The ConnXion, Volume 3, Issue 4
President Trump signed a major executive order this week aimed at cutting prescription drug costs in the U.S. The plan centers around a “Most Favored Nation” (MFN) pricing model, which would tie what Medicare and other government programs pay for certain drugs to the lowest prices available in similar developed countries.
If passed, this order has potential to dramatically reshape the prescription drug landscape. The administration says some drug prices could be lowered by up to 90%—a big step toward fixing the long-standing issue of Americans paying far more for medications than people in other countries.
Why This Matters
The U.S. makes up less than 5% of the global population but accounts for around 75% of worldwide pharmaceutical profits. That imbalance means Americans have essentially been footing the bill for lower drug costs abroad.
If the MFN model goes into effect in the next 30 days as planned, it could shake up the current prescription drug system, especially for PBMs who have faced criticism for driving up prices.
We’re not declaring the PBM model dead just yet, but we are saying it’s time to keep a close eye on how companies like CVS, Cigna, and UnitedHealth respond. Their role (and bottom line) could look very different depending on how this shakes out.
A Few Things to Watch
As a company who works closely with healthcare partners across the ecosystem, we’re cautiously optimistic. Lower drug prices would be a huge win for American consumers. But we also must be mindful of the potential unintended consequences:
- Impact on Innovation: Drug companies warn that slashing profits could slow down research and delay new treatments.
- Legal Roadblocks: Similar policies have faced lawsuits before, and this one could run into the same problems.
- Market Reaction: Pharma stocks have been volatile since the announcement, reflecting investor uncertainty about what’s ahead.
Looking Ahead
This executive order marks a big shift in U.S. drug pricing policy. As it unfolds, we’ll be watching closely, tracking how the rule is implemented, seeing legal challenges it faces, and breaking down what it means for the broader healthcare landscape.
At WLT Software, we’re constantly evaluating how policy, pricing, and partnerships intersect. And this move, if successful, could usher in a whole new era of transparency and affordability. WLT will keep you updated with the latest developments as more details emerge.