President Donald Trump’s recent executive order targeting prescription drug pricing is sparking legal concerns across the healthcare and policy landscape. The “Most Favored Nation” (MFN) pricing model ties the cost of certain U.S. drugs to the lower prices paid by other developed nations. While the goal of lowering pharmaceutical costs is widely supported by the public, legal experts are raising red flags about how this order aligns with current federal laws, administrative procedures, and trade agreements.
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The Basics of the Executive Order
The MFN executive order mandates that Medicare pay the same lowest price for select prescription drugs as paid by countries such as Canada, the UK, and Germany. This effort is intended to address the long-standing issue of Americans paying significantly more for medications compared to citizens in other wealthy nations.
The order primarily affects Medicare Part B and Part D programs, which cover doctor-administered and pharmacy-dispensed medications, respectively. Trump argued that the U.S. has been “subsidizing” the rest of the world’s drug costs for decades. Supporters say the move could drive down prices by 30–80% for commonly prescribed medications.
Concerns About Statutory Authority
One of the primary legal concerns centers around whether the executive branch has the authority to enforce international price indexing without direct action from Congress. While the Inflation Reduction Act of 2022 granted Medicare new negotiation power, it’s unclear whether this executive order exceeds the scope of that law.
Critics argue that only Congress can fundamentally alter how Medicare calculates reimbursement rates. Past judicial rulings have emphasized that significant policy changes must be backed by clear legislative mandates. Therefore, legal experts warn that the MFN policy could face lawsuits over claims of executive overreach.
Administrative Procedure Act in Question
Another major issue involves the Administrative Procedure Act (APA), which governs how federal agencies implement new regulations. The APA requires that most new rules go through a formal notice-and-comment period to ensure transparency and public input.
Because Trump’s executive order pressures the Department of Health and Human Services (HHS) to act within 180 days, some legal scholars argue this timeline could be seen as bypassing the APA. If the rule is implemented without the proper procedural steps, it may be struck down in court as “arbitrary and capricious.”
Drug Importation and FDA Oversight
The executive order also encourages the importation of lower-priced prescription drugs from foreign markets. However, the Food and Drug Administration (FDA) has strict standards designed to protect consumers from counterfeit or unsafe drugs.
Allowing foreign drugs into the U.S. raises concerns about safety, regulatory consistency, and quality control. While several states have pushed for drug importation in recent years, the FDA has traditionally resisted widespread implementation due to health risks and legal uncertainty.
Potential Trade and IP Conflicts
Tying domestic drug prices to foreign markets could also trigger international trade conflicts and intellectual property disputes. Pharmaceutical companies argue that forced price alignment undermines research investment and violates trade agreements protecting patents and pricing autonomy.
Critics claim the MFN model may violate obligations under World Trade Organization rules or bilateral trade deals. If enacted, this executive order could open the door for retaliatory measures or formal disputes from trade partners.
What Happens Next
The MFN pricing rule is expected to face immediate legal challenges from the pharmaceutical industry, patient advocacy groups, and possibly members of Congress. These challenges may delay or derail the policy altogether.
As the policy moves toward implementation, courts will likely determine whether the Trump administration followed proper procedures and stayed within legal bounds. In the meantime, the debate over how best to reduce drug prices in the U.S. remains at the forefront of healthcare policy and legal scrutiny.
