Trump Targets Drug Prices With MFN Policy and Tariffs

Donald Trump announced on August 25 that his administration intends to lower prescription drug prices in the United States by 1,400% to 1,500%. This objective centers on a most-favored-nation policy requiring pharmaceutical companies to provide their full portfolio of existing drugs at MFN rates for all Medicaid patients.

To enforce these changes, the president issued letters to major firms, including Pfizer, Merck, and Johnson & Johnson, establishing a compliance deadline of September 29. Trump stated the administration would use every available tool to combat what he termed "abusive drug pricing practices."

In addition to the MFN policy, Trump proposed a tiered tariff system on imported pharmaceuticals to reduce costs and encourage domestic production. These tariffs would begin at a small rate and could potentially rise to 250% over an 18-month period.