On May 12, 2025, President Donald J. Trump issued Executive Order 14297, directing the Secretary of Commerce and the United States Trade Representative to “take all necessary and appropriate action” to stop foreign countries from “freeloading on American-financed innovation.” The Secretary of Department of Health and Human Services (“HHS”) was directed to facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price. In addition, the Secretary of HHS was directed to coordinate with the Assistant to the President for Domestic Policy, the Administrator for the Centers for Medicare and Medicaid Services, and other relevant executive department and agency officials to communicate most-favored-nation price targets to pharmaceutical manufactures. The pharmaceutical companies would be expected to bring prices for American patients in line with comparably developed nations within 30 days of the Executive Order.
The goal of the Executive Order is to reduce the pharmaceutical costs that Americans pay. If these directives are fully implemented, the amount that American consumers pay for prescription drugs would be capped at the amount that consumers pay in countries that impose price controls. The HHS expects each manufacturer to commit to aligning U.S. pricing for all brand products across all markets that do not currently have generic or biosimilar competition with the lowest price of a set of economic peer countries.
Currently, federal enforcement mechanisms for these expectations remain unclear. The pricing models will likely vary based on several factors, such as which countries are selected, which drugs are included, and what formula is used to calculate the U.S. price. Considering the broad scope and unanswered questions, it is likely that healthcare consumers, providers, and companies will see supplemental policy actions from the Trump Administration.
Leech Tishman is closely monitoring the impact of E.O. 14297 on healthcare providers and consumers and will update clients as new developments occur.
Phil Kanarsh is an Associate in Leech Tishman’s Healthcare Group in the firm’s Los Angeles office. Phil can be reached at pkanarsh@leechtishman.com or 310.651.9603.