President Donald Trump has signed a new executive order aimed at reducing prescription drug prices in the United States by reinstating the “most-favored-nation” (MFN) pricing policy. This policy seeks to align U.S. drug prices with the lowest prices paid by other developed countries, particularly affecting Medicare Parts B and D.
The MFN policy was initially introduced during Trump’s first term in 2020 but faced legal challenges and was subsequently rescinded by the Biden administration. The renewed executive order mandates that pharmaceutical companies reduce U.S. drug prices within 30 days or face payment caps based on international pricing benchmarks. Additionally, the order empowers health officials, including Mehmet Oz, to negotiate directly with drug manufacturers.
President Trump asserts that this initiative could lower prescription drug prices by 30% to 80%, addressing the significant cost disparities between the U.S. and other nations. He emphasized that Americans should not bear disproportionate costs for pharmaceutical research and development.
The pharmaceutical industry has expressed concerns over the potential impact of the MFN policy, arguing that government-imposed pricing could hinder innovation and patient access to new treatments. Analysts also caution that the policy’s exact effects will depend on specifics yet to be announced, including its application to Medicaid and the determination of international reference prices.
Despite anticipated legal challenges, the executive order represents a significant move in the Trump administration’s efforts to address high drug prices, a key issue for many American voters. The administration has tasked the U.S. Trade Representative and the Commerce Secretary with preventing foreign price manipulation that could lead to domestic cost increases, reported Politico.
The implementation of the MFN policy will be closely monitored by stakeholders across the healthcare sector, including pharmaceutical companies, healthcare providers, and patients, as its outcomes could have far-reaching implications for drug pricing and access in the United States.
Watch a video of Trump signing the executive order and calling out an ABC reporter:
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