Analysis of Trump’s Most Favored Nations Executive Order
Authored by Michael Ryan, PharmD and Rita Numerof, Ph.D.
On May 12th President Trump released his “Put Americans First by Lowering Drug Prices and Stopping Foreign Free Riding on American Pharmaceutical Innovation Executive Order (EO).” The EO is focused on how best to “end global freeloading” and re-visits Trump’s 2020 concept of most-favored-nation (MFN) drug pricing. In the EO, Trump directs several agency heads to take a set of collective actions designed to ensure that Americans will, as defined in a subsequent May 20th HHS announcement, receive the lowest price for all branded products sold “across all OECD markets that do not currently have generic or biosimilar competition.”
Little details on how the MFN directive will be operationalized are available at this time. Further details are likely to become available in 30 days when the Secretary of HHS and the Commissioner of the FDA are scheduled to “communicate MFN price targets to pharmaceutical manufacturers.” As with the original 2020 Trump MFN directive and the IRA, the 2025 Trump MFN EO will likely face significant legal challenges and delays. It will also likely require legislative action to be fully implemented.
The MFN EO has put enormous pressure on pharmaceutical company CEOs and subsequently Heads of Market Access who are tasked with estimating what the potential impact of the EO will be for their company should it become reality. In developing an early economic impact model for this EO, organizations will need to base their planning on defensible assumptions behind a long list of important questions such as:
What drugs will be included in MFN price negotiation?
Which U.S. payer programs are included and excluded from MFN?
Will MFN pricing spill to commercial segments?
How will CMS determine a product’s ex-US pricing?
What adjustments might be made to the foreign reference price?
Will the policy utilize the lowest, mean, or phasing of market basket prices?
What constitutes "significant progress" sufficient to avoid regulatory enforcement?
How will foreign governments react to the Trump MFN EO?
Will the discounts associated with adopting MFN (or increased manufacturer discounts) be excluded from Medicaid BP, ASP, 340B?
To project the likely answers to these questions is more than a spreadsheet exercise. It calls for detailed knowledge of the history of this policy thread and significant experience based insight into the U.S. and global marketplaces. This is core to our work. A comprehensive and detailed discussion of how underlying assumptions behind each of these key questions vary from low, to base, to high case scenarios, as well as the associated analyses, is beyond a LinkedIn post. Interested readers can either contact me directly or Rita Numerof at the Numerof & Associates, Inc. website.