PFIZER (PFE.N) and President Donald Trump said they had entered into an agreement under which the manufacturer of drugs based in the United States had agreed to reduce the prices of prescription drugs in the Medicaid program to match people invoiced in other developed countries, in exchange for tariff relief.
Trump also said Pfizer would offer that the most favored nation prices on all new drugs have been launched in the United States and said other drug manufacturers would follow suit.
Pfizer’s actions increased by more than 6% on Tuesday, and the news raised Eli Lilly (Lly.n), Merck (MRK.N), AMGEN (Amgn.O), Abbvie (Abbv.N) and GSK (GSK.L) also share, in relief of investors, they would escape the worst prices. European actions increased early Wednesday.
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American patients are currently paying the most for prescription drugs, often almost three times more than in other developed countries. Trump has put pressure on drug manufacturers to reduce their prices to match what patients pay elsewhere.
Trumprx will be launched in 2026
Pfizer will be part of the new Direct White House website so that Americans can buy drugs, called Trumprxwhich will be launched in 2026.
“The United States has carried out health care of the rest of the world,” said Trump, speaking during an event in the oval office alongside the CEO of Pfizer Albert Bourla, of the Health Secretary Robert F. Kennedy Jr., and others.
Several drug manufacturers have already established direct prices for consumers for some of their medicines, which will be listed on a new website of the American lobby group Phrma, and have increased the prices of their therapies in Britain in accordance with the desire of Trump to compensate for the decreases of the United States in the United States
On September 25, Trump announced that it would impose a 100% rate of imports of brand pharmaceuticals or patented from October 1, unless a drug manufacturer built a manufacturing plant in the United States.
The Pfizer agreement includes a 3 -year grace period
Pfizer is the first drug manufacturer to announce an agreement. Trump sent letters to 17 main pharmaceutical companies in July telling them to reduce prices to correspond to people paid abroad, asking them to respond with binding commitments by September 29.
Sources of five major drug manufacturers told Reuters that Trump-Pfizer’s announcement had surprised their business, and they watched the White House press conference to assess its implications.
Pfizer will invest $ 70 billion in research, development and interior manufacturing, and has received a three -year grace period during which its products will not be subject to targeted pharmaceutical prices, “as long as, of course, we move the products here,” said Bourla.
Pfizer has around nine manufacturing sites in the United States and 28 in other parts of the world, from Ireland to Japan, according to its website.
The rivals of Pfizer, including Astrazeneca (AZN.L) and Eli Lilly, have done in recent months to increase their American manufacturing capacity after Trump’s pricing threats.
Pfizer has said that a large majority of its primary care treatments and certain specialized brands will be offered to savings up to 85% and on average 50%. According to a poster exposed during the event, these will include the medication with Xeljanz rheumatoid arthritis, which has a list price of more than $ 6,000 per month, the treatment of ZavzPrette migraine, Eucrisa drug dermatitis and the post-menopausal duavee osteoporosis drug.
The actions of drug manufacturers have increased because prices concessions are limited to Medicaid, said Daniel Barasa, portfolio director of the investment company Gabelli Funds.
Barasa said the agreement was “a very favorable result for industry. Since Medicaid already benefits from substantial discounts and discounts – exceeding 80% in some cases – the additional impact on manufacturers is relatively minimal. ”
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Next year launch
New Medicaid prices should also be launched in 2026, said a senior administration official during a media call. The most favored price is based on the lowest price paid in eight other rich countries after costs and discounts.
More than 70 million people are covered by Medicaid, the government and federal government’s program for low -income people. But drug expenditure in the program is overshadowed by those of its Sister Medicare program, which covers people aged 65 and over or those who have disabled and are not included in the announcement on Tuesday.
Medicare drug spending reached $ 216 billion in 2021, while Medicaid’s raw expenses were around 80 billion dollars.
Anna Kaltenboeck, health economist at Verdant Research, said that if Pfizer and other companies provide additional discounts in Medicaid, this could be important because it would support states with the cost of specialized drugs.
However, Medicaid spends less in medication than other payers, so the impact would be less dramatic than if the reductions applied to health insurance, she said.
