President Donald Trump wants drugmakers to work with his federal health department to reach an agreement on a most favored nation price for their medicines.

Under Article 1 of the General Agreement on Tariffs and Trade (GATT), 1994, every member country of the World Trade Organization (WTO) must accord Most Favoured Nation (MFN) status to all other member countries.

The order pushes drug companies to reduce drug prices in the United States to fall in line with other countries around the world.

This means is that if a company is charging ‘X’ for a particular medicine in a particular country and charging ‘2X’ in the US, they will have to bring down the price by 50% in the American market immediately. Hence, the executive order is expected to have a ripple effect on pharma markets globally.