A New Executive Order on Drug Pricing: Is the U.S. Finally Catching Up?

Introduction

The U.S. government has taken a bold policy step that could significantly impact the pharmaceutical landscape: a new Executive Order proposes tying Medicare drug prices to those paid in other developed nations. This model, commonly referred to as the “Most Favored Nation” (MFN) pricing approach, is designed to bring American prescription costs closer to international norms.

The implications are wide-reaching—for patients, payers, pharmaceutical manufacturers, and healthcare systems.

1. What the Executive Order Proposes

Under this order, the U.S. would adopt a pricing strategy that ensures Medicare pays no more than the lowest price paid by comparable countries for select high-cost drugs. The approach aims to:

Reduce prescription costs for seniors and taxpayers
Improve access to medications that are unaffordable under current pricing
Apply initial focus on Medicare Part B and Part D medications

This is a sharp deviation from the traditional U.S. model where prices are often set unilaterally by manufacturers and vary significantly across payers.

2. What This Could Mean for Healthcare Stakeholders

For patients:
✔ Lower out-of-pocket costs
✔ Improved medication adherence
✔ Broader access to critical therapies

For providers and systems:
✔ Potential for reduced pharmacy benefit expenses
✔ Challenges navigating changing formularies and contracts
✔ Need to update clinical workflows for coverage verification

For pharmaceutical companies:
✔ Increased pricing pressure in the U.S.
✔ Potential impact on R&D budgets
✔ Need to reassess global pricing strategies

3. The Policy’s Promise—and Its Risks

While the MFN approach could correct longstanding cost disparities, critics argue it may:

Lead to reduced access if manufacturers limit supply
Dampen innovation due to lower profit margins
Create implementation complexity across Medicare programs

The policy’s success will depend on its execution, stakeholder engagement, and whether it’s paired with reforms that balance affordability with innovation incentives.

Final Thoughts

The U.S. has historically lagged behind in prescription drug pricing reform. This Executive Order signals a potential paradigm shift—one that could reshape pharmaceutical economics and improve patient access.

But as with all reforms, the details will matter. Will this be the policy that finally bends the drug cost curve? Or will it create new barriers in pursuit of affordability?

📢 What’s your take—can internationally indexed drug prices work in the U.S. without harming innovation?