Congress Enacts Most Favored Nation Pricing for Biologics and Specialty Drugs Amid State Price Controls
Congress enacted a policy establishing Most Favored Nation pricing for biologics and specialty drugs on May 12, 2025, following President Donald Trump’s Executive Order 14,297 signed in Washington, D.C. The policy aims to tie U.S. drug prices to the lowest prices paid by comparable developed countries to prevent Americans from subsidizing lower-cost drugs abroad, officials said.
The policy directs the Secretary of Health and Human Services to communicate Most Favored Nation (MFN) price targets to drug manufacturers within 30 days of the executive order’s signing, according to Executive Order 14,297 signed by President Donald Trump on May 12, 2025. The Centers for Medicare & Medicaid Services (CMS) was tasked with delivering these price targets by June 11, 2025, though the order did not specify the exact methodology for calculating MFN prices, officials said. The directive requires manufacturers to comply with the MFN pricing targets or face proposed rulemaking to enforce the pricing scheme.
The policy targets high-cost Medicare Part B drugs and biologics, which constitute a significant portion of Medicare’s drug spending, officials said.
MFN pricing ties U.S. drug prices to the lowest prices paid by comparable developed countries, specifically members of the Organisation for Economic Co-operation and Development (OECD) with a gross domestic product per capita of at least 60% of that of the United States, according to policy documents. The pricing model blends the lowest GDP-adjusted international price with manufacturers’ average sales price (ASP) and replaces the existing 6% ASP add-on with a flat per-dose payment based on 6.1224% of 2019 historic spending, adjusted for inflation.
The administration aims to ensure that U.S. drug prices match or fall below the lowest prices paid by countries such as Canada, Germany, and France. Penalties for manufacturers who do not comply with MFN pricing were outlined in the executive order, though specific enforcement mechanisms remain under development, sources confirmed. As of December 2025, five pharmaceutical manufacturers had entered voluntary MFN pricing agreements with the administration. These agreements guarantee that all state Medicaid programs have access to the agreed-upon prices across the manufacturers’ product portfolios and include provisions for newly launched innovative medicines, according to Health and Human Services records.
The executive order also includes provisions to facilitate direct-to-consumer sales of drugs at MFN prices. Section 4 of the order directs the HHS Secretary to enable manufacturers to sell products directly to American patients through the government-operated website TrumpRx.gov. Manufacturers participating in the MFN program are required to support this direct-to-consumer purchasing model, officials said. This measure is intended to prevent Americans from subsidizing lower drug prices abroad and to provide U.S. patients with access to the lowest international prices, according to administration statements.
The MFN policy builds on prior efforts initiated during the Trump administration. An initial MFN model proposed in 2020 targeted approximately 50 Medicare Part B drugs but faced legal challenges that prevented implementation, according to CMS records and legal analyses. The 2025 executive order renews these efforts amid concerns that the United States pays significantly higher prices for prescription drugs than other high-income countries. For example, the U.S. paid $19.50 per dose for the Pfizer-BioNTech COVID-19 vaccine, roughly 40% more than some European countries, according to government procurement data.
Despite executive action, codifying MFN pricing into law has faced resistance in Congress. White House officials have urged lawmakers to include MFN provisions in a broader health care package aimed at reducing U.S. drug costs below those of peer countries. Republican lawmakers, including Sen. Bill Cassidy of Louisiana, have referenced agreements with pharmaceutical companies that last for three years, but as of March 2026, no legislation enacting MFN pricing had been passed, sources close to congressional negotiations confirmed.
Critics of the MFN policy have raised concerns about its potential legal, economic, and ethical implications. A Harvard analysis warned that MFN pricing could disrupt global drug access and deter pharmaceutical innovation by tying U.S. prices to countries with strict price controls, potentially delaying new treatments. The Alliance for Safe Biologic Medicines stated that MFN threatens patient access to medicines, and some experts have cautioned that the policy could lead to higher cancer mortality rates due to restricted access to drugs imported from Europe, according to published reports and advocacy group statements.
The MFN policy originated in 2020 under a Trump executive order targeting Medicare Part B drugs and biologics but was halted by legal challenges. The 2025 executive order reflects renewed administration efforts to address high U.S. drug prices by linking them to international benchmarks. The policy remains subject to ongoing regulatory development and congressional debate.
