As part of a broader resurgence in pharmaceutical pricing reform and manufacturing policies in 2025, President Donald Trump and bipartisan congressional leaders have introduced contemporaneous proposals to lower prescription drug prices under “most-favored-nation” (MFN) drug pricing models.
Earlier this month, a bipartisan group of US senators introduced the Fair Prescription Drug Prices for Americans Act (FPDP Act), an ambitious legislative proposal designed to lower prescription drug prices in the United States to reflect the international average price in other developed nations. This bill follows the reintroduction of two other bipartisan bills aimed at lowering drug costs, the Prescription Pricing for the People Act and the Pharmacy Benefit Manager (PBM) Transparency Act, with the PBM Transparency Act also aiming to increase price transparency.
The FPDP Act was initially introduced in 2023 but failed to gain the necessary support at that time. The FPDP essentially revives the concept behind the MFN pricing policy, a controversial pricing strategy that was attempted—but ultimately blocked by federal courts—during President Trump’s first term. Subsequently, on May 12, 2025, President Trump issued an executive order (EO) titled Delivering Most-Favored-Nation Prescription Drug Pricing to Americans, a cross-government approach toward implementing the MFN model.
The FPDP Act and the MFN EO are fueled in part by the current US administration’s renewed focus on reshoring drug production and lowering patient costs. However, they are fraught with industry challenges, as trade groups contend that the enactment of MFN policies would not only result in $1 trillion in lost revenue for pharmaceutical manufacturers but also financially harm Medicare patients, state Medicaid programs, health insurers, and hospitals, effectively forcing millions of low-income Americans off Medicaid.
The resurgence of the FPDP Act and MFN model more broadly warrant close attention from healthcare stakeholders, particularly pharmaceutical manufacturers and Medicaid administrators.
FPDP Act: Summary of the Proposal and Its MFN Roots
The FPDP Act proposes capping the retail list price of prescription drugs and biological products in the United States at the average retail list price for the drug or biological product among certain nations (i.e., Canada, France, Germany, Italy, Japan, and the United Kingdom). Using manufacturer reported and publicly available data, the retail list price would be calculated on an annual basis to determine the average retail list price for each drug or biological product sold in the aforementioned countries. Additionally, the proposed bill maintains that manufacturers would be subject to civil monetary penalties for each unit sold at an inflated price in an amount equal to the difference between the US list price and the average retail list price as calculated under the proposed statute.
The FPDP Act is directly inspired by the MFN model, which was introduced during the first Trump administration in late 2020. The MFN rule attempted to set Medicare Part B drug reimbursement rates to the lowest price among certain nations. However, the MFN policy never took effect, having been blocked by federal courts in late 2020 on procedural grounds—including a violation of the Administrative Procedure Act (APA).
Like the MFN model, the FPDP Act raises serious concerns about administrative feasibility, patient access to treatment, and global pharmaceutical industry impacts. Notably, however, this time around, the legislation has bipartisan sponsorship—suggesting a growing consensus around the need for drug pricing reforms, even if potential execution remains contentious.
Introduction of the President’s EO on the MFN Model
The MFN EO similarly aims to reduce US prescription drug costs by linking domestic prices to the lowest prices paid in other developed countries. The EO directs the US Department of Health and Human Services (HHS) to establish pricing targets for pharmaceutical manufacturers and, if necessary, pursue rulemaking to implement MFN pricing across the US healthcare system.
In addition to requiring HHS coordination with the assistant to the president for domestic policy and the administrator for the Centers for Medicare and Medicaid Services in setting price targets, the EO also instructs agencies across the government to work in coordination to prevent discriminatory pricing practices at home and abroad. With respect to ex-US influence, the EO directs the US Department of Commerce and the US Trade Representative to take all necessary action to ensure other nations are not pursuing discriminatory practices that require the United States to disproportionately bear the weight of funding global pharmaceutical supply chains.
