Trump Announces Deal with Pfizer to Sell Drugs to Medicaid at European Prices

The administration also announced it will create a website, TrumpRx, that will help consumers buy drugs directly from manufacturers.

Key Policy Announcement

· Pfizer Agreement: Pfizer will lower prices for most of its drugs sold to U.S. state Medicaid programs, aligning them with prices in wealthy nations like Canada, Germany, and Japan.

· New Drug Pricing: Future Pfizer drugs introduced in the U.S. will be priced comparably to European rates.

· Benchmarking Countries: Prices will be benchmarked against eight nations including France, Britain, and Switzerland.

Direct-to-Consumer Sales: TrumpRx

· TrumpRx Website: Launching next year, it will allow Americans to buy drugs directly from manufacturers, bypassing insurance.

· Pfizer’s Offerings: Includes primary care and specialty drugs like Duavee, Eucrisa, and Toviaz, with discounts up to 85%.

· Other Companies: AstraZeneca, Novartis, Boehringer Ingelheim, and Bristol Myers Squibb have announced similar programs.

Impact on Drug Pricing

· Medicaid Savings: Expected to reduce costs for state programs, though exact figures remain confidential.

· Limited Scope: No price cuts for Medicare, private insurers, or employers.

· Sticker vs. Net Prices: Administration aims to align final prices post-rebate, not just sticker prices.

Tariff Measures

· New Tariffs: 100% tariff on certain imported brand-name drugs; 15% for EU imports.

· Exemptions: Drugmakers building U.S. factories may receive a three-year grace period.

· Potential Effects: Blockbuster drugs likely unaffected; niche products may see price hikes.

Political Context

· Timing: Announcement made amid looming government shutdown and Democratic demands for healthcare funding.

· Executive Leverage: Trump hinted at regulatory action if voluntary compliance fails, referencing a May executive order.

[ABS News Service/03.10.2025]

President Trump announced on Tuesday that his administration had taken a concrete step toward his long-held goal of equalizing prescription drug prices between the United States and other wealthy nations.

The drugmaker Pfizer agreed to lower the prices it charges to state Medicaid programs for many of the drugs the company currently sells, Mr. Trump and Dr. Albert Bourla, Pfizer’s chief executive, announced in an Oval Office news conference. Under the deal, the drugmaker would also introduce new drugs in the United States at prices comparable to what it asks European countries to pay.

In a phone call with reporters later on Tuesday, senior administration officials said they had reached similar agreements with other drug manufacturers, but did not name them.

Mr. Trump heralded the deal as a breakthrough. “We’re ending the era of global price gouging at the expense of American families,” he said.

Mr. Trump was flanked by the vice president and most of his top health officials, several of whom described the all-night negotiations needed to finalize the deal. Dr. Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services, suggested that books would be written about the process. Mr. Trump spoke of impossible price decreases, of as much as 1,600 percent.

“The big winner of this deal clearly will be the American patients,” Dr. Bourla said.

Brand-name drug prices in the United States are three times as high, on average, as those in peer nations. Drug companies already give Medicaid, the health insurance program for lower-income Americans, significantly lower prices than they give American employers and other U.S. government programs.

Administration officials said that the new prices in the United States would be benchmarked against those offered in Canada, France, Germany, Italy, Japan, Britain, Switzerland and Denmark.

The officials did not specify which Pfizer drugs would be priced lower for Medicaid but they said almost all the drugs Pfizer makes would be included. Pfizer’s best-selling drugs include the blood thinner Eliquis; the cancer drugs Ibrance and Xtandi; and the Covid treatment Paxlovid. Under the plan, Medicaid programs could see significant savings, though it is not clear how much, because their prices are generally secret. Medicaid patients, who pay very little for prescriptions themselves, are unlikely to be directly affected.

Pfizer has not agreed to cut the prices it currently offers to employers, private insurers and other government programs, like Medicare.

