The EO reintroduces the concept of most-favored nation (MFN) pricing and includes directives to:

• Ensure foreign countries are not engaged in any “act, policy, or practice” that forces Americans to disproportionately pay for global R&D.
• Facilitate direct-to-consumer (DTC) purchasing programs for pharmaceutical manufacturers selling to American patients.
• Establish MFN pricing and price targets to bring prices paid by American patients in line with those of comparable nations.

Measures for enforcement: If manufacturers fail to make progress within 30 days, the EO calls for various enforcement mechanisms, including:

• Working with Congress to mandate MFN pricing.
• Proposing a rulemaking plan to impose MFN pricing.
• Prosecuting anti-competitive practices.
• Allowing greater importation of drugs from developed nations with low-cost pharmaceuticals.
• Potentially modifying or revoking approvals granted for drugs determined to be unsafe, ineffective, or improperly marketed under increased regulatory scrutiny.

Additional guidance:

On May 20, the US Department of Health and Human Services (HHS) released additional guidance defining what constitutes the MFN price.

The announcement stated the following:

• Manufacturers are expected to align US pricing with the lowest price of a set of economic peer countries for all brand products across markets that currently do not have generic or biosimilar competition.
• The MFN target price is the lowest price in an OECD country with a GDP per capita of at least 60% of the US GDP per capita.

The administration is driving reform and addressing pricing across multiple insurance markets, including government and the private sector.

340B program

Directives include:

• Conducting a survey to determine hospital acquisition costs for covered outpatient drugs at hospital outpatient departments.
• Proposing any appropriate adjustments that would align Medicare payments with the cost of acquisition.
• Conditioning future grants on health centers offering insulin and injectable epinephrine at or below the 340B program's discounted price.

Pharmacy benefit managers (PBMs)

Directives include:

• Providing recommendations on how best to promote a more competitive, efficient, transparent, and resilient pharmaceutical value chain that delivers lower drug prices.
• Proposing regulations to improve employer health plan fiduciary transparency into the direct and indirect compensation received by PBMs.

Drug importation

Directives include:

• Streamlining and improving the current importation program to make it easier for states to obtain approval without sacrificing safety or quality.

Directives include:

• Proposing guidance for MDPN for initial price applicability year (IPAY) 2028 and manufacturer implementation of maximum fair price (MFP) for IPAY 2026, 2027, and 2028, with the goal of improving the transparency of the MDPN.
• Prioritizing selection of prescription drugs with high costs to Medicare program and minimizing any negative impacts of MFP on pharmaceutical innovation within the United States.
• Providing recommendations on how to best stabilize and reduce Part D premiums.
• Modifying the MDPN to align treatment of small molecule prescription drugs (9 years) with that of biological products (13 years).

Directives include:

• Developing a payment model to improve the ability for Medicare to obtain better value for high-cost prescription drugs.
• Ensuring manufacturers pay accurate Medicaid drug rebates, promoting innovation in Medicaid drug payment methodologies, linking payments for drugs to the value obtained, and supporting states in managing drug spending.
• Accelerating approval of generics, biosimilars, combination products, and second-in-class brand-name medications.
• Reclassifying prescription drugs as over-the-counter medications.
• Ensuring the Medicare program is not encouraging a shift in drug administration from less costly office settings to more expensive hospital outpatient departments.
• Working with the Departments of Justice and Commerce and the FTC to issue recommendations on reducing anti-competitive behavior from pharmaceutical manufacturers.