Within our borders, the US attorney general and the chairman of the Federal Trade Commission are directed to increase enforcement against anti-competitive behaviors, and the secretary of commerce is instructed to consider necessary action regarding exportation of certain pharmaceutical drugs or precursor materials that may be fueling global price discrimination. To the extent the establishment of US pricing targets alone is not sufficient to bring prices for American patients in line with comparably developed nations, the EO also directs the US Food and Drug Administration (FDA) to open up a re-importation process on a case-by-case basis or to potentially modify or revoke approvals for drugs that may be “unsafe, ineffective, or improperly marketed.”
Alignment with the President’s May 2025 EO on Drug Manufacturing
The FPDP Act and MFN EO have not been introduced in a vacuum; rather, these proposals are several of myriad attempts by the US administration to reshore drug production, lower patient costs, and ultimately, save the federal government money to assist with proposed tax cuts. On May 1, 2025, President Trump issued an EO titled Regulatory Relief to Promote Domestic Production of Critical Medicines. This related directive aims to reduce dependency on foreign pharmaceutical supply chains and bolster opportunities for domestic drug manufacturing. The executive order calls for (1) streamlining FDA approvals for US-made generic drugs, (2) providing tax incentives for domestic pharmaceutical plants, and (3) prioritizing federal contracts for drugs manufactured in the United States.
Taken together, the FPDP Act and these EOs suggest a dual-pronged approach by the US administration: lowering drug prices through international benchmarking while reshoring the production of drugs and biologics to US soil. While these policies are philosophically aligned, they may present practical contradictions: if companies are forced to sell drugs at internationally benchmarked prices but also invest heavily in US infrastructure and manufacturing, profit margins may erode, creating long-term disincentives for participation in federal programs.
Potential Unintended Consequences of MFN Pricing
Possible side effects of MFN pricing include the following:
- Pharmaceutical manufacturers facing the decision of steep price cuts in the United States or a loss in less profitable overseas markets could decide to exit foreign markets, which would negatively impact patient care abroad; likewise, if pharmaceutical manufacturers increase prices for pharmaceutical products in foreign countries to minimize the financial impacts of MFN pricing in the United States, this too could result in disruption in patient care
- If MFN pricing is implemented in the United States and the resulting financial impact to manufacturers is significant, which we expect it would be, the possibility exists that some manufacturers may cease selling drugs in government channels, which would result in disruption in patient care in the United States
- Reduced revenues could potentially result in delayed or abandoned product launches in reference countries to avoid establishing pricing benchmarks, reduced investment in research and development of new treatments, and shifting resources toward less regulated products that may offer higher revenue returns
Operational Barriers to Implementation
Potential barriers to the implementation of MFN pricing include the following:
- Akin to the challenges the Trump-Pence administration faced in 2020, the current administration is likely to draw significant legal opposition from the pharmaceutical industry
- While the HHS secretary is to provide manufacturers with price reduction targets within 30 days, the EO does not specify whether price targets should apply to Medicare, Medicaid, or commercial pricing
- The intent is for price targets to open manufacturer negotiations; however, if after price targets are issued, “significant progress towards most-favored-nation pricing for American patients is not delivered” (the EO is silent on a timeframe for execution), HHS will impose MFN pricing on drugs through rulemaking or “other aggressive measures”
- Alternatively stated, if foreign nations and drug manufacturers do not agree to equalize prices across nations that reflect MFN targets, HHS will create a rulemaking plan to impose MFN pricing—this would be subject to significant legal opposition and challenge
- The EO does not contain details on actions the US administration could take against manufacturers that decide against negotiating target prices; further, it is unclear whether it will impact Medicare Part B, Medicare Part D, Medicaid, or other government programs
Key Takeaways
The FPDP Act and the MFN EO are serious attempts to revive and refine the original MFN model, this time with bipartisan backing. The proposed model also dovetails with broader efforts by the US administration to reshore pharmaceutical manufacturing, creating a policy framework that favors United States-made, globally benchmarked drugs and biological products.