Mr. Trump’s announcement comes on the eve of a government shutdown. Democrats have been insisting that they will not support a bill to fund the government unless Republicans subsidize the cost of Obamacare insurance premiums and reverse recent cuts to Medicaid funding. Democratic lawmakers held numerous public events on Tuesday assailing Republicans for raising Americans’ health care costs. Mr. Trump described his announcement — also related to health care affordability — as more significant than what Democrats are requesting.

In the news conference, the officials also announced they will create a new website, TrumpRx, where Americans will be able to use their own money to buy drugs directly from manufacturers, while sidestepping health insurance.

The website, which is still under construction, will go online next year, senior administration officials said, and will include links to direct-to-consumer websites from many major pharmaceutical companies.

The model is already widely used for popular obesity drugs from Eli Lilly and Novo Nordisk, which are often not covered by insurance. The idea behind these offerings is to offer the drugs directly to patients at about the same rate that employers and government programs pay after accounting for discounts. Patients often pay using their own money, but they can also sometimes go through insurance, as with Eli Lilly’s site.

Pfizer said in a news release that its direct to consumer sales would include widely used primary care drugs and some more expensive specialty medicines, offering them to patients at a discount as high as 85 percent off the sticker price and, on average, half off the sticker price. Using insurance, many patients already pay very little out of pocket for these drugs, so it is not clear how many patients would benefit.

Among the drugs expected to be offered on Pfizer’s site are Duavee, used by women to reduce hot flashes; Eucrisa, for skin problems; and Toviaz, for an overactive bladder.

In the last few days, the drugmakers AstraZeneca, Novartis and Boehringer Ingelheim have announced direct-to-consumer sales programs for drugs to treat conditions like lung problems and arthritis. Bristol Myers Squibb recently announced a similar program for the blood thinner Eliquis, which it markets with Pfizer.

The products being picked for the direct sales programs have not so far included the most expensive drugs for cancer and other conditions, which can cost hundreds of thousands of dollars a year.

The programs are partly aimed at reducing the influence of giant middleman companies known as pharmacy benefit managers, which can profit on the difference between a drug’s sticker price and the final price after discounts are taken into account.

In recent weeks, some other companies, like Eli Lilly and Bristol Myers Squibb, have announced moves that would align their sticker prices in European countries with those in the United States for a few specific products. But none has announced an agreement as broad as the Pfizer deal announced on Tuesday.

In both the United States and Europe, drug prices are set through a complex series of negotiations that result in confidential rebates that lower the final price that government programs and American employers pay.

Administration officials said they would push for drugmakers to match their U.S. and European prices even after the rebates were taken into account, a much more ambitious proposal than simply aligning initial sticker prices. The administration did not explain how that would work. A central reason that European governments receive bigger discounts is that they are more willing to walk away from negotiations if a price is too high, denying their citizens coverage of the medications.

During Tuesday’s announcement, Mr. Trump and the federal health officials said nothing about a threat they have been dangling for months: forcing drugmakers to lower their prices through executive action. In an executive order signed in May, Mr. Trump said the administration would “propose a rule-making plan” to mandate lower prices if voluntary compliance failed. Last week, the administration published, deleted and then republished a federal notice signaling plans to use regulation to lower drug prices.

While Mr. Trump’s announcement Tuesday was focused on lowering drug prices in the United States, other recent policy announcements could cut in the opposite direction.

Last week, Mr. Trump announced that he would impose a tariff of 100 percent on certain imported brand-name medicines. Drugs imported from the European Union, as many are, would be taxed at a lower rate of 15 percent. Drugmakers could apply for tariff exemptions for drugs they make in factories they are building in the United States.

Dr. Bourla said his company had been assured that it would receive a three-year grace period to avoid the tariffs because it is building and expanding factories in the United States. Pfizer already does some manufacturing in the United States, but also has significant production in Europe.

An administration official said more details on the tariffs would follow as soon as this week. Drug pricing experts said they did not expect the tariffs to steeply raise prices for the industry’s biggest blockbusters, though they said more niche products could see price increases as a result.