Trump unveils new plan to lower prescription drug prices
Image: Pharmaphorum
President Trump yesterday announced a new effort to lower US prescription drug costs, including a sweeping deal with Pfizer to reduce the prices of many of its products, and the creation of a “TrumpRx” direct-to-consumer website for discounted drugs.
The deal, unveiled in an Oval Office press conference, calls for Pfizer to:
- Offer almost all of its existing drugs to Medicaid at "most-favored nation" prices, meaning the lowest net-price paid in other wealthy countries (where drugs often sell for less).
- Agree it will introduce all new drugs to the US market at those reduced “most-favored nation” prices.
- Invest $70 billion in US manufacturing and research, in exchange for being exempted from Trump admin tariffs for three years.
Pfizer also agreed to offer some of its most popular drugs at a steep discount to US consumers through a new website dubbed "TrumpRx," which aims to launch in early 2026.
- Senior US officials say TrumpRX would allow Americans without insurance to receive a discounted price for certain drugs that is negotiated by the government.
- It’s unclear how many drugs will be offered on TrumpRX, or whether it will provide benefits to Americans already covered by private insurance, Medicare, or Medicaid.
The first of many?
The Pfizer agreement comes amid a long-running campaign by Trump—dating back to his first term—aimed at getting pharma giants to lower their prescription drug prices for US patients. Trump has repeatedly criticized the fact that America pays far more than peer countries, which typically have single-payer healthcare systems that negotiate drug prices.
- Pfizer is the first drugmaker to voluntarily agree to all the demands Trump laid out in a July letter to 17 leading pharma companies, which imposed a deadline of this past Monday for them to agree to binding commitments.
- Trump yesterday said other companies will soon be making deals in addition to Pfizer, mentioning Eli Lilly by name.
- He also threatened to impose higher pharma tariffs if firms don’t agree to lower drug prices.
Senior administration officials frame the negotiations with drugmakers as an effort to equalize prices paid by US customers and people in other developed nations, many of which have single payer healthcare systems that negotiate drug prices with manufacturers.
Big picture: Prescription drug prices are ~2.8x higher in the US than comparable wealthy countries, according to a recent Health and Human Services Department report.
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Sprinkles from the Left
- Some commentators argue that if the US demands the same low prices as the rest of the world, the incentive for drugmakers to spend millions or billions of dollars on new treatments would disappear, since US sales cover a substantial share of the massive drug development costs.
- Others contend that while high drug prices are one reason the US has become a global leader in medical innovation, Trump’s most-favored-nation plan is worth exploring because it could help shift the cost of innovation by raising prices in other nations.
- “Americans pay a lot for drugs because they’re worth it” –WaPo Editorial Board
- “Americans Can’t Subsidize Medical Innovation Alone” –Bloomberg Editorial Board
- “I braced for the worst, but Trump's move to lower drug prices takes right approach” –Dace Potas, USA Today
Sprinkles from the Right
- Some commentators argue that Trump has the unique ability to end the foreign freeloading on America's biotech industry, much in the same way that he pressured foreign allies in NATO to stop freeloading on outsized US defense spending and start carrying their own weight.
- Others contend that being outraged at other nations for paying low prescription drug costs doesn’t mean price controls are good policy, since they limit innovation, have whittled away the European pharmaceutical sector, and are inferior to market-friendly policies that lower costs.
- “Trump Fixed NATO. He Can Fix Prescription Drug Prices Too” –Jeffrey Gerrish, Newsweek
- “Price Controls Won’t Make America Healthy” –Tevi Troy, Wall Street Journal
- “How Trump’s October drug price plan can bring families relief” –Tom Price, Washington Times
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