Trump Touts Drug Price Wins Even as Plans for Savings Unclear

Top drugmakers are bending to President Donald Trump’s attempts to lower US drug costs by tying them to international prices, announcing deals that lack clear details about implementation and impact on consumer savings.

Pfizer Inc., AstraZeneca PLC, and Merck KGaA in recent weeks locked in deals to voluntarily slash certain drug costs as Trump pressures companies to match US medicine prices to cheaper ones abroad, also known as “most favored nation” pricing.

The agreements consist of selling existing medicines to Medicaid patients at steeply discounted prices, launching new drugs in the US at the lowest prices offered to peer countries, and participating in TrumpRx, a direct purchasing platform planned for next year to allow patients to purchase some medicines at a reduced cash price.

The deals are a major shift from how drugmakers reacted to Trump’s attempt to implement most favored nation in his first term, when they criticized the plan and challenged the administration’s rulemaking.

“First time around, it was done through rulemaking and there wasn’t scope for a deal or not,” said Neal Masia, former chief economist for Pfizer, now CEO of health economics software company EntityRisk. “This time, it was more like a threat and I think the administration has put a lot of pressure on the companies.”

Pharmaceutical companies acceded to Trump’s plan, and his threats of higher tariffs and revoked drug approvals, but the secured deals lacked official guidance that could ensure lowered drug prices. The White House sent two pricing models to the Office of Management Budget for review, but industry watchers question if and when those will advance given drugmakers have already secured deals.

The agreements leave industry watchers guessing the weight of the deals and the extent of savings from slashing US drug prices, which Trump has long criticized as Americans pay far more for drugs than patients in other countries.

“He’s expecting manufacturers to come up with these solutions,” said Milena Sullivan, a practice director at Avalere Health. “At the same time, he has not released anything concrete that could draw scrutiny or more specific advocacy.”

“There’s still a risk that one or more of those models could do something a little more sweeping in case not enough manufacturers step up with voluntary commitments,” said Sullivan, a former director of oncology policy and market access at Bristol Myers Squibb Co.

More drugmakers are expected to strike a deal after Trump in July sent letters to 17 companies demanding lower prices. Drugmakers including Johnson & Johnson and Novo Nordisk A/S said they’re still in discussions with the administration.

Details Matter

The details for implementing most favored nation matter as they could share insights on how costs would be lowered, drug pricing experts say.

Pfizer, for example, touted that a large majority of the company’s primary care treatments will be offered at savings that will range as high as 85% and on average 50%, but the effects of that will be murky.

“It’s not at all clear to me that this isn’t sort of a public relations effort, but that it won’t have much of an impact for patients or on pricing in practice,” said Rachel Sachs, a professor at WashU Law and former senior adviser for the US Department of Health and Human Services’ General Counsel. “It’s hard to know exactly how much is intentional.”

The extent of savings the plan could yield is also unclear, especially as Medicaid already gets steep discounts from drugmakers.

“Offering Medicaid programs MFN pricing could help lower costs for states,” said Sarah Emond, CEO of the Institute for Clinical and Economic Review. However, “we won’t know because the current prices of drugs offered to Medicaid are confidential and the details of what MFN prices are being offered are also confidential.”

AstraZeneca and Pfizer already offer some of the medicines through their own direct-to-consumer platforms that seek to improve accessibility and affordability. Eligible patients, for example, can get AstraZeneca’s diabetes drug Farxiga for as much as 70% off its list price through its platform.

Giving consumers a way to buy drugs directly online through those platforms and TrumpRx could increase access, but “most of the prices pharma companies are charging for those drugs are way out of reach for most Americans,” Emond said.

Often with direct sales, patients must pay out of pocket rather than use their insurance.

“Being able to buy something directly doesn’t help if you can’t afford the price tag,” Emond said.

More Pressure

Drugmakers are likely folding this time to the administration due to various threats against the industry.

Pfizer and AstraZeneca agreed to slash their drug costs and increase manufacturing in the US in exchange for three years of relief from Trump’s threatened tariffs. Merck, too, said it will cut the price of its fertility medicines in exchange for relief from tariffs.

The Food and Drug Administration’s new National Priority Review Voucher Program that offers expedited drug reviews to companies with products that align with national health priorities is also viewed as another lever to get drugmakers to enter agreements.

Drug affordability was among the FDA’s considerations when granting vouchers, but industry watchers have questioned that factor as the agency is traditionally not involved with drug pricing, but rather the clinical review of medicines.

“These are all carrot and stick approaches,” said Ron Lanton, a partner at Lanton Law, specializing in health care.

Nonetheless, the industry should still be prepared for the administration’s drug pricing agenda given this is the second time they’ve tried to implement most favored nation, said John Barkett, managing director of BRG’s health-care transactions and strategy practice.

“They’ve got four years and they’ve got experience under their belts,” Barkett said, a former health senior policy adviser for the Biden administration.

“There’s a reason to not underestimate them and their ability to try to draw something up here that avoids any of those landmines that might blow up an effort like this.”