Trump Announces Most Favored Nation Drug Price Policy, Third Round of Medicare Drug Price Negotiations

In tandem with an announcement that Part B drugs would be added to the Medicare Prescription Drug Price Negotiation Program, President Donald Trump announced that he would take steps to aggressively negotiate lowering all drug prices, though the means by which this would happen remains unclear.

On Monday, the administration issued guidance for the third cycle of Medicare drug price negotiations, with the addition of Part B drugs for the first time. According to Fierce Healthcare, the Centers for Medicare and Medicaid Services (CMS) request community feedback on the best way to manage access to the maximum fair price negotiated for Part B drugs. The guidance also notes that CMS may choose to renegotiate prices set for 2026 and 2027.

The drug price negotiation program was established under the Inflation Reduction Act of 2022, and the first round of negotiations included those that were most expensive for Medicare Part D insurance plans. Reuters reports that the new guidance aims for the third-round negotiations to begin in January, 2028.

The announcement came in tandem with an executive order resurrecting the Most Favored Nation drug pricing policy that President Trump attempted to implement in his first term. The order directs the Secretary of Health and Human Services to (HHS) to work with CMS to “communicate most-favored nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations.” The Hill explains that this is direct federal drug price negotiation, something vehemently opposed by many on both sides of the aisle, but especially so by Trump’s allies in Republican Party leadership positions.

The administration’s explicit goal is to tie drug prices paid by government programs to those paid in other countries, but how that negotiation would be reached and those demands met remains a mystery, NPR surmises. Trump said that drugmakers would face consequences for noncompliance and the U.S. market would be opened to imports from other countries.

The press release on the third round of drug price negotiations can be found at CMS.