The Trump administration’s efforts to implement MFN pricing

Per the executive order, government agencies, including the US Department of Health and Human Services, are to instruct drug manufacturers to take voluntary steps to reduce their drug prices. If this voluntary approach does not make significant progress toward lowering drug prices, the executive order directs agencies to take further steps, including to:

• Propose rulemaking “to impose” MFN pricing
• Begin reimportation of drugs from “developed nations with low-cost prescription drugs”
• Pursue antitrust enforcement actions related to practices resulting in high US drug costs
• Take “all necessary action” to restrict the export of drugs or precursor materials that “may be fueling the global price discrimination”
• Review and potentially modify or revoke US Food and Drug Administration (FDA) approval for drugs that may be “unsafe, ineffective or improperly marketed”
• Take all available action to address “global freeloading and price discrimination against American patients”

The executive order’s MFN pricing, drug reimportation, drug and drug precursor export restriction, and FDA review provisions primarily target drug manufacturers. However, the executive order’s directives would also affect other stakeholders, including:

• State Medicaid programs, which may benefit from larger rebates under Medicaid’s best price rules
• Healthcare providers that participate in the 340B Drug Pricing Program, as they may see changes to the opportunities available under the program if MFN prices are introduced

Following the executive order, on July 31, 2025, the White House sent letters to 17 drug manufacturers outlining “the steps they must take” to reduce drug prices. While the letters are not public, the press release announcing the letters stated that the required steps include providing MFN pricing to every Medicaid patient, equalizing international pricing on new drugs, selling drugs directly to patients at MFN prices, and increasing international prices with proceeds to be reinvested in the United States. The letters warned manufacturers that if they do not take action to implement MFN pricing within 60 days, the government “will deploy every tool in [its] arsenal to protect American families from continued abusive drug pricing practices.”

The executive order and July 2025 letters demonstrate the Trump administration’s continued commitment to reducing drug costs, a goal the first Trump administration attempted to achieve with a different MFN drug pricing model that was never implemented. That proposal would have effectuated MFN pricing similar to the Medicare Drug Price Negotiation Program’s Maximum Fair Price model created by the Inflation Reduction Act of 2022 and would have capped Medicare payments for the 50 drugs with the highest percentage of Part B spending. Under the proposed model, providers would have needed to place pressure on manufacturers to obtain the MFN price. The model would have created significant challenges for providers that were unable to obtain drugs at the MFN price cap.

The first Trump administration’s attempt to implement MFN pricing differs markedly from the approach laid out in the executive order and the July 2025 letters. The current Trump administration has signaled its willingness to explore a wider range of regulatory actions to achieve its goals. Unlike the previous proposed MFN model, which would have been limited to drugs paid for by Medicare Part B, the MFN approach laid out in the executive order is silent as to the payors and the dispensing or administration settings to which the directive applies and appears to be intended to apply across the board regardless of the drug, dispensing or administration setting, or payor. The July 2025 letters similarly refer to providing drugs at MFN prices regardless of the setting or payor. The accompanying press release called out Medicaid and “newly launched drugs” as targets for MFN pricing; however, it also referenced “Americans” and drugs more generally, regardless of payor or date of “launch.”

Analysis

Despite their strong language, neither the executive order nor the July 2025 letters established any new legal requirements or obligations for drug manufacturers or others. Instead, they present a list of requested actions for drug manufacturers and a list of directives to federal agencies on future regulatory changes or enforcement actions if manufacturers do not voluntarily comply with the requests.

Questions remain about both the legal authority for some of the material changes proposed in the executive order and July 2025 letters, such as the mechanism through which drug manufacturers would sell drugs directly to patients at the MFN price, as proposed in the executive order and the letters. Many of the actions described in the executive order and the letters would require either formal notice-and-comment rulemaking or statutory changes by Congress. As such, implementation of any material change in drug pricing policy in 2025 seems unlikely.

Nevertheless, manufacturers, healthcare providers, and other stakeholders should continue to monitor the administration’s actions with respect to drug pricing, especially as the 60-day deadline for drug manufacturers to implement the steps outlined in the July 2025 letters approaches. Stakeholders should ensure they are familiar with the MFN policies described in the executive order and engaged in the process of developing or implementing the executive order’s directives. Stakeholders should also remain mindful of how the administration’s actions related to the executive order may interact with the administration’s other initiatives in the drug pricing and pharmaceutical space, including tariffs on pharmaceutical products and implementation of the Medicare Drug Price Negotiation Program.