Prescription drug prices in the U.S. are high—significantly higher than what people pay in other developed countries. In response to this disparity, the President signed an executive order on May 12, 2025—the “Most Favored Nation” (MFN) policy. The goal? To bring U.S. drug prices more in line with what other countries are paying.

What is the “Most Favored Nation” (MFN) drug pricing policy?

The MFN policy mandates that the U.S. should not pay more for prescription drugs than the lowest price paid by other developed nations, of course adjusting for factors like GDP and purchasing power. 

Under this policy, Medicare would only pay the lowest price that other developed nations (like Canada, Germany, or the U.K.) pay for certain drugs. It is initially only targeting Medicare Part B drugs, but could eventually extend to Medicare Part D and potentially influence commercial drug pricing. 

How the MFN policy would work—and what might get in the way

Putting the Plan into Action:
The executive order gives the Department of Health and Human Services (HHS) the go-ahead to negotiate directly with drug manufacturers to bring prices down. If those talks don’t lead to a deal within 180 days, the government may consider regulatory actions, including potential import restrictions.

Potential Roadblocks:
This isn’t the first time a policy like this has been attempted. Trump’s efforts in 2020 to enact this plan hit legal roadblocks and were ultimately blocked in court. Without support from Congress, this new version could face similar legal and political challenges that might stall or prevent its rollout.

What this means for the pharmaceutical industry

So how is the pharmaceutical industry reacting? Unsurprisingly, big pharmaceutical companies aren’t onboard with the MFN policy. They argue that tying U.S. prices to those of other countries could hurt innovation and slow down research and development, ultimately limiting patient access to vital care.

In addition to the response from the pharmaceutical industry, the world markets are already feeling the effects of this executive order. Right after the announcement, stocks for major healthcare and pharma-related companies—like Aetna, CVS, and Cigna—took a hit. The market reaction shows just how uncertain investors are about how this policy might play out.

Potential benefits for Shed and its members

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On the other end of the spectrum, there are potential benefits to the “Most Favored Nation” policy—Shed and its members may see some of those benefits.

• Reduced Drug Costs:
  If implemented, the MFN policy could lead to significant reductions in drug prices, including GLP-1’s, making treatments more affordable for patients.
  
  
• Enhanced Access:
  Lower drug prices may improve access to essential medications for Shed's members, aligning with the company's mission to provide personalized wellness solutions for everyone.
  
  
• Competitive Advantage:
  Shed's proactive approach in navigating regulatory changes positions it to adapt swiftly, ensuring continued service amidst industry shifts.
  

What does all this mean?

The “Most Favored Nation” policy could mark a major shift in how drug pricing works in the U.S. While there are still legal and political uncertainties ahead, the potential benefits are hard to ignore. For Shed and its members, this could potentially mean lower drug costs, better access to medications like GLP-1s, and a more affordable path to care.

While we’re still unsure of where the MFN policy will land, Shed is keeping a close eye on these developments so we can continue to offer the most cost-effective, high-quality care to our members.