In more detail

Below is a high-level summary of the key provisions of the EO:

• Direct-to-Consumer (DTC) Purchasing Programs

The US Department of Health and Human Services (HHS) will facilitate DTC purchasing programs for drug manufacturers to sell their products at the MFN price. According to the accompanying Fact Sheet issued by the White House, this mechanism allows American patients to purchase drugs directly from manufacturers who sell to Americans at a MFN price, bypassing middlemen.³ However, neither the EO nor the Fact Sheet provide further information about the DTC purchasing programs or describe how such programs will be implemented in the context of government healthcare programs such as Medicare.

• MFN Pricing Model

Within 30 days of the EO, HHS will work in coordination with multiple federal agencies, including the Centers for Medicare & Medicaid Services (CMS) to communicate the MFN price targets to drug manufacturers with the stated goal of bringing their prescription drug prices in line with comparably developed countries. In the event the manufacturers fail to make "significant progress" toward those targets, the Administration will take further action to lower drug prices, including:

• Rulemaking. Without providing additional detail, the EO directs that HHS will propose a rulemaking plan to impose MFN pricing. It is important to note that the White House previously issued an MFN-related EO in September 2020 during the first Trump Administration.⁴ Similar to the new EO, the 2020 EO directed HHS to develop and implement a rulemaking plan for payment models on MFN pricing in Medicare Part B and Part D, which resulted in an interim final rule and a new Medicare payment model called the "MFN Model."⁵ The implementation of the interim final rule was blocked by federal district courts due to the lack of notice and comment rulemaking process.⁶
• Drug Importation. The EO directs that the Secretary of HHS will certify to the Congress that the Importation Program under Section 804(j) of the Federal Food, Drug, and Cosmetic Act (FDCA) will pose no additional risk to public health and safety and will significantly reduce prescription drug costs to American consumers. Upon this certification, the US Food and Drug Administration (FDA) will publish and update guidance that describes circumstances in which waivers will be consistently granted, on a case-by-case basis, to import prescription drugs from developed countries with low-cost drugs.

For context, FDA has developed a pathway under Section 804 of the FDCA which allows importation of certain prescription drugs from Canada (i) to significantly reduce the cost of these drugs to the American consumer; and (ii) without imposing additional risk to public health and safety.⁷ Under Section 804(j), HHS may grant to individuals, by regulation or on a case-by-case basis, a waiver of the prohibition of drug importation for personal use if HHS deems appropriate.⁸ In particular, HHS by regulation may grant individuals a waiver to permit importing a prescription drug from Canada to the US if the drug is:

• Imported from a licensed pharmacy for personal use by an individual, not for resale, in quantities that do not exceed a 90-day supply;
• Accompanied by a copy of a valid prescription;
• Imported from a Canadian seller registered with FDA;
• A prescription drug approved by FDA;
• In the form of a final finished dosage that was manufactured in an FDA-registered establishment; and
• Imported under the conditions that the HHS determines to be necessary to ensure public safety.⁹

The EO action item regarding drug importation seems to be consistent with a key proposal previously announced in EO No. 14273, which directed HHS and FDA to streamline and improve the Section 804 Importation Program (SIP) to make it easier to obtain FDA authorization of a SIP. To date, only the state of Florida has received FDA authorization to operate a SIP to import certain prescription drugs from Canada for two years,¹⁰ although several additional states (including Colorado, Maine, New Hampshire, and New Mexico) are currently seeking FDA authorization of their respective SIPs.

• Enforcement Against Anti-competitive Practices. The US Attorney General and the Federal Trade Commission (FTC) will take enforcement action against any anti-competitive practices identified in the report that will be issued pursuant to EO No. 14273, including through use of Sections 1 and 2 of the Sherman Antitrust Act and Section 5 of the Federal Trade Commission Act, as appropriate.
• Actions Against Global Price Discrimination. The Secretary of Commerce and other relevant agencies will review and consider all necessary actions regarding the export of pharmaceutical drugs or precursor material that may be fueling the global price discrimination.
• Modification or Revocation of Drug Approvals. For drugs that maybe be unsafe, ineffective, or improperly marketed, FDA will review and potentially modify or revoke approvals that have been granted for those drugs, such as approval of a New Drug Application (NDA) or Biologic License Application (BLA). However, the EO and the accompanying Fact Sheet did not specify how FDA will determine whether an approved drug is unsafe, ineffective, or improperly marketed.

Key takeaways

While this EO does not provide certain details explaining how the relevant agencies will implement the proposed actions, it outlines the initiatives the Administration is likely to pursue to lower prescription drug pricing, which will have the potential to impact various stakeholders in the healthcare and pharmaceutical industry.

• Healthcare Providers: Providers will need to stay informed about the new pricing structures and ensure that their billing practices comply with the updated Medicare reimbursement rates.
• Pharmaceutical Companies: Companies should review their pricing strategies and prepare for potential renegotiations of existing contracts. It is also advisable to stay abreast of any regulatory updates from HHS, FDA, FTC and CMS. Any significant changes in drug pricing in the US will also undoubtedly affect the valuation of assets, particularly for innovative drug products that have high research and development costs.

We recommend that all stakeholders closely monitor the implementation of this Executive Order and assess its impact on their operations. Our team at Baker McKenzie is available to provide guidance and support as you navigate these changes. Please do not hesitate to reach out to us for further information or assistance.

1 https://www.whitehouse.gov/presidential-actions/2025/05/delivering-most-favored-nation-prescription-drug-pricing-to-american-patients/

2 https://www.whitehouse.gov/presidential-actions/2025/04/lowering-drug-prices-by-once-again-putting-americans-first/ 

3 https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-president-donald-j-trump-announces-actions-to-put-american-patients-first-by-lowering-drug-prices-and-stopping-foreign-free-riding-on-american-pharmaceutical-innovation/

4 https://trumpwhitehouse.archives.gov/presidential-actions/executive-order-lowering-drug-prices-putting-america-first-2/ 

5 See 85 Fed. Reg. 76180 (Nov. 27, 2020), available at https://www.govinfo.gov/content/pkg/FR-2020-11-27/pdf/2020-26037.pdf 

6 See e.g., Regeneron Pharm., Inc. v. U.S. Dep't. of Health & Human Servs., No. 7:20-cv-10488 (S.D.N.Y. Dec. 30, 2020); Ass'n of Cmty. Cancer Ctrs. v. Azar, No. 20-cv-353 (D. Md. Dec. 23, 2020); Cal. Life Scis. Ass'n v. Cntr. for Medicare and Medicaid Servs., No. 20-cv-08603 (N.D. Cal. Dec 28, 2020).

7 https://www.fda.gov/about-fda/reports/importation-program-under-section-804-fdc-act

8 See 21 U.S.C. § 384(j)(2).

9 Id. at § 384(j)(3).

10 https://www.fda.gov/news-events/press-announcements/fda-authorizes-floridas-drug-importation-program