Executive Orders and Drug Pricing: Constitutional Limits on the Most Favored Nation Model

In an interview with Pharmaceutical Executive, Ron Lanton, Partner, Lanton Law, addressed the growing debate over the limits of presidential authority in drug pricing policy. One particularly controversial issue is the use of executive orders to implement international pricing benchmarks—such as the Most Favored Nation (MFN) model—without congressional approval. This approach raises fundamental constitutional questions about the separation of powers, as drug pricing has traditionally fallen under the legislative authority of Congress. As the executive branch seeks new ways to address rising pharmaceutical costs, legal scrutiny is intensifying over whether such actions overstep the bounds of presidential power.

Pharmaceutical Executive: What are the constitutional or statutory limits on the President’s authority to implement international pricing benchmarks like the Most Favored Nation model through executive order, without congressional approval?

Ron Lanton: Executive orders can generally be used to enforce powers that the President or the executive branch already possesses. The key issue here is whether implementing something like the Most Favored Nation model via executive order exceeds those powers. Constitutionally, Congress holds the authority to legislate on matters such as drug pricing—not the executive branch. The legal boundaries in this specific area aren't entirely settled, but this executive order is likely to face significant legal scrutiny. Courts will likely examine it through the lens of the separation of powers doctrine to determine whether it oversteps presidential authority.