On May 12^th, 2025, United States (U.S.) President Donald Trump signed an Executive Order¹ accompanied by a Fact Sheet² to implement a “Most Favored Nation (MFN)” drug pricing approach intended to lower U.S. prescription drug costs by tying their prices to those in similarly developed countries. While this MFN Executive Order is not President Trump’s first attempt at implementing International Reference Pricing- based (IRP-) methodology to regulate drug prices in the US (see figure 1), it certainly has the broadest and strictest scope vs. previous attempts^3,4,5,6,7,8.

In this article, we aim to provide an overview of the MFN Executive Order (EO) and initial industry response, hypothesize its implications on global pricing & market access, and offer guidance to help pharmaceutical companies navigate the remaining uncertainties.

II. The 2025 MFN Model: Overview

Product Scope | Unlike President Trump’s previous attempts to implement IRP-based pricing methodology in the U.S., which focused on Medicare Part B biologic drugs (see figure 1), the 2025 MFN model suggests a very large scope. Indeed, all new product launches across Commercial, Medicare, and Medicaid channels would be subject to the 2025 MFN reform. Existing products commercialized under the Medicaid channel would also be subject to the 2025 MFN.

Geographic Scope |Per a Department of Health and Human Services (HHS) update to the Executive Order issued on May 20^th, 2025⁹, U.S. drug prices would need to be adjusted to the lowest price paid among a basket of Organization for Economic Co-operation and Development (OECD) countries with ≥60% of US GDP per capita. However, it is yet to be clarified whether GDP per capita will be measured on a nominal basis or adjusted for Purchasing Power Parity (PPP) like in the 2020 MFN model. Without adjusting for PPP, the reference basket would include16 markets: Australia, Austria, Belgium, Canada, Germany, Denmark, Finland, Iceland, Ireland, Israel, Luxembourg, Netherlands, Norway, Sweden, Switzerland, and the United Kingdom (U.K.). If adjusted for PPP, the basket would encompass an additional 9 markets including key European countries (France, Italy, and Spain), as well as Czech Republic, Japan, Lithuania, New Zealand, Slovenia, and South Korea (see figure 2).

Referenced Prices |While it is expected that list (WAC) prices would be referenced, the Administration’s Director of Medicare, explicitly stated during the Oval Office announcement on September 30^th, ’25 that MFN would be grounded on net prices rather than list prices. However, this was not confirmed in the subsequent press release. If net prices are to be referenced, this would require disclosure of confidential rebates which raises legal and operational challenges, as many markets legally mandate confidential contracting to prevent net prices from influencing IRP.

Execution |As for its execution, the EO calls on pharmaceutical companies to voluntarily comply and proactively lower their U.S. drug prices to MFN levels. However, initial limited momentum among pharmaceutical companies prompted the Administration to publish a July 31^st Open Letter¹⁰ warning of potential regulatory consequences for non-compliance, which has since led to significant action .

Indeed, on September 25^th, Bristol Myers Squibb (BMS) announced direct-to-patient platforms for Eliquis and Sotyktu, under which eligible cash-pay patients will be able to purchase the drug at 40% and >80% discount vs. their respective list price¹¹. A day after, on September 26^th, AstraZeneca announced a U.S. direct-to-patient online platform for patients to access several of its drugs for a cash price up to 70% off their list prices with home delivery, starting October 1^st, 2025¹². On September 30^th, this momentum reached a new inflection point, with President Trump and Pfizer Chairman and CEO Albert Bourla announcing Pfizer as the first manufacturer to reach an agreement with the administration during a joint Oval Office press conference.^{13, 14} According to statements from Pfizer and the White House, Pfizer will offer its portfolio at MFN-benchmarked pricing for Medicaid beneficiaries and implement MFN-compliant pricing across channels for all future U.S. drug launches––in line with the EO’s call to action. Additionally, Pfizer has confirmed the most of its primary care portfolio and select specialty drugs will be available with discounts up to 85% and on average 50% via ‘TrumpRx’ (see below).

