Health Agencies Set Price Targets to Comply With Trump’s Order to Lower Prescription Costs

The pricing model for the most preferred countries (MFN) is aimed at adjusting the costs of US branded drugs, with the lowest prices offered in other wealthy countries.

The Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) announced May 20, the agency has set benchmark targets to lower prescription drug prices for American patients.

The announcement comes after President Donald Trump signed an executive order earlier this month, signing Americans by lowering prescription drug prices in line with what the economy of equally size pays globally.

Trump’s May 12th instructed HHS to stop what is called “foreign free-riding” and not to pay disproportionately high prices for the same drug.

The pricing model for the most preferred countries (MFN) aims to line up the costs of US branded drugs with the lowest prices offered in other wealthy countries with similar economic profiles.

“For too long, Americans have been forced to pay exorbitant prices for the same drugs sold overseas,” HHS Director General Robert F. Kennedy Jr. said in a statement. “Today is over. I hope that pharmaceutical manufacturers will fulfill their commitment to lowering prices for American patients, or they will take action to do so.”

Dr. Mehmet Oz, administrator of CMS, said the agency is targeting all branded drugs that lack generic or biosimilar competition. For each of these drugs, manufacturers are expected to match each individual with the lowest prices found in any country of the Economic Co-operation and Development Agency (OECD) and GDP of at least 60% of that of the US.

These countries include major economies such as Germany, France and Japan. According to HHS, patients in the US may pay 3-5 times more than their overseas counterparts.

The administration said the policy applies to high-cost drugs covered by Medicare Part B. A similar MFN proposal introduced during Trump’s first term in 2020 was projected to save nearly $88 billion over seven years, but was repealed in federal courts. The policy faced four lawsuits and was stopped by a nationwide injunction before it became effective.

The May 12th order revives and expands previous efforts, including both Medicare and Medicaid. He also instructs HHS secretaries to propose rules to implement MFN pricing if drugmakers fail to comply, allowing Americans to purchase drugs directly at the lowest global price.

The executive order also directed US trade representatives and the Secretary of Commerce to investigate overseas pricing practices that could harm American consumers.

Trump, Kennedy and Oz say the initiative is a continuation of efforts launched during Trump’s first term.

“In the aftermath of the case, our citizens will effectively subsidize socialism overseas by paying significantly higher prices than other countries paying the same pills from the same factory,” Trump said.

“So you’ll spend a lot of money on providing cheap medicines to other countries. And when I say prices are different, you can see some examples of prices exceeding the rest of the world.

Lawmakers on both sides of the aisle have recently expressed interest in a similar approach. Earlier this month, Senators Josh Hawley (R-Mo.) and Peter Welch (D-Vt.) introduced legislation that capped US drug prices, which were paid on average across six countries. The bill will fine ten times the price difference for each unit sold on its benchmark.

The policy has attracted criticism from pharmaceutical industry groups warning that it could undermine innovation and limit access to new treatments. Drug Research and American Manufacturers (PHRMA) said imports of foreign prices could block investments in drug development and limit access to patients to new treatments.

The Biotechnology Innovation Organization (Bio) reflects these concerns and claims that the MFN model will be the biggest blow to the smallest biotechnology companies by disrupting funds for research.

The Healthcare Distribution Alliance (HDA), which represents drug distributors, also raised concerns about the impact and access of the supply chain, particularly when it includes sales or drug import regulations for consumers.

The administration has not yet named the specific drugs or businesses affected, but the health agency said further commitments from drug manufacturers will release further commitments to lowering U.S. prices in the coming weeks.