Trump’s Plan to Match Foreign Drug Prices Faces Familiar Hurdles

President Donald Trump’s move to revive a policy that would slash Americans’ drug costs by tying them to lower prices paid abroad is likely to be confronted by legal and operational challenges similar to those he faced during his first term.

Trump signed an executive order Monday that renewed the “most favored nation” policy that brings manufacturers to the negotiating table and directs them to lower drug prices.

US patients pay more for medicine than anywhere else in the world. Trump’s order this time around targets more medicines and programs to focus on the drugs that have the “largest disparities and largest expenditures,” but the administration is still set to face hurdles just as it did the first time around in 2020, industry watchers say.

The order includes little information on implementation and on the legal authority the Trump administration will use to carry it out.

“There’s a lot of bluster with limited meat on the bone in terms of what they’re actually planning to do,” said Zach Baron, a director of the Center for Health Policy and the Law at Georgetown University’s O’Neill Institute. “The first time Trump tried the most favored nation approach, they lost on procedural grounds.”

“The question, now, is what are the procedural steps and process that they’re going to go through?” Baron said. “They allude to some type of rulemaking plan that would come into effect, but the specifics are going to be really important.”

Legal, Operational Barriers

The administration could draw legal opposition again from the pharmaceutical and health-care industry if it goes down the same path it did in 2020, attorneys say.

A drug manufacturer, cancer advocacy groups, and pharmaceutical industry groups challenged Trump’s most favored nation policy at the time because the administration didn’t go through the notice-and-comment procedure before issuing rulemaking to implement the plan.

A federal judge agreed with the pharmaceutical industry, ruling that the US government failed to consider public comment and violated procedural requirements. The Biden administration eventually axed the policy in 2022.

“That’s something that the administration could fix this time around if they simply issued a notice of proposed rulemaking and asked for public comment on the changes that they were hoping to make before finalizing them,” said Rachel Sachs, a law professor at Washington University in St. Louis. “That’s the easiest barrier.”

Trump set the stage for this in his Monday order, tasking the Department of Health and Human Services to pursue rulemaking within 30 days if the agency doesn’t make progress in negotiating most-favored-nation price targets with pharmaceutical manufacturers.

However, if the Trump administration does overcome the challenge on procedural grounds, courts are expected to get into the merits of the legal arguments on why the government can implement this plan, which wasn’t deeply explored in previous litigation.

“It was certainly fair to expect the industry to look to the court to block these policies from going into effect, but the exact claims and arguments that they make will depend on the actions that the Trump administration takes,” Baron said.

How the program will be implemented to support operations also stands to be a challenge before the administration, with various critics worried the policy depends on health assessments from other countries that don’t align with the US.

“It’s a problematic policy that imports other countries’ valuations,” said Darius Lakdawalla, chief scientific officer at the USC Schaeffer Center for Health Policy & Economics. “Overseas markets will have strong incentives to offer confidential discounts and keep them confidential. They have also demonstrated their lower willingness to pay for drugs, which gives drug companies strong incentives to pull out of overseas markets.”

Industry watchers are also eyeing how the administration will work with Congress to implement this policy.

Currently, the only mention in the executive order of interaction with Congress directs the health secretary to consider certification that importation under the Federal Food, Drug, and Cosmetic Act won’t pose additional risks to the public’s health and safety and result in a significant reduction of prescription drug costs.

“We do know that to some extent, congressional action is needed,” said Mariana Socal, an associate professor at Johns Hopkins Bloomberg School of Public Health. “That’s one of the questions the administration will have to answer: Are these policies under the authority of the purpose of the president, or do they need congressional action?”

Engagement, Systems

The executive order appeared to not be as hard-hitting as the pharmaceutical industry had anticipated.

Despite the industry’s long-held opposition to the policy, some drug companies and groups urged Trump to consider an approach that would prioritize patients’ access to medicines.

“A Most Favored Nation pricing policy would need to be implemented with thorough stakeholder engagement and robust systems to avoid it risking disrupting patient care,” a spokesperson for AstraZeneca PLC said in a statement.

The Pharmaceutical Research and Manufacturers of America, a leading drug industry group, said the administration is right to use trade negotiations to force foreign governments to pay their fair share for medicines, but importing foreign prices means patients would foot the bill.

“It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America—threatening jobs, hurting our economy and making us more reliant on China for innovative medicines,” Stephen J. Ubl, CEO of PhRMA, said in a statement.

Other groups say they will work with the Trump administration to explain why the US pays more for medicines.

“Importing foreign price controls is a step backward for American innovation, and American patients,” said John Stanford, executive director of Incubate Coalition, an organization of venture capital firms. “If the government imposes international price caps, there will be lower investment in scientific research and fewer new medicines for people living with cancer, Alzheimer’s, and other devastating diseases.”