Mintz IRA Update — Under Pressure: The Trump Administration’s Drug Pricing Executive Orders

This article is part of the Mintz IRA Update – Fifth Edition. Explore the full series of IRA-related insights here.

On January 29, 2025, the Center for Medicare & Medicaid Services (CMS) released a statement highlighting that “[l]owering the cost of prescription drugs for Americans is a top priority of President Trump and his Administration.” The statement further explained that the Trump administration and CMS were “committed to incorporating lessons learned to date from the program and to considering opportunities to bring greater transparency in the Negotiation Program.” Since CMS’s initial statement, the Trump administration has moved forward a number of initiatives to tackle the high costs of prescription drugs in the US. In this post, we summarize the unilateral initiatives taken by the administration over the past few months to curb drug costs, and we discuss Congress’s potential role in helping effect such changes.

The First Executive Order

Three months after the CMS statement, on April 15, 2025, President Trump issued his first Executive Order aimed at curbing high drug prices in the United States. The Executive Order (Reform Order) instructs federal agencies to implement a variety of drug pricing reforms, several of which specifically address reforming the IRA. We previously discussed the broader scope of the Reform Order, which proposes drug pricing solutions from several different angles, including removing the so-called “pill penalty” from the Medicare Drug Price Negotiation Program (Negotiation Program), increasing pharmacy benefit manager (PBM) competition and transparency, and studying Medicare and Medicaid drug pricing, international importation options, and drug manufacturer competition.

The Reform Order also directed the Secretary of Health and Human Services (HHS) to propose and seek comment on guidance for the Negotiation Program. The stated purpose of the guidance is to “improve the transparency of the Negotiation Program, prioritize the selection of prescription drugs with high costs to the Medicare program, and minimize any negative impacts of the maximum fair price (MFP) on pharmaceutical innovation within the United States.” Prior predictions that a second Trump administration would seek to repeal the Inflation Reduction Act (IRA) and replace the Negotiation Program now seem off the table. Instead, the inclusion of a directive for HHS to seek further public comment on the Negotiation Program suggests that this second Trump administration will, at least initially, seek opportunities to improve the existing Negotiation Program through more surgical measures.

The Second Executive Order

One month later, on May 12, 2025, President Trump issued a second Executive Order related to drug pricing. This Executive Order (MFN Order) seeks to reduce the price of drugs by requiring manufacturers to offer the United States most-favored-nation pricing — in other words, the lowest price offered to any “comparably developed” foreign country that pays for the same drugs. We discussed the MFN Order shortly after its release, noting similarities between the MFN Order and an Executive Order (First Term Executive Order) released during President Trump’s first term that required CMS to issue rulemaking to test a payment model under which Medicare would pay no more than a most-favored-nation price for drugs covered by Medicare Part B and Part D. The First Term Executive Order was challenged in court and later rescinded by the Biden administration.

The MFN Order authorizes the Secretary of HHS, among other members of the current administration, to take immediate steps to ensure the United States receives most-favored-nation pricing for prescription drugs and to enforce the MFN Order should manufacturers fail to make significant progress toward meeting the most-favored-nation pricing requirements. In addition, the MFN Order requires the Secretary of HHS to facilitate a process whereby manufacturers can sell drugs directly to patients at most-favored-nation pricing.

The Manufacturer Letters

On July 31, 2025, the White House released a Fact Sheet indicating that President Trump had “sent letters to leading pharmaceutical manufacturers outlining the steps they must take to bring down the prices of prescription drugs in the United States to match the lowest price offered in other developed nations (known as the most-favored-nation, or MFN, price).” According to the Fact Sheet, addressed in our recent blog post, the steps include:

• Calling on manufacturers to provide MFN prices to every single Medicaid patient.
• Requiring manufacturers to stipulate that they will not offer other developed nations better prices for new drugs than prices offered in the United States.
• Providing manufacturers with an avenue to cut out intermediaries and sell medicines directly to patients, provided they do so at a price no higher than the best price available in developed nations.
• Using trade policy to support manufacturers in raising prices internationally, provided that increased revenues abroad are reinvested directly into lowering prices for American patients and taxpayers.

Should the 17 manufacturers identified by the White House refuse to comply with the proposed steps by September 29, 2025, the Fact Sheet warned manufacturers that the federal government would “deploy every tool in [its] arsenal to protect American families from continued abusive drug pricing practices.” The Fact Sheet further explains that “decisive action” is needed to address concerns expressed by the Trump administration that American consumers are subsidizing the costs of pharmaceuticals for foreign nations.

The Fact Sheet raises several new issues that we are actively monitoring, including:

1. How will the White House determine if a manufacturer has “refused to step up”? Must the manufacturer comply with all requested steps, or will incremental progress be accepted by the administration?
2. Is it possible for manufacturers to commit not to offer better prices abroad, given existing drug pricing schemes in foreign jurisdictions?
3. How will the MFN pricing work in conjunction with President Trump’s proposed plan to implement tariffs up to 250% on imported pharmaceutical products?
4. What authority, if any, does the Trump administration have to implement the most-favored-nation requirements without Congressional action?
5. How will manufacturers respond to the Trump administration’s directives? We note that at least one manufacturer, Eli Lilly, has indicated it is increasing the list price of its GLP-1 drug in Europe to reduce the price disparity with its US list price.

Opportunity for Congressional Action

The remaining piece of the puzzle is determining if and how Congress will seek to support the president’s drug pricing goals, particularly with respect to MFN pricing. One such proposal, put forth by Senate Health, Education, Labor & Pensions (HELP) Committee Chair Bill Cassidy (R-LA) would have reportedly imposed a clawback penalty on manufacturers that were found selling certain Medicare drugs below a GDP-adjusted price floor. Despite Senator Cassidy’s efforts, such bill has reportedly stalled, as there is not much appetite in the Senate for an MFN pricing approach. It remains to be seen what, if any, support President Trump’s drug pricing executive orders will receive from Capitol Hill.

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