How the administration says ‘most-favored-nation’ pricing will work

Administration negotiators described the MFN formula as beginning with net prices (after fees and rebates) and then indexing those prices to a basket of wealthy countries, using the lowest comparable price as the U.S. starting point. "We're talking about we start at net prices, after fees, after rebates, the prices people actually pay here ... We then index to a basket of countries, wealthy countries," a lead negotiator said when outlining the mechanics.

Officials stressed that the policy targets net prices rather than list prices, and they emphasized that Medicaid will be prioritized for the initial protections. The negotiator described five pillars supporting the policy: a consumer-facing purchasing site (referred to as "Trump Rx"), prioritizing Medicaid, commitments from manufacturers on launch pricing, a shared-savings mechanism, and onshoring commitments to reduce import reliance.

Administration officials repeatedly stated these were contractual commitments and incentives rather than statutory price controls. "These are not price caps. These are not price controls," the negotiator said, adding that manufacturers remain free to set prices but were committing to the MFN-aligned framework. Officials also said that detailed lists of covered drugs, precise indices and implementation timetables remain to be published and that some price changes would begin immediately for select medicines.