United States President, Donald Trump, announced on Sunday his intention to bring back a polarizing policy from his first term aimed at lowering prescription drug prices by linking U.S. payments to the lowest prices found abroad.
Known as the “Most Favored Nation” policy, the original rule was finalized in late 2020 but never implemented.
It was blocked by federal courts and later rescinded by President Joe Biden in 2021. The initial version targeted Medicare payments for select medications administered in clinical settings.
However, Trump’s renewed directive lacks clarity on the specific drugs or payments it would affect.
In a post on Truth Social, Trump declared that he would sign an executive order Monday morning that he claims will significantly slash drug prices.
“I will be signing one of the most consequential Executive Orders in our Country’s history. Prescription Drug and Pharmaceutical prices will be REDUCED, almost immediately, by 30% to 80%,” he stated. “I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World.”
In tandem, the Trump administration is reportedly considering new tariffs on pharmaceutical imports, previously exempt from first-term trade levies. Critics warn such tariffs could worsen drug shortages, particularly for generics, and potentially hike prices.
If modeled closely after the 2020 policy, the new initiative could offer savings to Medicare and its recipients.
Yet, healthcare analysts caution that access to essential medications might be compromised depending on the rule’s execution.
Chris Meekins, a health policy analyst with Raymond James, cast doubt on Trump’s bold assertions.
“Trump has a long history in his first term of talking bigger on drug pricing than what his policies would actually do,” Meekins told clients on Sunday. “The more grandiose Trump’s proposed executive actions, the less likely they are to be implemented as successful court challenges will be much more likely.”
While drug pricing was a hallmark of Trump’s first presidential run, it has taken a back seat this term. His campaign told Politico last year that he had stepped away from the “Most Favored Nation” framework, an approach many Republicans are reluctant to support.
Nevertheless, the proposal has resurfaced amid discussions within the GOP about deep spending cuts, including potential Medicaid reductions.
It remains unclear whether Trump’s idea will be embedded in forthcoming legislation or enacted solely through executive authority.
The pharmaceutical industry, which successfully opposed the original rule, is expected to push back again. Stephen Ubl, CEO of PhRMA, issued a stark warning:
“This Foreign First Pricing scheme is a bad deal for American patients. Importing foreign prices will cut billions of dollars from Medicare with no guarantee that it helps patients or improves their access to medicines,” Ubl said. “It jeopardizes the hundreds of billions our member companies are planning to invest in America, making us more reliant on China for innovative medicines.”
Trump’s administration first floated the concept in 2018 and finalized it shortly after the 2020 election. The seven-year model would have allowed the U.S. to adopt the lowest pricing negotiated by peer nations, which typically have stronger government oversight on drug costs.
Under the original plan, Medicare would have matched the lowest prices among selected countries for 50 Part B drugs commonly administered in doctors’ offices. Government projections at the time estimated savings of about $86 billion.
Since then, the passage of the Inflation Reduction Act in 2022 granted Medicare limited authority to negotiate prices directly—a power it previously lacked.
Experts note that a revived “Most Favored Nation” plan could reduce out-of-pocket costs and premiums for Medicare beneficiaries, depending on its implementation.
