New Rx Drug Executive Order and WC Medical Equipment Pricing Trends

May 20, 2025 / 5 min read

It remains a busy time on the national policy scene and the insurance industry with several new and interesting developments for consideration. Two recent updates many may find interesting include: (1) President Trump’s Executive Order regarding prescription drug (RX) pricing and (2) WC medical equipment pricing trends.

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The below provides a high-level and general overview of these two updates as follows:

Executive Order – Prescription Drug Pricing

On May 12, 2025, President Donald J. Trump signed an Executive Order (EO) titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” Overall, the focus of this EO is on reducing prescription drug pricing. As outlined below, the EO directs, in part, the Secretary of Health and Human Services (and other parties) to communicate most-favored-nation price targets to pharmaceutical manufacturers within 30 days. In addition, the EO directs the Secretary of Health and Human Services (and other parties) to undertake certain actions, including proposed rulemaking as outlined more specifically outlined in the EO. The following provides a general overview of this recently released EO:

Objective

The EO’s “Purpose” section states, in part, that “[t]he United States has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits. This egregious imbalance is orchestrated through a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets, and subsidize that decrease through enormously high prices in the United States.”^[1]The EO, as part of its “Policy” section, states that “Americans should not be forced to subsidize low-cost prescription drugs and biologics in other developed countries, and face overcharges for the same products in the United States. Americans must therefore have access to the most-favored-nation price for these products.”^[2]

Action to be taken within 30 days

Toward this goal, EO Section 5 directs the Secretary of Health and Human Services (Secretary) “[w]ithin 30 days of the date of this order, the Secretary shall, in coordination with the Assistant to the President for Domestic Policy, the Administrator for the Centers for Medicare and Medicaid Services, and other relevant executive department and agency (agency) officials, communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations.”^[3]

Additional Activity

According to EO Section 5, if “significant progress towards most-favored-nation pricing for American patients is not delivered” from the above, the Secretary shall: (a) propose rulemaking “to impose most-favored-nation pricing,” (b) consider “certification to the Congress that importation under section 804(j) of the Federal Food, Drug, and Cosmetic Act (FDCA) will pose no additional risk to the public’s health and safety and result in a significant reduction in the cost of prescription drugs to the American consumer;” and (c) “if the Secretary so certifies, then the Commissioner of Food and Drugs shall take action under section 804(j)(2)(B) of the FDCA to describe circumstances under which waivers will be consistently granted to import prescription drugs on a case-by-case basis from developed nations with low-cost prescription drugs.”^[4]

Further, the EO Section 5 also directs the Attorney General and the Chairman of the Federal Trade Commission “to undertake enforcement action against any anti-competitive practices identified within such report, including through use of sections 1 and 2 of the Sherman Antitrust Act and section 5 of the Federal Trade Commission Act, as appropriate” and directs “the Secretary of Commerce, and the heads of other relevant agencies as necessary, shall review and consider all necessary action regarding the export of pharmaceutical drugs or precursor material that may be fueling the global price discrimination.”^[5]The EO also states that the Commissioner of Food and Drugs “shall review and potentially modify or revoke approvals granted for drugs, for those drugs that maybe be unsafe, ineffective, or improperly marketed” and that “the heads of agencies shall take all action available, in coordination with the Assistant to the President for Domestic Policy, to address global freeloading and price discrimination against American patients.”^[6]

In addition to the above, Section 4 of the EO states that the Secretary “shall facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price.”^[7]

While a complete analysis into this EO is beyond the scope of this article, it will be interesting to see what develops going forward in terms of the EO’s stated objectives, including potential regulatory rulemaking and enforcement activity, and what impact this may have not only on RX pricing, but, more specifically, how any changes to RX pricing could potentially impact claims. For now, this all remains at the beginning stages, and it will be interesting to monitor what may develop toward the EO’s goal of reducing RX pricing.

WC Medical Equipment – Tariffs, Medical Inflation, and Trends

The second update presented highlights an interesting article published in Workers’ Comp Advisor which reports, in part, that NCCI notes that the recently imposed tariffs could impact workers’ compensation medical equipment pricing. Specifically, this article reports that “NCCI said trade levies will directly hit workers compensation by raising prices on medical equipment and supplies and medicinal drugs.”^[8]This article further reports that “NCCI’s first-quarter 2025 Medical Inflation Insights report shows that medical prices measured by its workers’ compensation gauge showed a noticeable softening, fueled by a combination of several trends.”^[9]On this point, this article states that “[p]rice trend growth continued to soften, with prices for both hospital inpatient services and hospital outpatient services remaining below recent averages.”^[10]

Going Forward

It will be interesting to see what may develop regarding these updates going forward, and what impact they may have in their respective areas, and potentially on claims practices.

[1] President Donald J. Trump, Executive Order, Delivering Most-Favored Nation Prescription Drug Pricing to American Patients, May 12, 2025, Section 1, Purpose.

[2] Id. Section 2, Policy.

[3] Id. Section 5, Establishing Most-Favored-Nation Pricing.

[4] Id.

[5] Id.

[6] Id.

[7] Id. Section 4, Enabling Direct-to-Consumer Sales to American Patients at the Most-Favored-Nation Price.

[8] NCCI Sees Tariff Hit on WC Medical Equipment, Worker’s Comp Advisor (April 25, 2025).

[9] Id.

[10] Id.