Trump Administration 'Most Favored Nation' Drug Pricing Order Draws Medicare Scrutiny
If implemented as described, the executive policy would tie Medicare reimbursement rates to lower prices paid by foreign governments — a structural change that alters how pharmaceutical companies...
The Trump administration is actively considering a "most favored nation" (MFN) drug pricing policy that would benchmark Medicare reimbursement rates for certain drugs to the lowest prices paid by peer nations, according to reporting by the Washington Examiner (June 2026) and consistent with a prior executive order signed during Trump's first term (Executive Order 13948, September 2020). That earlier order was blocked by a federal district court in 2021 before taking effect, and any new iteration would again require formal rulemaking through the Centers for Medicare and Medicaid Services (CMS) under the Administrative Procedure Act.
Under the MFN model as previously structured in the 2020 executive order, Medicare Part B reimbursements for select high-cost drugs administered in clinical settings would have been capped at the lowest price paid for the same drug in a set of Organisation for Economic Co-operation and Development (OECD) countries. CMS's own 2020 interim final rule (CMS-5528-IFC) estimated the policy could reduce Medicare spending on affected drugs by approximately $85.5 billion over seven years, while also projecting potential reductions in drug availability in the U.S. market as manufacturers responded to lower reimbursement rates.
Advocates for the pharmaceutical industry, including the Pharmaceutical Research and Manufacturers of America (PhRMA) — which reported $30.1 million in federal lobbying expenditures in 2024 per Senate LDA disclosures — have argued that foreign price controls reflect government-mandated price suppression and that applying them to Medicare would reduce incentives for domestic drug development. Patient advocacy groups and fiscal conservatives have offered competing arguments, with some supporting lower out-of-pocket costs for seniors and others warning of reduced access to newer therapies.
The policy intersects with the Inflation Reduction Act of 2022 (Public Law 117-169), which authorized CMS to negotiate directly with drug manufacturers for a defined set of Medicare Part D drugs — a separate but related mechanism for reducing Medicare drug costs. CMS completed its first round of negotiations in 2024, reaching agreements on 10 drugs; the negotiated prices take effect in 2026 per the statutory timeline published in the CMS Medicare Drug Price Negotiation Program final guidance (August 2024).
What remains unknown is the precise scope, legal vehicle, and implementation timeline of the current administration's MFN proposal. It is not yet confirmed whether the policy would proceed via executive order, a new CMS proposed rule, or another regulatory mechanism. A CMS proposed rule, if issued, would be publicly available in the Federal Register and subject to a public comment period; that document, once published, would specify which drug categories are covered, the formula for calculating the MFN price benchmark, and the projected fiscal and access impact. No such rule has been published in the Federal Register as of June 19, 2026.