Authority for the Trump pharmaceutical pricing agreements rests with the president acting through executive order and with HHS and CMS acting through a voluntary Medicaid test model. Challenges can come from drugmakers in federal court over rulemaking procedure and legal scope, and from watchdogs seeking the confidential deal texts. Most-Favored-Nation pricing means the United States pays no more than the lowest price paid in other wealthy countries. The current deals are voluntary letters under which makers extend those prices to state Medicaid programs and sell discounted drugs direct to consumers.
Table of Contents
- What the agreements require companies to do
- Where HHS and CMS get legal authority
- Who can challenge the deals in court
- What watchdogs and states can do
- What the agreements require companies to do
- Where HHS and CMS get legal authority
- Who can challenge the deals in court
- What watchdogs and states can do
What the agreements require companies to do
Starting with Pfizer on Sept. 30, 2025, makers signed voluntary MFN letters with the White House. The American Hospital Association reports those letters commit makers to give all state Medicaid programs MFN prices and sell direct through TrumpRx.gov at discounts. In exchange, makers receive three-year tariff exemptions and pledge new U.S.
investment. By late August 2026, the administration said 26 manufacturers had signed, including Pfizer, AstraZeneca, Lilly, Novo Nordisk, Teva and Astellas. The administration said those signers cover about 89% of the U.S. branded-drug market. That breadth is why the deals affect Medicaid budgets and cash shoppers even without a new drug-pricing law.
Where HHS and CMS get legal authority
The process began May 12, 2025, when President Trump signed Executive Order 14297 on MFN prescription drug pricing. According to the White House fact sheet on the executive order, it directed HHS to set MFN price targets and pursue rulemaking and other aggressive measures if companies did not act. The Medicaid leg relies on CMS's GENEROUS model.
According to the Hogan Lovells analysis of the GENEROUS model, it runs under Social Security Act Section 1115A through the Innovation Center as a voluntary five-year test launching Jan. 1, 2026. CMS uses negotiated supplemental rebates to reach MFN net prices. Those rebates are structured to leave Medicaid Best Price and 340B ceiling prices unchanged while lowering state net cost.
Who can challenge the deals in court
Drugmakers are the most direct challengers to any mandatory MFN rule. According to Bloomberg Law reporting on litigation risk, they can sue in federal court on Administrative Procedure Act notice-and-comment and scope-of-1115A grounds. That risk is concrete because courts enjoined Trump's 2020 mandatory Part B MFN interim rule for skipping notice-and-comment.
That rule was later rescinded under President Biden. The current voluntary design reduces that exposure. A company that signed a letter agreed to the terms, so a later fight would more likely concern how CMS turns targets into binding rules.
What watchdogs and states can do
Public Citizen sued HHS and Commerce in January 2026 under the Freedom of Information Act for the confidential Pfizer and Lilly texts. It later published heavily redacted copies and said loopholes let Lilly drop foreign sales from the comparison and Pfizer self-calculate launch prices. State participation is broad rather than contested.
All 50 states plus D.C. and Puerto Rico applied to GENEROUS, which CMS and the White House project will save $64.3 billion federal-state over 10 years. For consumers, the practical effect is state-dependent. Medicaid enrollees get protection through their state's participation, while cash buyers must compare the TrumpRx direct price against insurance, pharmacy discounts, and assistance programs.
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What the agreements require companies to do
Starting with Pfizer on Sept. 30, 2025, makers signed voluntary MFN letters with the White House. The American Hospital Association reports those letters commit makers to give all state Medicaid programs MFN prices and sell direct through TrumpRx.gov at discounts, as described in the American Hospital Association summary of the AstraZeneca deal. In exchange, makers receive three-year tariff exemptions and pledge new U.S.
investment. By late August 2026, the administration said 26 manufacturers had signed, including Pfizer, AstraZeneca, Lilly, Novo Nordisk, Teva and Astellas. The administration said those signers cover about 89% of the U.S. branded-drug market. That breadth is why the deals affect Medicaid budgets and cash shoppers even without a new drug-pricing law.
Where HHS and CMS get legal authority
The process began May 12, 2025, when President Trump signed Executive Order 14297 on MFN prescription drug pricing. The White House fact sheet says the order directed HHS to set MFN price targets and pursue rulemaking and other aggressive measures, as detailed in the White House fact sheet on MFN pricing and TrumpRx expansion. The Medicaid leg relies on CMS's GENEROUS model.
Hogan Lovells analysis explains it runs under Social Security Act Section 1115A through the Innovation Center as a voluntary five-year test launching Jan. 1, 2026, as detailed in the Hogan Lovells analysis of the GENEROUS model. CMS uses negotiated supplemental rebates to reach MFN net prices. Those rebates are structured to leave Medicaid Best Price and 340B ceiling prices unchanged while lowering state net cost.
Who can challenge the deals in court
Drugmakers are the most direct challengers to any mandatory MFN rule. Bloomberg Law reporting explains they can sue in federal court on Administrative Procedure Act notice-and-comment and scope-of-1115A grounds, as examined in Bloomberg Law reporting on litigation risk. That risk is concrete because courts enjoined Trump's 2020 mandatory Part B MFN interim rule for skipping notice-and-comment.
That rule was later rescinded under President Biden. The current voluntary design reduces that exposure. A company that signed a letter agreed to the terms, so a later fight would more likely concern how CMS turns targets into binding rules.
What watchdogs and states can do
Public Citizen sued HHS and Commerce in January 2026 under the Freedom of Information Act for the confidential Pfizer and Lilly texts. It later published heavily redacted copies and said loopholes let Lilly drop foreign sales from the comparison and Pfizer self-calculate launch prices. State participation is broad rather than contested.
All 50 states plus D.C. and Puerto Rico applied to GENEROUS, which CMS and the White House project will save $64.3 billion federal-state over 10 years. For consumers, the practical effect is state-dependent. Medicaid enrollees get protection through their state's participation, while cash buyers must compare the TrumpRx direct price against insurance, pharmacy discounts, and assistance programs.
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