Executive Order Seeks to Eliminate Discrepancies in Drug Pricing Between United States and Other Countries

President Trump’s highly publicized executive order 14297, titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients,” targets the discrepancy in drug pricing in the United States compared with other advanced countries.

The fact that pharmaceuticals cost more in the United States compared with other advanced countries has often faced bipartisan criticism. Innovator pharmaceutical companies have historically claimed that the higher prices in the United States are necessary to support research and provide U.S. patients earlier and better access to drugs. Rejecting this explanation as unfairly passing on the cost to American consumers, the drug pricing executive order promises, “Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories.”

This analysis discusses key provisions of the drug pricing executive order, questions that remain to be resolved, and preemptive steps that drug manufacturers may take as they prepare for possible enforcement of its mandate.

Key Provisions of the Drug Pricing Executive Order

Manufacturers and Foreign Nations Are Both Targeted

The executive order recognizes that the lower prices in many countries are driven, at least in part, by negotiating tactics in which the governments negotiate lower prices or suppress the value of the drugs in the domestic marketplace. Keeping this market reality in mind, the executive order imposes obligations on both the manufacturer and foreign health care authorities that negotiate substantially lower prices.

For drug manufacturers, their obligation is to offer American consumers the most-favored-nation prices available. In parallel, the secretary of commerce and the U.S. trade representative are tasked with ensuring that foreign countries do not engage in unreasonable or discriminatory conduct, including suppressing the fair market value in their home countries and shifting the cost of research and development to consumers in America.

Determination of Most-Favored-Nation Pricing and Direct-to-Consumer Sales to American Consumers at the Most-Favored-Nation Prices 

A critical question underlying the executive order is how the most-favored-nation (MFN) pricing will be determined. The executive order assigns that responsibility to the secretary of the U.S. Department of Health and Human Services, to communicate the MFN pricing targets to manufacturers within 30 days of the executive order.

In addition, the executive order directs the secretary to facilitate direct-to-consumer purchasing programs for those pharmaceutical manufacturers selling products directly to consumers at MFN prices.

Multipronged Approach to Address Pricing Discrepancies

The executive order sets out a multipronged approach if its initial goals on MFN pricing remain unmet. These include:

• The HHS secretary is authorized to propose a rulemaking plan to impose MFN.
• The HHS secretary is directed to “consider” certification to Congress that implementation of section 804(j) of the Federal Food, Drug, and Cosmetic Act will pose no additional risk to public health and safety and result in a significant reduction in the cost of prescription drugs for American patients. If such certification is made, the FDA commissioner may act under section 804(j)(2)(B) of the FDCA to describe circumstances under which the FDA will consistently grant waivers for individuals’ drug importation from developed nations with low-cost prescription drugs.
• Section 13 of EO 14273 (“Lowering Drug Prices by Once Again Putting Americans First”), dated April 15, 2025, calls on the Department of Health and Human Services to conduct joint public listening sessions with the Department of Justice, the Department of Commerce, and the Federal Trade Commission, and to issue a report with recommendations to reduce anti-competitive behavior from pharmaceutical manufacturers. The executive order further directs the attorney general and the chair of the FTC to consider enforcement against anti-competitive practices by manufacturers following the report issued under EO 14273.
• The secretary of commerce and other agency heads are directed to consider necessary action regarding the export of drugs or precursor material that may be fueling “global price discrimination.”
• The FDA commissioner is authorized to review and potentially modify or revoke drug approvals for drugs that may be unsafe, ineffective, or improperly marketed.
• The assistant to the president for domestic policy, with agency heads, is directed to take “all action available” to address “global freeloading and price discrimination.”

Takeaways

Disparate drug pricing has long been a contentious issue, but prior attempts to harmonize drug pricing between U.S. and other advanced countries have met with substantial opposition. A comparable initiative during the first administration of President Trump stumbled for not engaging in appropriate notice and comment rulemaking. While this administration may navigate the prior administrative law issues, several questions must first be addressed, including:

• Definition of “Developed” Countries: The executive order seeks pricing comparable to other “developed” countries, but what constitutes a “developed” country for the purposes of the executive order remains to be defined.
• Impact on Generics and Biosimilars: The executive order specifically references research and development costs of prescription drugs and biologics and suggests that the main target of the executive order is innovator products. However, pricing discrepancies may also exist for generics, and it is unclear whether the generic and biosimilar industry will also be subject to comparable scrutiny on pricing.
• Framework for Direct-to-Consumer Sales: Unlike unauthorized importation of drugs that have triggered patent, trademark, and unfair competition claims from the manufacturer, authorized sales directly to consumers would be by the manufacturers themselves, who presumably own the intellectual property rights to the product. However, the executive order is silent on whether such sales are required only when no lower-priced generic or biosimilar is also available in the marketplace.
• Role of Pharmacy Benefit Managers and Insurance Reimbursement: In light of the directive to permit direct-to-consumer sales, the role of PBMs and insurance reimbursement of such purchases and sales will need to be addressed.

Strategic considerations for drug manufacturers include:

• Participation in the Notice and Comment Process: Agencies have issued requests for information requesting public comments on several executive orders, and it is likely that an RFI on drug pricing will be forthcoming. Manufacturers should consider participating in the notice and comment process to bring their concerns to the agencies’ attention and to preserve their rights in future litigation.
• Internal Review of Drug Prices: Both brand and generics should undertake an evaluation of their product portfolio to identify drugs that could potentially be affected if the MFN pricing obligations are enforced. While the executive order is silent on how MFN will be determined, manufacturers should engage in an internal assessment of drugs that may be subject to MFN pricing and establish processes for compliance.
• Preparing for Antitrust Scrutiny: The executive order contemplates antitrust scrutiny and FTC investigations to address disparate pricing, and manufacturers should review pricing agreements, negotiation strategies, and contractual obligations to identify risks from such investigations.
• Direct-to-Consumer Sales: While the contours of direct-to-consumer sales remain to be established, practical considerations include developing protocols for reviewing and accepting prescriptions from qualified practitioners, fulfillment costs and strategies, and changes in pharmacovigilance protocols, if necessary. Manufacturers should consider investigating the logistics of establishing such direct-to-consumer sales platforms.
• Negotiations With Foreign Countries: The executive order contemplates actions both by manufacturers and by the U.S. government to address pricing demands of foreign countries. Manufacturers should consider reviewing existing agreements, renewals, and upcoming negotiations to consider preemptive strategies to handle MFN pricing requirements.