On July 31, 2025, the White House released a fact sheet1 discussing additional steps taken by the Trump administration surrounding efforts towards lowering drug prices for Americans.The fact sheet was a follow-up to Executive Order (EO) 14297 signed May 12, 2025.(See Ankura's previous article about the Executive Order: Most-Favored-Nation, Executive Order 14297|Forward Looking Perspectives for Drug Manufacturers, Pharmacy Benefit Managers, Health Plans, and Pharmacies). We learned that 17 drug manufacturers received a letter from President Donald Trump, outlining their expectations to provide most favored nation (MFN) drug pricing to the United States.
The Letter
The letter ("letter"), addressed to each of the drug manufacturers' chief executive officers (CEOs), stated that "Most proposals my Administration has received to 'resolve' this critical issue promised more of the same; shifting blame and requesting policy changes that would result in billions of dollars in handouts to industry."2 The letter further highlighted key themes which set expectations of the drug manufacturers' cooperation within 60-days (Sept. 29, 2025)3:
- Extend MFN pricing to Medicaid.
- Guarantee MFN pricing for newly launched drugs.
- Return increased revenues abroad to American patients and taxpayers.
- Provide for direct purchasing at MFN pricing.
Compared to EO 14297, which did not describe the applicability of MFN, the letter appears to suggest that it is expected that MFN pricing would pertain to Medicare, Medicaid, and commercial payers.
The Fact Sheet
The fact sheet provided additional insight into the information that was contained in the letter to the CEOs and some additional details surrounding the concepts and expectations of the drug manufacturers. Here is a brief summary:
The following drug manufacturers received the letter:
AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, EMD Serono, Genentech, Gilead, GSK, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron, and Sanofi.
It is discussed that "pharmaceutical manufacturers... must... bring down the prices of prescription drugs in the United States to match the lowest price offered in other developed nations (known as the most-favored-nation, or MFN, price). The steps include:
- Calling on manufacturers to provide MFN prices to every single Medicaid patient.
- Requiring manufacturers to stipulate that they will not offer other developed nations better prices for new drugs than prices offered in the United States.
- Providing manufacturers with an avenue to cut out middlemen and sell medicines directly to patients, provided they do so at a price no higher than the best price available in developed nations.
- Using trade policy to support manufacturers in raising prices internationally provided that increased revenues abroad are reinvested directly into lowering prices for American patients and taxpayers."4
The fact sheet further states "the price Americans pay for brand-name drugs are more than three times the price other Organization for Economic Cooperation and Development nations pay." Aligned with previous EOs, there is repeated concern that drug manufacturers benefit from U.S. government subsidies and healthcare spending without providing discounts to American consumers compared to the discounts provided in foreign markets.
First, EOs.Second, a Direct Letter From the President... It is the Manufacturers' Next Move: Possible Considerations
Although the proposals and discussions between the manufacturers and the administration that have occurred since the EOs5 have not been publicized, it appears that the foundational concepts still remain. 1) MFN pricing aligned with developed nations is an expectation, 2) Manufacturers are urged to provide direct-to-consumer (and direct-to-business6) drug distribution, 3) Calls for discounts for Medicare and Medicaid>7 recipients (and now commercial payers8), and 4) There is a perspective that Americans are subsidizing drug costs for other countries.
Based on the EOs, the letter, and the July 31, 2025 fact sheet, there are many possible scenarios that could impact the current drug supply chain as we know it. Here are some observations in addition to the perspectives Ankura shared on May 23, 2025:
Drug Manufacturers
Seventeen pharmaceutical companies received letters from the Trump administration discussing the shortfalls of initial proposals and the initiatives that are to be accomplished in the next 60 days surrounding MFN pricing.It is not explicitly clear how these companies were selected to receive letters regarding the MFN drug pricing protocol or if there will be additional drug manufacturers who could be affected by the evolving initiatives.
Ankura Observations: Based on the letter and the fact sheet, it appears that discussions that have occurred since EO 14297 have not met the initial goals. As these discussions evolve and possible supply chain alterations mature, the administration of current programs and drug distribution may need to be altered to align with future requirements.
- Expansion of Pricing Mechanisms:The implementation of policies based on executive orders and other regulatory guidance might expand beyond the initial 17 manufacturers. As frameworks like the MFN model or other pricing mechanisms gain traction, more manufacturers could be subject to these pricing adjustments, impacting their revenue and pricing strategies.
- Increased Compliance Requirements: New directives may introduce stricter compliance requirements affecting a broader range of manufacturers, potentially increasing operational costs and reshaping supply chain rules (e.g., Drug Supply Chain Security Act).Including more reporting surrounding data for pricing across U.S.-payers and other countries.
- Broader Market Adjustments: Changes in reimbursement rates and international price benchmarking could compel manufacturers to adapt their production and distribution strategies to maintain competitiveness and profitability.