Direct-to-Consumer Model |The EO also initially directed HHS to “facilitate” a direct-to-consumer (DTC) drug purchasing model to enable manufacturers to sell drugs directly to patients and at MFN prices, without issuing a timeline nor operational framework. However, on September 30^th, President Trump announced ‘TrumpRx’, a DTC platform scheduled to launch in 2026, through which patients can pay out-of-pocket for medicines at discounted – but not necessarily MFN-benchmarked – prices. Meanwhile, the U.S.’s leading pharmaceutical industry group, Pharmaceutical Research and Manufacturers of America (PhRMA), has announced plans to debut a DTC website, and AstraZeneca and Bristol Myers Squibb (BMS) have outlined their own direct to patient platforms. It remains unclear, in this context, if TrumpRx will operate as a centralized purchasing platform or primarily as a hub that connects patients to manufacturers’ platforms.

III. Implementation Implications

The prospect of implementation of the 2025 MFN Model has casted significant concerns within the pharmaceutical industry, with first impacts of the MFN being seen on U.S. drug prices (see Execution section). However, beyond the U.S., we anticipate the MFN to be quite consequential for both referenced and non-referenced markets.

Impact in MFN-Referenced Markets | The introduction of the MFN – if fully implemented – is expected to significantly reshape launch strategies in MFN-referenced markets, and drug launches in these markets are at risk of experiencing delays. Conventional launch sequence has traditionally begun with U.S. launches before quickly turning to European and other key markets, many of which are MFN-referenced. However, if countries with low prices within the MFN basket are launched into early, they may set a low MFN price benchmark that significantly erodes U.S. margins. Thus, pharmaceutical companies may aim to delay or even bypass these markets.

Additionally, if the MFN framework is based on list prices, it will likely force a pivot towards a high list price – high rebate / discount model, as higher list prices in MFN-referenced markets can raise the lowest-of-basket benchmark and potentially protect U.S. revenues from price erosion. However, this strategy – if not complemented by significant price reductions in the U.S.– could prompt a response by the U.S. Administration, whether in the form of further MFN policy updates or other mechanisms to force price reductions within the U.S..

Impact in Markets Not MFN-Referenced | Outside the MFN-referenced markets, some non-referenced markets would also be impacted by the MFN if the MFN is indeed referencing list prices. The main risk is that the list prices of non-referenced markets feed into the list prices of MFN-referenced markets, effectively pulling them into the MFN framework and thus risking delays or “no launch” strategies. For example, Slovakia is not included in the MFN basket, but it is referenced by 10 MFN-referenced markets (e.g., Austria, Finland, Germany).Pharmaceutical companies may deem it strategic to restrict access in Slovakia to avoid prices in Slovakia from feeding into MFN-referenced market prices and by extension lowering U.S. MFN price benchmarks. Markets at greatest risk of delays or “no launch” strategies, in the scenario where list prices are referenced, would be those which are not significant sources of revenue, yet in which prices are frequently referenced by MFN-referenced markets (e.g., Bulgaria, Croatia, Latvia, and Malta). Conversely, non-referenced markets which are major sources of revenue but whose prices do not feed into MFN-referenced markets (e.g., Brazil, China, Saudi Arabia, United Arab Emirates (UAE)) could benefit from the implementation of the MFN and potentially be prioritized in launch sequencing (see figure 3).

However, if net prices are referenced as stated by the Administration on September 30^th, non-referenced markets could conversely be prioritized in launch sequences relative to referenced markets, given IRP is conducted on list prices.

IV. Navigating the MFN Unknowns: Uncertainties and Strategies

While President Trump’s intention to lower US drug prices via the MFN reform is clear, several important uncertainties remain, including the number of markets referenced, whether referencing is based on WAC / list prices, and the general enforceability of the MFN. These uncertainties are unlikely to be clarified in the near term, meaning pharmaceutical companies will need to navigate ambiguity. While predicting the future is near impossible, there are certain steps we recommend pharmaceutical companies to follow, while advising against a “no launch in MFN-referenced markets strategy” which would likely suboptimize revenue, be politically and ethically difficult to justify, and carry dramatic public health consequences for patients:

