Take a chill pill, investors. Pfizer plans to cut US medication prices as part of an agreement with the White House that analysts say can help restore confidence in the prescription drug industry after months of policy tumult.
In exchange, Washington will grant Pfizer a three-year exemption from potentially onerous tariffs on pharmaceutical imports, provided it maintains a commitment to expand US research and manufacturing capacity.
Double Trouble The Trump administration has focused on two issues that directly impact the pharmaceutical industry’s bottom line. First, there are prices. A 2024 RAND study found that US drug prices are 278% higher than in 33 other developed countries in the Organization for Economic Cooperation and Development. For brand-name drugs, that climbs to a staggering 422%. The Trump administration announced in May that it would attempt to address the disparity through a “most favored nation” policy that pressures pharmaceutical companies to slash US price tags to equal the lowest offered in comparable developed economies. In May, the president sent letters to 17 pharma CEOs, including Pfizer’s, urging them to commit to most-favored-nation prices for all treatments to Medicaid patients — and for all patients on future drugs — by September 29.
Second, there’s manufacturing. A study by supply chain and risk compliance firm Exiger earlier this year found that 75% of essential medicines in the US are imported, the majority from China and India. “The fundamental problem is we’ve incentivized people to move everything offshore,” Mark Ey, the COO of the National Community Pharmacists Association, told an Axios roundtable in May. Trump said the US will place a 100% tariff on brand-name or patented pharmaceutical imports starting today. The Pfizer deal, meanwhile, set a key precedent for how drugmakers can earn slack in exchange for compliance, with markets signaling approval:
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