Trump’s Most Favored Nation Policy and EU Generics: Recent Developments

Recent trade negotiations between the Trump administration and the European Union have resulted in a finalized 15% tariff cap on generic drugs and active pharmaceutical ingredients imported from the EU, effective September 1, 20253 1.

Generics from the EU are exempt from broader or higher tariffs, with the Most Favored Nation (MFN) rate specifically applied1 3.

The MFN policy aims to tie U.S. drug prices to the lowest prices paid in comparable countries, targeting costs Americans pay for medications4 2.

Brand-name drug imports from the EU may still face additional rulemaking, as tariffs and MFN pricing for these products are undecided3.

Trump has pressured manufacturers to adhere to MFN pricing, threatening federal action if voluntary compliance is not achieved, and has issued letters to major drug companies with a 60-day negotiation window2 3.

The MFN policy does not currently apply to EU generics, focusing instead on branded drugs—generics have received tariff relief and are exempt from immediate MFN pricing enforcement1 3.

Earlier attempts to impose MFN pricing in the U.S. were blocked in court and rescinded but renewed efforts continue from Trump's administration2 5.