US Most Favored Nation policy for medicines

What happened: On May 12, 2025, President Trump signed an executive order for the Most Favored Nation (MFN) policy, aiming to secure lower drug prices in the U.S. by matching prices with the lowest paid in other countries. In response, Eli Lilly's CEO opposed codifying this policy into law, while Trump threatened 100% tariffs on pharmaceutical companies not complying. Meanwhile, the FDA declined to issue specific guidance on foreign drug imports.

Market impact: Pharma stocks, including Eli Lilly, may face pressure due to potential tariffs and pricing negotiations. The MFN policy could drive down U.S. drug prices, impacting pharma companies' revenue. Generic drugs, exempt from tariffs, might see increased demand. The FDA's stance on foreign imports could boost alternative funding programs, affecting health plans and patients.

What to watch next: On July 25, 2025, Eli Lilly reports earnings, providing insights into the company's response to the MFN policy. On August 15, 2025, the HHS is expected to finalize the MFN policy rules, clarifying its impact on the pharmaceutical industry. Additionally, monitor any developments in the FDA's stance on foreign drug imports.