- Innovations and Adaptations: Manufacturers might need to innovate or adapt their product offerings and supply chain logistics to align with new regulatory expectations and market demands (see Direct-to-Consumer/Direct-to-Business Model(s)).
Direct-to-Consumer/Direct-to-Business Model(s)
Although it was not explicitly stated in EO 14297, it is now evident that the "direct-to" model is "Providing manufacturers with an avenue to cut out middlemen and sell medicines directly to patients..." based on the fact sheet.
The letter added "direct-to-business" which is undefined.
"Provide for Direct Purchasing at MFN Pricing: Participate in Direct-to-Consumer (DTC) and/or Direct-to-Business (DTB) distribution models for high-volume, high-rebate prescription drugs so all Americans get the same low MFN prices that manufacturers already offer to third-party payers."
Ankura Observations: Based on this additional information, it appears the administration may create opportunities for new pharmacy dispensing venues to work on behalf of drug manufacturers.Will these new models be created under the current manufacturers' corporate structure or will this be a service that is outsourced to existing mail order/specialty pharmacies? Considering the "direct-to" model is aimed at diminishing the middlemen, will this omit pharmacies owned by pharmacy benefit managers (PBMs) from participating in the dispensing pathway on behalf of manufacturers?Could this lead to a "drop-ship" model where local pharmacies dispense drugs on behalf of drug manufacturers?These new dispensing pathways call for enhancements in interoperability and logistics.
'Middlemen'
In EO 14273, there was a directive for cabinet members to evaluate the "role of ,iddlemen" and "provide recommendations to the President on how best to promote a more competitive, efficient, transparent, and resilient pharmaceutical value chain that delivers lower drug prices for Americans."Middlemen were not discussed in the subsequent EO, however they have been explicitly called out in the fact sheet.Therefore, it is noteworthy that middlemen are being identified as entities that could be minimized in a forward-looking supply chain model.
Ankura Observations: "Middlemen" are not defined in EO 14273 or the fact sheet. From an industry perspective, "middlemen" are often associated with PBMs.However, there are other entities that participate in the supply chain that will likely be impacted by MFN and "direct-to" models.These entities likely prosper in the current supply chain on rebates, administration fees, and spread strategies collecting payments that may no longer exist.Payers who contract with PBMs and other "middlemen" typically use these vendors to establish pharmacy networks, perform claims adjudication, and develop formularies, which are based on drug pricing and rebate negotiations.If the latter is diminished or eliminated, the pricing model will primarily be for network and claims adjudication services, which is a major change in business model for these organizations.Can the middlemen continue to operate without rebate and other price concessions that are currently received from drug manufacturers?
Payers
Through agreements with PBMs, payers often receive pharmaceutical rebates based on coverage parameters for brand-name medications.These funding mechanisms could be minimized or obsolete through MFN and "direct-to" distribution.A reduction in pharmaceutical rebate dollars will likely alter the financial modeling of health plans' premiums, cost-sharing, and benefits offered.
Ankura Observations: In a zero-sum scenario, there is speculation that this will lead to higher premiums and less benefits for health plan beneficiaries to make up for the loss of rebates.Furthermore, these reduced benefits could include increased patient cost-sharing responsibilities as a percent of drug costs to make up for the shortfall.
Will a new health plan market dynamic increase competition, requiring health plans to operate at a lower margin and move toward higher volumes of membership?Or is there a shift to lower reimbursements across the health care supply chain impacting other provider types to make up for the loss in rebates?
Are there new opportunities for payers to begin to negotiate directly with manufacturers through DTB?
Pharmacies
Pharmacies may encounter a number of changes attributed to the pricing of drugs set by manufacturers to MFN, tightening of reimbursements from PBMs as their models may change, and a shift of dispensing to "direct-to" models.There is possibly a future of less brand-name drug dispensing through traditional retail pharmacy channels if "direct-to" dispensing increases, leaving mostly generic prescriptions and over-the-counter medications to be accounted for.
MFN pricing may lead to more transparency in pricing for brand drugs, therefore altering current ambiguous reimbursement approaches of discounts off average wholesale price (AWP) — or other pricing methods — could become superseded.Contract negotiations with PBMs could move to MFN plus dispensing fees similar to NADAC9 plus dispensing fee arrangements. This could create a reimbursement model that limits pharmacy margin to dispensing fees.However, as discussed above, it could remove inventory carrying costs due to the potential for drop-ship models.
Footnotes
2. Each letter to each of the 17 companies were posted on President Trump's Truth Social account on July 31, 2025.Example: https://truthsocial.com/@realDonaldTrump/114949071230614578
3. Ibid.
4. Fact Sheet
5. EO 14273, April 15, 2023, EO 14297, May 12, 2025.
6. Term "Direct to Business" was discussed in the letter.
7. Previously discussed in Executive Order 14273, April 15, 2025.
8. Discussed in the letter.
9. National Average Drug Acquisition Cost (https://www.medicaid.gov/medicaid/nadac)
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