Trump Administration Teases MFN Drug Pricing Rule as Commitment Deadline Looms for Companies

On May 12, 2025, President Trump signed an executive order to implement a Most-Favored-Nation (MFN) drug pricing policy, requiring drug manufacturers to match prices offered in other developed nations for prescription drugs3 4 5 6 7.

The administration sent letters to 17 leading pharmaceutical companies demanding a binding commitment to MFN pricing within 60 days, particularly for Medicaid and newly launched drugs, and warning of aggressive measures if companies do not comply, such as tariffs or regulatory actions3 6 9 10.

MFN pricing targets are being communicated to manufacturers, affecting all branded drugs or biologics without generic or biosimilar competition, and enabling direct-to-consumer sales at MFN prices1 3 6.

If companies refuse to commit, the administration threatens to deploy 'every tool in our arsenal,' including potential 100% tariffs on pharmaceuticals unless certain drugs are made in the US6 10.

Industry response has been cautious, with major drugmakers evaluating strategies amid the controversial call for price parity and operational/legal hurdles in implementing MFN pricing4 8.

These moves represent a sustained effort to lower U.S. drug costs, but the practicality and legality of MFN-based reforms remain contested and subject to further regulatory clarification and industry negotiation4 6 7.