Lowering Drug Prices by Putting America First

The order establishes a federal policy that Medicare should not pay more for costly Part B or Part D prescription drugs or biological products than the "most-favored-nation price," defined as the lowest price — adjusted for volume and national GDP — that a drug manufacturer charges any OECD member country with a comparable per-capita GDP. It directs the HHS Secretary to immediately advance a rulemaking plan to test a Part B payment model under this pricing framework, and separately to develop and implement a rulemaking plan to test a Part D payment model for drugs where insufficient market competition leaves seniors paying above OECD-comparable prices. It also revokes a prior executive order on the same subject issued July 24, 2020.

The order does not itself change any Medicare payment rate or drug price. All operative pricing changes depend on the HHS Secretary completing notice-and-comment rulemaking, and the directives are qualified with "to the extent consistent with law" and "to the extent feasible." The order also expressly creates no enforceable legal rights for any party against the federal government.

Medicare beneficiaries enrolled in Part B or Part D who pay cost-sharing based on drug prices, pharmaceutical and biologic manufacturers whose Medicare reimbursement rates could be reduced, and the Department of Health and Human Services, which must design and implement the payment model rules.

If rulemaking succeeds, Medicare's reimbursement rates for high-cost drugs could drop significantly, potentially lowering out-of-pocket costs for seniors. Drug manufacturers could face reduced revenue on Medicare sales, which may affect how they price drugs across all markets.

The HHS Secretary must immediately advance a rulemaking plan for a Part B payment model test and separately develop a Part D rulemaking plan, both targeting the most-favored-nation price benchmark. Part D rulemaking is grounded in the CMS Innovation Center authority at 42 U.S.C. § 1315a, which allows the agency to test alternative payment models. Each model must go through notice-and-comment rulemaking before taking effect, meaning actual price changes are contingent on future regulatory action. The order includes a standard severability-style savings clause and is subject to appropriations availability.