US President Donald Trump shakes hands with the CEO of Pfizer Albert Bourla (L) when he announces an agreement with Pfizer to reduce Medicaid drug prices in the White House Oval Office on September 30, 2025 in Washington, DC.
Win McNamee | Getty images
The long -awaited threat of President Donald Trump to impose pharmaceutical rates cannot be posed as much challenge as drug manufacturers once fearing, following his new drug price with medication with medication Pfizer.
Trump’s Tuesday agreement with the company to voluntarily reduce the prices of American medicines included a three -year exemption from pharmaceutical prices, as long as the company also invests in domestic manufacturing. Pfizer committed Tuesday to put $ 70 billion in American manufacturing and research, in addition to previous investments.
This agreement has brought and clarity to Pfizer and the broader pharmaceutical industry, indicating that many drug manufacturers could conclude similar agreements that would make them out of samples during most of the Trump period.
The Trump administration has also clearly indicated that it would try to secure these drug price agreements before imposing prices. The Secretary of Commerce, Howard Lunick, said on Tuesday that he would let companies finish their negotiations with the administration before setting pharmaceutical samples under the legal authority known as article 232.
Trump said on Tuesday that he was working with other drug manufacturers to get similar pacts in next week, and the White House confirmed that Eli Lilly should conclude the next price agreement of the drug. The vast majority of large pharmaceutical companies, including Eli Lilly, Johnson & Johnson,, Astrazeneca,, Abbvie,, Rock,, Novo Nordisk And Amgen have unveiled new American investments in manufacturing or research facilities in recent months to build goodwill with the president.
The actions of Pfizer and several other drug manufacturers increased Tuesday following the agreement. Pfizer’s stock ended more than 6% more, while Eli Lilly increased by 5%. The actions of Abbvie and Astrazeneca climbed more than 3%, while the shares of J & J and Bristol Myers Squibb increased by more than 2% each.
The PFIZER agreement adds a certainty for drug manufacturers and moves the president’s policies “potentially far from the pharmaceutical rates,” BMO capital analyst Evan Seigerman said on Tuesday.
“Today’s agreement seems to be establishing a way for other pharmaceutical players to follow, allowing pricing concessions and a ‘victory’ ‘of Trump without more punitive implementation” of the president’s most favored policy or prices of the president, added Seigerman.
Trump in May has signed an executive decree reviving this controversial plan, which aims to link the prices of certain drugs in the United States in the United States much lower abroad. As part of this effort, Trump sent 17 drug manufacturers in July in July – including Pfizer – calling them to take measures to reduce the prices of medicines by September 29.
“While we are thinking of the group more broadly, we would not be surprised to see a certain number of similar chords to help suppress uncertainty on the most favored policy and policy prices,” said JPMorgan analyst Chris Schott on Tuesday.
The “most favored” risk can be manageable
Tuesday’s agreement seemed to bring other good news to certain drug manufacturers.
Pfizer has agreed to sell its existing drugs to Medicaid patients at the lowest price offered in other developed countries, or what Trump calls for the most favored price. But Schott said that the most favored prices for Medicaid are “very manageable” for Pfizer. He said it was partly because the price of Medicaid is already similar to international levels for most medicines.
In particular, Medicaid represents less than 5% of the company’s American sales and an “even smaller percentage of world sales,” Leerink Partners’ analyst said on Tuesday.
The same goes for many major drug manufacturers, according to data compiled by Schott. Medicaid represents less than 5% of American sales from Bristol Myers Squibb, less than 7% of Regeneron’s domestic revenues and around 8% of interior sales in Lilly and Abbvie.
Medicaid also represents approximately or less than 10% of American sales for J & J, Merck, Amgen and Biogen.
Gilead Among the drug manufacturers with greater exposure to Medicaid, the program representing around 20% of its interior sales. Medicaid plays an important role in the prevention and treatment of HIV, in particular for poorly served populations, which is a main objective for Gilead.
The other part of the Pfizer agreement implies that the company guarantees the same most favored prices on its new drugs for Medicare, Medicaid and commercial payers. But Schott said that he saw a “limited impact” of this provision, because he expects Pfizer and wider industry to increase their prices for new drugs abroad rather than lowering them to the United States
He added that it would probably apply to a small number of treatments each year and is “much more digestible” for the company than any wide implementation for products already on the market.
