Yesterday, May 20, 2025, the U.S. Department of Health and Human Services (HHS) issued a significant update on the Executive Order “Delivering Most Favored Nation Prescription Drug Pricing to American Patients” that was announced on May 12, 2025. In its press release, “HHS, CMS Set Most-Favored-Nation Pricing Targets to End Global Freeloading on American Patients”—the agency announced immediate steps to implement President Trump’s Executive Order on Most-Favored-Nation (MFN) pricing. The executive order released on May 12th set a 30-day timeline to communicate most-favored-nation price targets to pharmaceutical manufacturers; CMS and HHS now appear to be beginning this process.

A Closer Look at the MFN Framework

HHS expects manufacturers to commit to aligning U.S. prices for all brand drugs—specifically those with no generic or biosimilar competition—to the lowest price among countries in the Organisation for Economic Co-operation and Development (OECD) that have a per capita GDP of at least 60% of the U.S. Importantly, our read on the issue is the release also stated that the MFN pricing would only apply to brand drugs with no generic or biosimilar competition-“HHS expects each manufacturer to commit to aligning US pricing for all brand products across all markets that do not currently have generic or biosimilar competition with the lowest price of a set of economic peer countries”.  It’s worthwhile to note that one may also interpret this as meaning that HHS will only use prices from countries where a brand has no biosimilar or generic competition.  In either case, we are now seeing the agencies’ first attempts in determining which drugs and or biologicals will be subject to MFN pricing.  

Current U.S. GDP Context: According to the World Bank, U.S. per capita GDP was approximately $82,769 in 2023 which means qualifying comparison countries for MFN pricing include: Luxembourg, Ireland, Switzerland, Norway, Iceland, Denmark, Australia, Netherlands, Austria, Sweden, Belgium, Germany, Canada, Finland, Israel, and United Kingdom.

Possible Expansion Under PPP: If HHS opts to use GDP by purchasing power parity (PPP) instead of nominal terms, the pool of comparator countries could expand to include: Italy, Slovenia, New Zealand, Spain, Czech Republic, South Korea, Lithuania, and Japan.

Recommendations for Manufacturers

While details of the MFN initiative are still being developed, HHS has clearly signaled a move towards lower drug prices through international comparisons. Manufacturers, especially those with innovative and higher-priced treatments, should now start evaluating potential risks and preparing for possible adjustments.

Model MFN Scenarios for Key Brands

Identify which of your portfolio products meet the MFN applicability criteria: brand-name, no generic or biosimilar, and currently priced significantly higher in the U.S. than in OECD peer markets. For those products, model potential revenue impacts of aligning U.S. prices to the lowest international benchmarks. Manufacturers may also consider total government spending attributed to their portfolio products to account for situations in which MFN is gradually phased-in, starting with the highest contributing products. 

Evaluate Data Sources and Pricing Comparisons

Ensure your team is tracking real-time pricing data across the target OECD countries. This data will be essential for forecasting and financial planning—and for building a defensible strategy in the event of enforcement.

Review Existing Channel Strategy

If a direct-to-patient distribution mechanism is introduced, will your supply chain support it? Consider how bypassing traditional wholesalers and pharmacies could disrupt current GTN forecasts, contract obligations, and service-level agreements.

Engage Government Affairs and Legal Early

Manufacturers should monitor developments in Washington in the coming months. Stakeholder feedback, the potential role of The Center for Medicare and Medicaid Innovation (CMMI), rulemaking processes, and even legal challenges could shape how the MFN mechanism is ultimately defined. This policy requires proactive engagement.

Watch for IRA and MFN Interplay

The Inflation Reduction Act (IRA) is already reshaping Medicare pricing policy. Whether MFN and IRA will operate independently or be harmonized into a single pricing reform structure is still unknown—but the overlap could compound revenue risks for certain products.

Looking Ahead

The MFN initiative is just the latest in a series of regulatory signals aimed at lowering U.S. drug prices. Whether or not this specific version of MFN becomes permanent policy, the direction is clear: U.S. pricing is no longer immune to international comparison. Policymakers are increasingly willing to tether American drug costs to those paid in peer economies—and to use executive action to bypass legislative gridlock if necessary.

At IntegriChain, our advisors are closely tracking these developments and advising our customers on how to build resilience into their pricing, contracting, and GTN strategies. While the MFN mechanism may take time to finalize, it is important to begin discussing your options now.

Let’s discuss how these changes impact your strategies. Contact me at rmoore@integrichain.com or hear more about MFN at the Access Insights conference.