Trump strikes deal with Pfizer to lower US drug prices

Key takeaways:

• Pfizer announced a deal with the U.S. to cut medication prices in exchange for 3-year tariff relief.
• The Trump administration also announced a new direct-to-consumer website to sell discounted drugs.

Editor’s note: This is a developing news story. Please check back soon for updates.

President Donald J. Trump announced an agreement with Pfizer to sell its drug products to Medicaid for much lower prices, while also unveiling TrumpRx, a new direct-to-consumer drug website that will sidestep health insurance companies.

The announcement follows an executive order Trump signed in May aimed at requiring “most favored nation” prices for some medications, which he said would significantly decrease their cost in the United States. Trump gave drugmakers until Sept. 29 to respond.

“Pfizer is committing to offer all of their prescription medications to Medicaid and it will be at the ‘most favored nation’ prices,” Trump said during a press conference at the White House. “It’s going to have a huge impact on bringing Medicaid prices down.”

Changes ‘long overdue’

As Healio previously reported, Trump said the United States has 4% of the world’s population but that pharmaceutical companies make an overwhelmingly higher proportion of their profits here. According to a report by Public Citizen, the U.S. pays nearly double what the rest of the world combined pays for the 20 top-selling drugs, with payments in 2021 totaling $101.1 billion vs. $57 billion.

According to Arthur L. Caplan, PhD, a professor and founding head of the division of medical ethics at NYU Grossman School of Medicine, the argument for the U.S. paying more for medicine than the rest of the world is because “we have to subsidize the cost of research in order to get new drugs,” he told Healio.

“That has always struck me as ridiculous,” Caplan said during an interview. “Why should we subsidize Germany or France or Singapore or [other] rich countries? I think the president is on target in trying to correct this longstanding price disparity. It is long overdue.”

In July, Trump issued 17 letters to leading pharmaceutical manufacturers outlining the steps they must take to bring down the prices of prescription drugs in the U.S. The letters informed manufacturers that if they refused, the federal government “will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices,” according to a White House press release.

During today’s announcement, Albert Bourla, CEO of Pfizer, said the company struck the deal in exchange for tariff relief from the Trump administration and will invest an additional $70 billion in manufacturing and research “in America alone” over the next few years.

“By this agreement, we commit to the production of our medicines that are consumed in the U.S. and are made outside the U.S., and for that, we are ready to unleash our investment portfolio in this country,” Bourla said during the press conference. “The president graciously gave us a 3-year grace period that we will not be subject to tariffs as long as we move the products here.”

According to Caplan, the approach to this deal was “the right ethical strategy” for lowering drug prices.

“The government needs relief,” Caplan said. “Unless you drive prices down, you are going to be restricting Medicaid eligibility and that is not the ethical thing to do; this is.”

‘Bypassing the middlemen’

Chris Klomb, Medicare director at the Centers for Medicare and Medicaid Services, said in an announcement that Americans will have direct access through TrumpRx, “a site soon to be launched,” at ‘most favored nation’ prices as well as generally reduced prices.

“This is bypassing the middlemen,” Klomb said. “In many instances, prices are 80% lower than they are today.”

During the announcement, Trump said that other drug companies will follow suit.

“Having a big company like Pfizer say that we are getting on board is obviously going to influence other companies,” Caplan told Healio.

Though a deal has yet to be struck, Bristol Myers Squibb announced on Thursday that it will be selling its psoriasis drug, Sotyktu (deucravacitinib), directly to cash-paying U.S. patients at a more than 80% discount from its list price. The company’s new program will cut the current monthly listing price of $6,828 to $950.

“We are working with other major pharmaceutical companies to secure similar agreements,” Trump said. “The United States is done subsidizing the health care of the rest of the world.”

For more information:

Arthur L. Caplan, PhD, can be reached at arthur.caplan@nyulangone.org.