The package revives President Donald Trump’s much-maligned Most Favored Nation rule but goes further into the private markets and beyond, leveraging the patent system, drug importation and more.
The White House has announced a sweeping drug pricing policy package that will touch all edges of the pharmaceutical industry. The executive order to be signed by President Donald Trump Monday morning will affect drug prices from Medicare to the private markets and could impact various industry operations, including how biopharma companies source their drugs and how they protect their intellectual property.
“The president is dead serious about lowering drug prices,” White House officials said on a call Monday morning.
But government officials offered a dubious explanation of the legal authority for such a broad proposal and brushed off concerns about the collateral damage to biomedical innovation.
The package revives President Donald Trump’s Most Favored Nations rule, a much-maligned policy from his first term that ordered Medicare to price drugs in line with nations where they are cheaper. It seeks to use levers of the federal government, such as patent enforcement, to pressure drugmakers to lower their prices voluntarily.
The executive order directs Secretary of Health and Human Services Robert F. Kennedy Jr. to facilitate direct-to-consumer (DTC) sales—a growing trend in the industry—at Most Favored Nation prices. The secretary will need to “set clear targets” for achieving price reductions with MFN pricing within 30 days, according to the order.
However, an executive order does not implement a law. A president can issue these orders to direct federal agencies to conduct an action, but a presidential decree cannot override existing laws.
The White House officials insisted on Monday morning’s call that there would be no impact to biopharma innovation, which has been a talking point in the industry since the specter of MFN was raised again in recent weeks. The officials noted that the U.S. has less than 5% of the world’s population yet it accounts for about three-quarters of global pharmaceutical profits.
“We expect, obviously, the United States as the largest purchaser to be getting the best deal across the world,” one official said. “However, we do anticipate that with some of these actions that we will be taking to crack down on countries that are pursuing unfair and discriminatory practices, as well as when pharmaceutical companies realize that the United States alone is not going to pay for innovation, that they will be increasing their prices abroad and getting additional revenues there.”
The official continued: “It’s not that pharmaceutical companies are not going to continue to make money after this.”
President Trump in a post on his Truth Social network over the weekend promised immediate relief for Americans; although it’s unclear how quickly the proposed suite of actions will take force.
“We expect . . . drug manufacturers to be coming to the table immediately,” a White House official said. “We’ve already, of course, been hearing from them in the run up to this executive order, so we expect action and relief very soon.”
At a signing ceremony at the White House following the call, President Trump, flanked by HHS Secretary Robert F. Kennedy Jr., FDA commissioner Marty Makary, NIH director Jay Bhattacharya and CMS administrator Mehmet Oz, exclaimed the executive order.
“This is one of the most important orders ever signed, especially with regard to health.”
Trump said “drug prices will be reduced immediately by 50% or more. Pharma companies will abide by this voluntarily” or the administration and Congress would take some unspecified action to codify the executive order.
Kennedy, Oz, Bhattacharya and Makary then took turns speaking, each congratulating the president on his courage in signing the executive order.
Kennedy complimented Trump on his “intestinal fortitude,” and added “I have kids who are big Bernie Sanders fans, and when I told them this would happen, they had big tears in their eyes.”
A Sweeping Action
While the initial MFN rule was limited to just Medicare Part B, the public medical insurance program that covers some prescription drugs, the new package will attempt to touch all parts of the government’s insurance programs, as well as the public markets. The White House officials said this is not the same rule as the one brought forth during Trump’s first term. “This suite of actions is broader than that.”
The officials did not specifically say how the proposal would impact Medicare Part D, which covers brand-name and generic prescription drugs.
No drug or class will be off limits, according to the officials. However, the plan will focus on drugs that have the widest pricing gap between the U.S. and other nations as well as those with the largest expenditures.
When asked specifically about GLP-1 drugs, the officials issued a shot across the bow to companies like Eli Lilly and Novo Nordisk, the market leaders, and companies developing assets in the clinic.
“It would be fair to expect that GLP-1s, given that they hit both of those categories, will be a focus and there will be an expectation that those prices should come down,” the official said. “And then if they don’t, that we will be looking at our various policy levers that can be used to force those prices down.”
The White House officials said the patent system could be leveraged as a way to bring down prices, too.
“I think that we’re all familiar with some of the places where pharmaceutical companies push the limits to prevent competition that would lower their prices, whether it be through patents, whether it be through pay for delay, whether it be Orange Book manipulation, and I can just say that we will absolutely be pursuing this across all those fronts and more,” the officials stated.
A Word About Tariffs
The FDA has been ordered to work on upping drug imports from nations where drugs are cheaper, “beyond just Canada,” the White House officials said Monday morning. This would also revive a policy that Trump pushed in his first term and one that the state of Florida has tried to implement with little success. The FDA approved the state’s drug importation plan last year but Florida has yet to begin bringing in drugs from Canada.
The plan to import drugs from Canada would come as Trump also wages a trade war on the U.S.’ northern neighbor. The White House officials insisted that the drug pricing policy is separate from the plan to implement tariffs on the pharmaceutical industry and the Trump administration remains focused on lowering drug prices.
“We are opening conversations here with the pharmaceutical industry to get their prices down,” the officials said. “There is a separate strong interest to make sure that we have adequate production of essential medicines within the United States.”
The officials also offered vague details about a plan for the Department of Commerce and the U.S. Trade Representative to “take all appropriate action against unreasonable and discriminatory policies in foreign countries that suppress drug prices abroad.” When asked about the legal authority to do so, the official said the government will take actions on matters that impact national security.
Editor’s note (May 12): This story was updated with comments from President Donald Trump and his team of healthcare administrators at a signing ceremony at the White House following the early morning press call. Reporting contributed by Dan Samorodnitsky.
