Pfizer agrees to lower prescription drug costs for Medicaid in a deal
with Trump
[October 01, 2025]
By TOM MURPHY and MICHELLE L. PRICE
WASHINGTON (AP) — Pfizer has agreed to lower the cost of prescription
drugs for Medicaid under a deal struck with the Trump administration,
President Donald Trump said Tuesday as he promised similar deals with
other drugmakers under the threat of tariffs.
Trump made the announcement at the White House alongside Pfizer CEO
Albert Bourla just hours ahead of a possible government shutdown in a
partisan standoff over health care and spending.
Pfizer Inc., one of the largest U.S. drugmakers, produces the COVID-19
vaccine Comirnaty and the treatment Paxlovid. Its products also include
several cancer drugs, the blood thinner Eliquis and Prevnar pneumonia
vaccines.
Under the deal, New York-based Pfizer will charge most-favored-nation
pricing to Medicaid and guarantee that pricing on newly launched drugs,
Trump said. That involves matching the lowest price offered in other
developed nations.
Pfizer also agreed to participate in a new website the administration
plans to start called TrumpRx, which will allow people to buy drugs
directly from manufacturers. Pfizer said many of its treatments will be
offered at discounts that average 50% through that platform.
The agreement builds on an executive order Trump signed in May, setting
a deadline for drugmakers to electively lower prices or face new limits
on what the government will pay. Trump said deals with other drug
companies would be coming over the next week.
“I can’t tell you how big this is,” the president said Tuesday.
“We are turning the tide and we are reversing an unfair situation,”
Bourla said.
But prescription drug pricing expert Stacie Dusetzina said it isn't
clear yet the extent of the pricing changes that will occur. The
Vanderbilt University Medical Center professor noted that Pfizer is
keeping specific terms of the deal confidential, and it wasn't clear how
different any new pricing levels will be from what Medicaid already pays
Pfizer.
Consumers are not expected to start seeing lower prices under the Pfizer
deal until 2026, according to senior administration officials who were
not authorized to speak publicly and spoke on condition of anonymity.
Patients in Medicaid, the state and federally funded program for people
with low incomes, already pay a nominal co-payment of a few dollars to
fill their prescriptions, but lower prices could help state budgets that
fund the programs.
Lower drug prices also will help patients who have no insurance coverage
and little leverage to negotiate better deals on what they pay. But even
steep discounts of 50% found through the administration's website could
still leave patients paying hundreds of dollars a month for some
prescriptions.
Drugmakers in the past couple of years have started launching websites
to connect customers directly with some products, such as obesity
treatments or the blood thinner Eliquis.
But Dusetzina said selling drugs like that directly to consumers will
help only a small number of people.
“Theoretically there are some who will benefit, but in general this is
not a solution for lowering drug prices,” she said.
Besides committing to lowering costs, Trump said, Pfizer agreed to spend
$70 billion in domestic manufacturing facilities, becoming the latest in
a string of major drugmakers to announce plans to build production in
the United States.
[to top of second column]
|
Mehmet Oz, Administrator for the Centers for Medicare & Medicaid
Services, speaks in the Oval Office of the White House, Tuesday,
Sept. 30, 2025, in Washington, as President Donald Trump, right, and
Secretary of Health and Human Services Robert F. Kennedy, Jr., look
on. (AP Photo/Alex Brandon)
 The White House did not immediately
release details about the investment, but Pfizer said in a statement
that the outlay would be dedicated to U.S. research, development and
capital projects in the next few years.
Trump has been talking for months about the need to lower drug
prices and to boost U.S. drug manufacturing. To persuade companies
to strike deals, Trump said he threatened to impose tariffs — a
favorite tool of his to use as leverage across all areas of
government — but that move could raise drug prices.
Trump said the tariff threat put the government in “a pretty good
negotiating position,” and said, “This is something that most people
said was not doable.”
One thing that is not doable, however, was Trump’s repeated claim
that it would cut drug prices by more than 100%, “14, 15, 1,600%
reductions in some cases,” he said.
A 100% reduction would make the drugs free. Cuts greater than that
would essentially mean people are paid to take the drugs.
Trump sent letters in late July to executives at 17 pharmaceutical
companies about changes he would like to see. Copies of the letters
posted on social media note that U.S. prices for brand-name drugs
can be up to three times higher than averages elsewhere.
The letters called for drugmakers to commit by Monday to offering
what Pfizer agreed to: most-favored-nation pricing to Medicaid and
new medications.
Trump also asked drugmakers to offer the lower pricing levels for
drugs sold directly to consumers and businesses.
Trump has claimed that the U.S., with its higher drug prices,
subsidizes care in other countries.
Drug prices for patients in the U.S. can depend on a number of
factors, including the competition a treatment faces and insurance
coverage. Most people have coverage through work, the individual
insurance market or government programs like Medicaid and Medicare,
which shield them from much of the cost.
While Trump was focusing on drug costs on Tuesday, Democrats were
focused on reversing Medicaid cuts in the sweeping law he signed
this summer.
They were pushing for that reversal to be included in a measure to
fund the government in the short term, along with an extension of
tax cuts that make health insurance premiums more affordable for
people who purchase coverage through Affordable Care Act
marketplaces.
Republicans have said they won't negotiate.
___
Murphy reported from Indianapolis.
All contents © copyright 2025 Associated Press. All rights reserved |