• Negotiate Reasonable Higher List-to-Net Discounts if MFN References List Prices |Assuming list prices are referenced, increasing list-to-net discounts can help bridge the gap between U.S. list / WAC prices and ex-U.S. list prices. This, however, will be subject to payer willingness to cooperate, and increased list prices alone may not fully insulate pharmaceutical companies from further policy scrutiny, given the Administration’s overarching goal to see U.S. drug prices fall.
• Reconsider the Timing of Drug Launches |Traditional launch sequences, whereby drugs are first launched in the U.S. followed by European and Int’l markets, are likely to carry new risks in the near term, as many key European markets will be referenced under the MFN framework. We therefore recommend evaluating price / volume trade-offs in scenarios where launches in non-MFN-referenced markets precede launches in European and other MFN-referenced markets, carefully balancing potential volume losses from delayed launches against revenues generated from protecting the U.S. price.
• Maximize Ex-US Clinical Value Perceptions |The risk of MFN referencing puts further pressure on pharmaceutical companies to achieve increased prices in MFN-referenced markets. In Europe, this will most likely mean providing stronger evidence to payers, such as launching with phase 3 trials (vs. phase 2 trials), to secure stronger Health Technology Assessment (HTA) outcomes and justify higher list (and net) prices. Manufacturers may also consider assessing high-value subpopulations where differentiated clinical benefit can be clearly demonstrated and thus also rationalize higher pricing. While increasing the level of evidence and identifying key subpopulations may lead to delayed drug launches, these strategies could well align with the above-mentioned recommendation to revise the geographic launch sequence.

V. Conclusions

President Trump’s intent to lower U.S. drug prices has advanced beyond policy signalling, with the Administration’s recent agreement with Pfizer marking a crucial tangible step towards implementation of the MFN framework. As additional manufacturers negotiate with the administration, it is increasingly likely that some downward price pressure in the U.S. will emerge, whether or not the 2025 MFN framework is formally codified.

While the objective of lowering U.S. prices has been framed as beneficial to patients, it carries significant risks. Chief among those are significant delays in drug access for patients living in MFN-referenced markets, and broader consequences for drug development and innovation, limiting competition, and ultimately narrowing treatment choices for patients worldwide.

Sources

1. https://www.whitehouse.gov/presidential-actions/2025/05/delivering-most-favored-nation-prescription-drug-pricing-to-american-patients/
2. https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-president-donald-j-trump-announces-actions-to-put-american-patients-first-by-lowering-drug-prices-and-stopping-foreign-free-riding-on-american-pharmaceutical-innovation/
3. [2018 IPI] https://www.cms.gov/priorities/innovation/innovation-models/ipi-model
4. [2018 IPI] https://www.cms.gov/files/document/10-25-2018-cms-5528-anprm.pdf
5. [2018 IPI] https://www.regulations.gov/document/CMS-2018-0132-0001
6. [2020 MFN] https://www.cms.gov/priorities/innovation/innovation-models/most-favored-nation-model
7. [2020 MFN] https://www.regulations.gov/document/CMS-2018-0132-2750
8. 2020 MFN] https://www.congress.gov/crs-product/LSB11319
9. https://www.hhs.gov/press-room/cms-mfn-lower-us-drug-prices.html
10. https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-announces-actions-to-get-americans-the-best-prices-in-the-world-for-prescription-drugs/
11. https://news.bms.com/news/corporate-financial/2025/Bristol-Myers-Squibb-Builds-on-Eliquis-apixaban-Direct-to-Patient-Program-Announces-New-BMS-Patient-Connect-Platform-Offering-Sotyktu-deucravacitinib/default.aspx
12. https://www.astrazeneca-us.com/media/press-releases/2025/AstraZeneca-launches-direct-to-consumer-platform-to-expand-access-to-medications-for-US-patients-including-those-living-with-chronic-conditions.html
13. https://www.whitehouse.gov/fact-sheets/2025/09/fact-sheet-president-donald-j-trump-announces-first-deal-to-bring-most-favored-nation-pricing-to-american-patients/
14. https://www.pfizer.com/news/press-release/press-release-detail/pfizer-reaches-landmark-agreement-us-government-lower-drug