Ending Global Freeloading

For years, Americans have shouldered a disproportionate burden when it comes to prescription drug costs, often paying three to five times more for the same medications available at lower prices in other developed nations. This stark disparity has long been frustrating for patients and policymakers alike. On May 20, 2025, the U.S. Department of Health and Human Services (HHS), under the leadership of President Donald J. Trump, HHS Secretary Robert F. Kennedy Jr., and Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz, took a bold step to address this issue by announcing specific pricing targets for pharmaceutical manufacturers under the “Most-Favored-Nation” (MFN) Executive Order. This policy is poised to reshape the U.S. pharmaceutical landscape, aiming to deliver affordable, life-saving treatments to American patients while challenging the global pricing dynamics that have disadvantaged U.S. consumers for decades.

The MFN policy, a cornerstone of President Trump’s broader healthcare reform agenda, seeks to align U.S. prescription drug prices with the lowest prices offered in economically comparable countries. Specifically, the policy targets brand-name drugs that lack generic or biosimilar competition, requiring pharmaceutical manufacturers to match the lowest price found in an Organization for Economic Co-operation and Development (OECD) country with a GDP per capita of at least 60% of the U.S. GDP per capita. This approach ensures that Americans no longer pay exorbitant prices for medications sold at a fraction of the cost abroad, effectively ending what the administration calls “global freeloading” on American patients.

The policy builds on the principle that the U.S., as the world’s largest purchaser of pharmaceuticals, should not bear a disproportionate share of global drug development costs. By setting these pricing targets, HHS aims to bring U.S. drug prices in line with those in countries like Germany or Canada, where prices are often significantly lower due to government-negotiated rates or other market dynamics. The administration argues that this move will lower costs for American patients and preserve innovation by redistributing the financial burden more equitably across global markets.

The announcement comes at a critical time when the high cost of prescription drugs continues to strain American households. According to HHS, U.S. patients pay prices for brand-name drugs that are often three to five times higher than those in other OECD nations, even after accounting for discounts. This disparity has forced many Americans to make difficult choices, such as skipping doses or forgoing medications altogether due to cost. The MFN policy aims to alleviate this burden by ensuring Americans pay no more for their medications than those in other economically comparable countries.

HHS Secretary Robert F. Kennedy Jr. emphasized the urgency of this reform, stating, “For too long, Americans have been forced to pay exorbitant prices for the same drugs that are sold overseas for far less. That ends today. We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do.” This strong stance signals a new era of accountability for pharmaceutical companies, with the administration prepared to enforce compliance through regulatory measures if necessary.

Under the MFN Executive Order, signed on May 12, 2025, HHS has outlined clear expectations for pharmaceutical manufacturers. Within 30 days of the order, the department communicated specific MFN price targets to manufacturers. These targets apply to all brand-name drugs without generic or biosimilar competition, ensuring the focus remains on medications where price disparities are most pronounced. Manufacturers are expected to align their U.S. pricing with the lowest price offered in a qualifying OECD country, which could drastically reduce costs for American patients.

While the MFN policy has garnered significant attention, it has challenges. The pharmaceutical industry has historically opposed such measures, arguing that lower prices could stifle research and development (R&D) and limit innovation. The Pharmaceutical Research and Manufacturers of America (PhRMA) has warned that importing foreign prices could reduce treatments and cures, threatening the industry’s ability to invest in new therapies. However, the Trump administration counters that the policy preserves innovation by ensuring that the financial burden of R&D is shared more equitably across global markets, rather than falling disproportionately on American consumers.

Analysts also note that implementing MFN pricing could disrupt the global drug pricing equilibrium. The U.S. accounts for roughly 70% of global pharmaceutical profits, and a significant reduction in U.S. prices could lead manufacturers to renegotiate contracts with other countries or withdraw from less profitable markets. This could result in higher prices abroad, potentially offsetting the cost reductions for American patients. Additionally, legal challenges are likely, as the pharmaceutical industry successfully blocked a similar MFN policy during Trump’s first term.

Despite these hurdles, the policy has received support from advocates like AARP, who argue that it addresses the long-standing issue of Americans paying the highest prices for lifesaving medications. The administration’s focus on direct-to-consumer purchasing programs also signals a potential shift in how drugs are distributed, bypassing middlemen like pharmacy benefit managers (PBMs) to deliver lower prices directly to patients.

The coming weeks will be critical as HHS and CMS work to highlight commitments from pharmaceutical manufacturers and monitor progress toward MFN pricing targets. The administration’s aggressive timeline—requiring action within 30 days of the executive order—demonstrates its urgency to deliver results. However, the policy’s success will depend on navigating complex legal, economic, and industry dynamics.

The MFN policy represents hope for American patients in the fight for affordable healthcare. By addressing the global pricing disparities that have long disadvantaged U.S. consumers, the Trump administration is taking bold steps to ensure that Americans no longer bear the brunt of global pharmaceutical innovation. As Secretary Kennedy and CMS Administrator Oz work to implement this transformative policy, the nation watches closely to see if this promise of fairness and affordability will become a reality.

Author: Barby Ingle
Published by: International Pain Foundation, iPain Living Blog, Team iPain

Check out the Fact Sheet on the Executive Order and Secretary Kennedy’s Op-ed for more details.