:max_bytes(150000):strip_icc()/GettyImages-2228339013-5c2567abca934b2fa722da5dbbf098ca.jpg "Trump Announces Deal With Pfizer to Cut U.S. Drug Prices")
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KEY TAKEAWAYS
- Pfizer is cutting prices on some of its medications in the U.S., becoming the first major drug maker to comply with President Donald Trump’s push to bring costs of medications to the lower costs overseas.
- Trump announced the Pfizer move in an Oval office event with Albert Bourla, the New York-based drugmaker’s CEO. Its shares rose about 7% on Tuesday.
Pfizer is cutting prices on some of its medications in the U.S., making it the first major drug maker to comply with President Donald Trump’s push to bring medication costs down to levels found in other countries.
Trump announced the move with the New York-based drugmaker in an Oval Office event with CEO Albert Bourla.
Pfizer (PFE) shares rose nearly 7% on Tuesday, though they remain in the red for the year. The company said specific terms of the deal were “confidential,” though it said in a statement that prices on some treatments could fall by as much as 85%, with an average decline of 50%.
Americans enrolled in Medicaid will get “most-favored-nations” pricing, the president said, meaning the U.S. drug prices would match the lower prices of other developed countries. Pfizer will also sell drugs at a direct-to-consumer website that has been dubbed TrumpRx. The government is setting up the website, which will allow Americans to buy medications at prices the government negotiates.
Why This Matters
Pfizer is the first major drugmaker to comply with President Trump’s mandate to align U.S. drug prices with lower international levels. The move could reduce Medicaid spending and consumer costs, though it raises questions about the long-term financial health of the pharmaceutical industry.
Trump said he is working with other drugmakers to follow Pfizer’s lead for the lower pricing. Pfizer’s commitment will “have a huge impact on bringing Medicaid costs down like nothing else,” Trump said.
Pfizer will also invest $70 billion in manufacturing to build facilities in the U.S.
The move follows letters Trump sent in May to 17 large pharma companies including Pfizer, Eli Lilly (LLY), and Johnson & Johnson (JNJ) that gave them until Sept. 29 to take steps to lower drug prices. The Wall Street Journal earlier reported on the White House-Pfizer plan.
Trump last week threatened 100% tariffs on branded drugs unless the manufacturers start building facilities in the U.S. Earlier this year, he signed an executive order directing government health insurance agencies to purchase medicine at the lower prices that drugmakers charge in foreign countries.
Pharmaceutical companies often charge more in the U.S. than they do abroad. A 2024 study by RAND Corporation found that Americans paid 2.78 times more for the same drugs than in a selection of 33 other countries. That’s partly because drug pricing is largely unregulated in the U.S., which means pharma companies can often raise prices beyond inflation rates.
