, 2025). "5 questions on Trump's plan to lower US drug prices | BioPharma Dive". www.biopharmadive.com. Retrieved 14 May 2025.
- ↑ Bolton, Alexander (13 May 2025). "Trump drug pricing proposal puts GOP senators in a tough spot". The Hill. Retrieved 14 May 2025 – via Yahoo News.
- ↑ Washington, Alexander Tin Digital Reporter Alexander Tin is a digital reporter for CBS News based in the; Tin, D. C. bureau He covers federal public health agencies Read Full Bio Alexander (14 May 2025). "Trump wants drug price caps tied to foreign nations. Here's why Biden never did it. - CBS News". www.cbsnews.com. Retrieved 17 May 2025.
- ↑ Baxter, Amy (May 19, 2025). "With the third round of Medicare price negotiations on the way, here's how the policy is shifting | PharmaVoice". www.pharmavoice.com. Retrieved 19 May 2025.
- ↑ Saris, Karlijn (13 May 2025). "Waarom Amerikanen meer betalen voor medicijnen? Trump wijst naar Europa". NRC (in Nederlands). Archived from the original on May 14, 2025. Retrieved 19 May 2025.
- ↑ Shah, Ravi (19 May 2025). "US drug pricing order – Implications for India's pharma sector". Express Pharma. Retrieved 19 May 2025.
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