Washington (BN24) – President Donald Trump announced Tuesday that Pfizer will cut the price of all prescription drugs in the Medicaid program for low-income Americans and sell new medicines at a “most-favored-nation” price in exchange for relief from looming tariffs on pharmaceuticals.
The agreement makes Pfizer the first major drugmaker to comply with Trump’s demand that companies lower U.S. drug costs to match or beat the prices paid in other wealthy countries. The White House said the deal will also include Pfizer’s participation in a new direct-to-consumer platform, TrumpRx, slated to launch in 2026.
“The United States is done subsidizing the healthcare of the rest of the world,” Trump declared at the Oval Office event, where he was joined by Pfizer CEO Albert Bourla, Health Secretary Robert F. Kennedy Jr., and other administration officials. Trump said he expected other pharmaceutical companies to follow Pfizer’s lead.
The announcement came just days before a self-imposed deadline. On September 25, Trump had threatened to impose a 100% tariff on imported branded or patented pharmaceuticals starting October 1 unless manufacturers shifted production to the United States. Pfizer secured a three-year grace period exempting its drugs from the tariffs, provided it invests heavily in domestic manufacturing and relocates products to U.S. facilities. Bourla said Pfizer plans to invest $70 billion in research, development and local production.
According to Pfizer, discounts will reach as high as 85% on some treatments, with an average reduction of about 50%. Among the drugs listed for immediate savings were the rheumatoid arthritis therapy Xeljanz, migraine treatment Zavzpret, dermatitis drug Eucrisa and osteoporosis medication Duavee. Shares of Pfizer jumped more than 6% following the announcement, while other major drugmakers including Eli Lilly, Merck, Amgen, AbbVie and GlaxoSmithKline also saw gains on investor relief that tariffs might be avoided.
The deal comes amid growing concerns over the soaring cost of new drugs in the U.S. A Reuters analysis found that launch prices for new medications more than doubled last year, with a median annual price tag of $370,000. Trump’s most-favored-nation pricing policy aims to tether U.S. costs to the lowest rates paid abroad after rebates.
While Medicaid is the immediate focus — covering more than 70 million Americans — Medicare, the government program for seniors and people with disabilities, was not included in Tuesday’s announcement. Medicare’s drug spending reached $216 billion in 2021, compared with $80 billion gross for Medicaid, according to the Kaiser Family Foundation.
Analysts said the financial impact on Pfizer is likely to be limited in the short term, but the deal could mark the beginning of broader negotiations with the pharmaceutical sector. “Today’s announcement appears to be the beginning of the rebound,” said Bernstein analyst Courtney Breen.
Trump’s administration has pressed companies for months to accept the new framework. In July, the president sent letters to 17 leading drugmakers demanding binding commitments to slash prices by late September. Industry insiders told Reuters that Tuesday’s announcement caught many of them by surprise, with executives tuning in to the press conference to learn the details in real time.
