President Donald Trump revealed Tuesday that his administration has struck an agreement with Pfizer to lower the cost of many of its medications for Medicaid patients. In return, Pfizer secured a three-year exemption from upcoming tariffs on foreign-made pharmaceuticals, which are scheduled to take effect Wednesday. A White House fact sheet said that “the agreement requires Pfizer to offer medicines at a deep discount off the list price when selling directly to American patients.”

As part of the deal, Pfizer will make several of its drugs available through a new government-run website called ‘TrumpRx,’ which the White House described as a direct-to-consumer platform. While the president offered few specifics on how the program will operate, he emphasized that it marks a new approach to lowering drug prices.

Mr. Trump said in the Oval Office: “Today, I’m thrilled to announce that one of the world’s largest pharmaceutical manufacturers and one of the best anywhere in the world, Pfizer, has agreed to offer countless prescription medications at major discounts in the United States, a result of the ‘most favored nation’ drug pricing order that we established earlier this year.”  

As part of the announcement, Pfizer also committed to investing $70 billion in research, development, and domestic manufacturing.  Pfizer CEO Albert Bourla, who was with the president for the announcement, said Mr. Trump’s threat of 100% tariffs on drugs manufactured outside the U.S. motivated his company to take swift action. The president said Pfizer’s drug prices will be lower starting “immediately,” adding that the cost of some Pfizer drugs could see decreases in price of 50%-100%.

According to Pfizer, the price cuts will apply to the majority of its primary care treatments and several brand-name specialty drugs. Discounts will average about 50% but could reach as high as 85%. For example, Pfizer’s menopause treatment Duavee will drop to around $30, the bladder medication Tobias will be reduced to $42, and the eczema ointment Eucrisa will cost $162 under the new program.

Chris Klomp, director of Medicare and deputy administrator at the Centers for Medicare and Medicaid Services, said the reduced prices should become available “soon.” It remains unclear whether the TrumpRx program will be limited exclusively to Medicaid recipients.

Trump also announced that every new drug Pfizer introduces in the U.S. market will follow the same lower pricing model, and that the deal will save American consumers and taxpayers “hundreds of millions of dollars a year,” since Americans have been “subsidizing research and development costs for the entire planet” because of the higher prices they have been paying. The president added that ‘we’re also announcing that moving forward, all new medications introduced by Pfizer to the American market will be sold at the reduced most favored nation cost. So, we’ll be paying essentially what other countries are paying, who have been much lower — much, much lower for many, many years.”

Pfizer, one of the largest pharmaceutical companies in the country, manufactures a wide array of medicines, including the blood thinner Eliquis, the cancer treatment Ibrance, and its COVID-19 vaccine. (Eliquis was included in the first round of Medicare drug price negotiations under the Biden administration, with the new pricing expected to take effect in 2026.). In May, Trump signed an executive order directing federal agencies to explore tying U.S. drug costs to those paid overseas. Pfizer is the first pharmaceutical company to finalize an agreement under that plan.

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