1. What exactly did the order do?
On May 12 2025 President Trump signed the Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients executive order.
- Directs HHS to make sure Americans pay no more than the lowest price (“most-favored-nation” or MFN) charged in any peer country.
- Tells HHS to “facilitate direct-to-consumer (DTC) purchasing programs” for manufacturers that agree to MFN prices—bypassing pharmacy-benefit managers (PBMs) and, in some situations, insurers.
- HHS has 30 days to send MFN target prices to drug makers and up to 180 days to publish implementing rules if companies or PBMs resist.
2. Who is affected first?
| Stakeholder | Near-term exposure | Why it matters |
|---|---|---|
| PBMs (CVS Caremark, Express Scripts, OptumRx) | High – shares fell 4-6 % the day after the signing | MFN cash sales cut out rebates & spread pricing that generate ≈ $28 B/year. |
| Commercial insurers & self-funded employers | Moderate | DTC sales could drain plan drug-spend data, forcing new copay-accumulator rules to keep members “in network.” |
| Drug manufacturers | Mixed | Some will pilot DTC storefronts to avoid steeper MFN cuts; others will litigate. |
| Consumers | Uncertain timing | Savings depend on logistics (shipping, counseling) and whether rules survive court challenges. |
3. Why is bypassing PBMs such a big deal for insurance?
PBMs negotiate rebates, build formularies, and keep a slice of each transaction. Direct cash sales at MFN prices mean:
- Lost rebate flow – Plans relying on rebate guarantees may see budget gaps.
- Benefit-design headaches – If a member buys outside the PBM channel, does the expense count toward the deductible? Expect insurers to tighten accumulator rules or create “cash-only” tiers.
- Network-pharmacy disruption – Small retail pharmacies could be undercut if manufacturers ship directly.
4. How might insurers respond?
- Rewrite formularies to steer members back to in-network fills and keep utilization data.
- Expand specialty-pharmacy services (white-bagging, home infusion) to justify their middle-man role.
- Lobby for guardrails (e.g., require MFN sellers to report data so spending still flows through medical-loss ratios).
- Re-price 2026 premiums early, citing rebate uncertainty.
5. Where will consumers actually see lower prices?
- High-cost self-administered drugs such as GLP-1 weight-loss injectables are the likeliest pilot class; estimates suggest MFN could cut list prices 60-90 %.
- Medicare Part B infusions could follow, because Medicare already collects ASP data.
- Insulin and rescue inhalers—popular political targets with established safety profiles.
6. Frequently asked questions (FAQs)
Q 1. Will I be able to order any drug online at a Canada-level price tomorrow?
No. HHS still has to issue regulations, build a secure dispensing system, and survive inevitable lawsuits. Expect pilots in late 2026 at the earliest.
Q 2. Does MFN pricing kill my current insurance drug benefit?
No, but it may split the market: plans keep covering many generics and low-cost brands, while expensive specialty drugs migrate to MFN cash channels.
Q 3. Could insurers refuse to count MFN purchases toward my deductible?
Possibly. Current accumulator practices already exclude some manufacturer assistance from out-of-pocket limits. States or CMS may need to clarify whether MFN cash counts.
Q 4. Will drug innovation suffer?
Pharma groups say yes, arguing MFN caps shrink R&D budgets; order supporters counter that foreign price hikes, not U.S. cuts, can fill the gap. This debate will surface in court challenges.
Q 5. What happens if manufacturers refuse MFN pricing?
The EO instructs HHS to consider importation waivers and antitrust action against any “anti-competitive practices.”
7. Bottom line for insurance professionals
- Model risk: Rebate-driven revenue streams face a structural threat; start stress-testing 2026 budgets without spread pricing.
- Policy watch: Key milestones—HHS price-target letters (mid-June 2025) and proposed rules (by November 2025).
- Member comms: Prepare plain-language FAQs; consumers will be confused about where to fill prescriptions and what counts toward deductibles.
- Opportunity: Carve-out service lines (clinical adherence coaching, specialty logistics) that manufacturers still need even in a DTC world.