A Busy Week in Drug Pricing Policy: Aligning US Drug Prices With Global Standards?
It’s been a busy few days for drug pricing policy. While I’d love to dig into the details of both President Trump’s latest executive order and the newest Republican bill that would cut Medicaid spending, we don’t have the time—and this isn’t the place for me to write another thesis-length overview (so I’ll save my thoughts on the House bill for next week and just stick to the facts).
Let’s start with the executive order President Trump issued on May 12. The order directs the Department of Health and Human Services (HHS) to implement a “most favored nation” pricing model for prescription drugs, effectively aligning US prices with those in other developed nations. This approach would allow direct-to-consumer sales, bypassing the traditional role of pharmacy benefit managers (PBMs), which are often blamed for driving up costs.1
Here’s what we know (and what we don’t know much about):
- Manufacturers must voluntarily adjust US prices within 30 days. This is a key point—how likely will the industry be to comply on such short notice? The clock is ticking, and we haven’t seen any clear signs that major manufacturers are on board yet. Industry group PhRMA issued a statement against the order, suggesting that this would result in fewer treatments and damage the economy.1,2
- HHS is instructed to pursue rulemaking if voluntary compliance falls short. This means the government could step in with stronger measures if companies aren’t cooperative, but we don’t yet know what that will look like or how it will be enforced.1
What’s at stake here? The potential for drug prices to drop significantly—by as much as 30%-80% according to President Trump—if manufacturers agree to the changes.3 This could mark a turning point in how the US approaches pharmaceutical pricing, but the process will likely be messy and drawn out. Expect legal challenges, especially around the expansion of drug importation and the role of PBMs.
At the same time, we’re waiting on another major development—House Republicans have introduced a bill that would reduce more than $880 billion in Medicaid spending over the next decade. This would have enormous implications for access to health care for millions of Americans, but as much as I’d love to unpack it right now, I’ll save that for a future post where we can dive deeper into what that means for the health care system.
What’s next? In the coming weeks, I’ll be tracking both of these issues closely—drug pricing reform, Medicaid cuts—and how they’ll play out.
Join me every Wednesday as I highlight key court decisions, review notable health policies, and analyze what’s behind the bill in health care.
References
1. Delivering most-favored-nation prescription drug pricing to American patients. The White House. May 12, 2025. Accessed May 14, 2025. https://www.whitehouse.gov/presidential-actions/2025/05/delivering-most-favored-nation-prescription-drug-pricing-to-american-patients/
2. PhRMA statement on most favored nation executive order. PhRMA. May 12, 2025. Accessed May 14, 2025. https://phrma.org/resources/phrma-statement-on-most-favored-nation-executive-order
3. Truth. Donald J. Trump. Published May 11, 2025. Accessed May 14, 2025. https://truthsocial.com/@realDonaldTrump/posts/114491534347862682
