President Donald Trump was photographed outside the West Wing of the White House on May 8, 2025. He made an announcement that he intends to revive a controversial policy from his previous term aimed at lowering drug costs by linking payments for certain medications to prices in other countries. The policy, known as “Most Favored Nation,” had been established in late 2020 but was blocked by federal courts and subsequently revoked by then-President Joe Biden in 2021. While the specifics of the new directive remain unclear, Trump stated in a post on Truth Social that he will be signing an executive order the following day, asserting that it would significantly reduce drug prices by 30% to 80%. The order would enforce a “Most Favored Nation’s Policy,” aligning U.S. payment rates with the lowest global prices for medications. The administration is also considering imposing tariffs on pharmaceutical imports, which could potentially lead to drug shortages and price hikes. Despite potential savings for Medicare and beneficiaries, concerns have been raised about the impact on patient access to medications. Analysts caution that Trump’s claims may not align with the actual outcomes of the policy, citing previous discrepancies between rhetoric and results. The pharmaceutical industry strongly opposes the initiative, emphasizing potential negative effects on patients and industry investments in the U.S. The proposal may encounter resistance and legal challenges, as seen with the initial version.
icare compared drug prices with those in other countries in 2018 and implemented the rule shortly after the 2020 election. The proposed seven-year model aimed to align the US reimbursement rates with the lower costs negotiated by other countries, where governments often dictate drug prices. The 2020 initiative, if implemented, would have enabled Medicare to pay the lowest price among peer countries for 50 Part B drugs administered in doctors’ offices, potentially saving around $86 billion.
Previously, Medicare was prohibited from negotiating drug prices; however, this changed with the 2022 passage of the Democrats’ Inflation Reduction Act, granting Medicare the authority to negotiate prices for select drugs annually.
Experts suggest that a “Most Favored Nation” proposal could lead to cost savings for beneficiaries in terms of out-of-pocket expenses and premiums, as drug prices influence both.
For more CNN news and newsletters, sign up for an account at CNN.com.
