What is Trump’s ‘most favored nation’ drug pricing policy and how will it reduce costs
May 12, 2025 07:08 AM IST
Donald Trump on Sunday announced that he will be signing an executive order to reduce prescription drug prices in the US
President Donald Trump on Sunday announced that he will be signing an executive order to reduce prescription drug prices in the US. The 78-year-old mentioned his ‘Most Favored Nation’ (MFN) drug pricing policy, saying it will bring down prices by 30% to 80%.
Donald Trump said he is signing an executive order to reduce drug prices in US(REUTERS)
“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. Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before,” Trump posted on Truth Social.
What is Trump’s Most Favored Nation policy?
President Trump’s MFN drug pricing policy seeks to lower prescription drug costs in the United States by tying Medicare payments for certain drugs to the lowest prices paid by other high-income countries with comparable economies, such as Canada, Germany, or the United Kingdom.
Initially proposed during Trump’s first term in 2020, the policy was blocked by legal challenges from the pharmaceutical industry and rescinded by the Biden administration.
The MFN model caps Medicare payments for selected drugs at the lowest price available in a group of Organization for Economic Cooperation and Development (OECD) countries with similar per-capita GDP, adjusted for volume and purchasing power.
Trump explains his decision
Expanding on his decision, Donald Trump claimed that pharma companies in the US charge higher prices citing research and development costs.
“For many years the World has wondered why Prescription Drugs and Pharmaceuticals in the United States States of America were SO MUCH HIGHER IN PRICE THAN THEY WERE IN ANY OTHER NATION, SOMETIMES BEING FIVE TO TEN TIMES MORE EXPENSIVE THAN THE SAME DRUG, MANUFACTURED IN THE EXACT SAME LABORATORY OR PLANT, BY THE SAME COMPANY??? It was always difficult to explain and very embarrassing because, in fact, there was no correct or rightful answer,” he wrote.
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