Overview

• President Trump’s executive order extends the Most-Favored-Nation pricing model to both Medicare and Medicaid, aiming to align U.S. drug costs with the lowest prices in developed countries.
• Administration officials are required to communicate target prices to drug manufacturers within 30 days, with voluntary compliance expected before formal rulemaking begins.
• The order seeks to bypass pharmacy benefit managers (PBMs) by enabling direct purchases from manufacturers, potentially reshaping the pharmaceutical supply chain.
• Legal challenges are anticipated, as a similar 2020 rule was blocked in court, and experts warn that full implementation could take months or years.
• Critics argue that the policy could impact pharmaceutical innovation and might require Congressional action to extend pricing controls to private insurers.