{"id":34514,"date":"2025-05-21T09:29:07","date_gmt":"2025-05-21T13:29:07","guid":{"rendered":"https:\/\/advisory.avalerehealth.com\/?p=34514"},"modified":"2025-05-21T11:12:48","modified_gmt":"2025-05-21T15:12:48","slug":"avalere-health-experts-react-to-the-most-favored-nation-executive-order","status":"publish","type":"post","link":"https:\/\/advisory.avalerehealth.com\/insights\/avalere-health-experts-react-to-the-most-favored-nation-executive-order","title":{"rendered":"Avalere Health Experts React to the Most-Favored Nation Executive Order"},"content":{"rendered":"

On May 12, President Trump signed an\u202f<\/span>Executive Order<\/span><\/a>\u202f(EO) that directed drug manufacturers to reduce US drug prices to align with those paid in economically comparable countries, a concept known as international reference pricing or Most-Favored Nation (MFN). The EO outlines a series of near-term steps the federal government may take to make manufacturers lower their US drug prices. These include implementing a voluntary direct-to-consumer (DTC) purchasing model based on MFN price targets and potentially enforcing MFN pricing through regulations and barring of manufacturer actions, among other administrative measures.\u00a0<\/span>\u00a0<\/span><\/p>\n

\u201cThis announcement makes it clear that MFN pricing is back on the table, and organizations should act now to model policy scenarios, assess exposure, and think through palatable alternatives to mitigate potential disruption across pricing, access and channel strategies,\u201d said <\/span>Milena Sullivan<\/span>, Avalere Health\u2019s Policy Practice Director. \u201cPolicy, market access, legal, and commercial teams will need to collaborate to effectively navigate the complexities of an MFN threat” she added.<\/span>\u00a0<\/span><\/p>\n

Background<\/span><\/b>\u00a0<\/span><\/p>\n

The first Trump administration undertook efforts to tie US drug prices to those in economically comparable countries, with proposed rulemaking for the\u202f<\/span>International Pricing Index model<\/span><\/a>\u202fin 2018 and the <\/span>Most-Favored Nation model<\/span><\/a> in 2020. These demonstrations aimed to limit overall Medicare spending by aligning provider payment for Part B drugs with that of equivalent countries. At the time, stakeholders expressed concern that these models would limit or restrict access to newer drugs, and the Centers for Medicare and Medicaid Services did not proceed with either model. Now, the second Trump administration has decided to revisit its focus on MFN pricing with a range of administrative actions.\u00a0<\/span>\u00a0<\/span><\/p>\n

The most recent MFN EO released by the White House was followed shortly by an<\/span> announcement<\/span><\/a> from the US Department of Health and Human Services (HHS) that it is taking immediate steps to implement the order. The HHS press release also stated that the administration would focus on MFN targets based on the lowest price in an OECD country with a per capita gross domestic product of at least 60% that of the United States. Based on 2023 data, the countries that fit within that threshold include Luxembourg, Ireland, Norway, Switzerland, Netherlands, Iceland, Denmark, Australia, Austria, Germany, Belgium, Canada, Finland, France, UK, Italy, Israel, Slovenia, New Zealand, Spain, Czech Republic, Korea, Lithuania, and Japan.\u00a0<\/span>\u00a0<\/span><\/p>\n

What Is Unique About the MFN EO?\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n

The EO outlines a series of near-term steps the federal government may take to lower drug prices. It differs from prior approaches in several ways:\u00a0<\/span>\u00a0<\/span><\/p>\n