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EO 13947Executive OrderTrump 45 · R Quiet signal

Executive Order 13947

Lowering Drug Prices by Putting America First

This executive order directs the Secretary of Health and Human Services to implement a Medicare Part B payment model that would cap U.S. prices for certain high-cost prescription drugs and biological products at the "most-favored-nation price"—the lowest price adjusted for volume and GDP differences that manufacturers charge in comparable developed OECD countries. The order frames this as ending foreign free-riding on American-funded pharmaceutical innovation and addressing affordability for seniors, particularly during the COVID-19 pandemic.

Federal Register Open PDF 85 FR 59171

Impact dates

  1. HHS Secretary to immediately take appropriate steps to implement rulemaking plan

Key directives

  • HHS Secretary shall immediately take appropriate steps to implement rulemaking plan to test a payment model
  • Medicare would pay no more than most-favored-nation price for certain high-cost Part B drugs and biological products
  • Most-favored-nation price defined as lowest price after adjusting for volume and GDP differences in comparable OECD member countries

Who is ordered

Timeline

Immediate

  • HHS Secretary directed to 'immediately take appropriate steps' to implement rulemaking plan for most-favored-nation payment model testing

Near term (90d)

  • Rulemaking process initiation for payment model (no fixed deadline specified)

Long term

  • Potential implementation of most-favored-nation pricing model for Medicare Part B drugs
  • Possible structural change to U.S. pharmaceutical pricing if model adopted broadly

Risks & tensions

  • Implementation contingent on 'applicable law' and 'availability of appropriations'—softens binding force
  • Order explicitly does not create enforceable rights, limiting legal leverage for beneficiaries
  • 'To the extent consistent with law' qualifier creates uncertainty about scope of action
  • Rulemaking process means actual price changes face delays and potential legal challenges from pharmaceutical industry
  • GDP adjustment methodology not specified, leaving implementation details to rulemaking
  • May trigger tensions with trade partners and OECD countries whose pricing systems are referenced
  • Potential conflict with innovation incentives if manufacturers reduce R&D investment in response
Executive Order 13947: Lowering Drug Prices by Putting America First · Executive Orders