Pfizer reached an agreement on the most popular national drug pricing; other drugs expected to follow
Pfizer is the first large pharmaceutical company to reach a deal with the Trump Administration with the most popular national drug pricing, which reduces the price of certain drugs and is directly available to patients through new online channels. The deal announced on Tuesday also brought a grace period for Pfizer before facing potential tariffs on its drugs.
With the most popular country pricing, in a comparable developed country, the price of the U.S. drug will match the lowest price of the same drug. President Trump restored the policy through May executive order. In July, he wrote to the CEOs of 17 large pharmaceutical companies outlining the ways he hoped they would comply with the order. The letter was sent to the company until September 29 to respond.
Pfizer executives said at a Tuesday news conference with the Trump administration that the company will participate in Trumprx.gov, a new procurement platform that will allow Americans to purchase most primary care treatments and certain special medicines from Pfizer for “significant discounts.” The White House profile lists some examples of existing Pfizer products: an 80% discount on the atopic dermatitis drug Euclidean; a 40% discount on the immunology drug Xeljanz; and a 50% discount on the migraine drug Zavpret.
The specific terms of the agreement remain confidential. But the White House said the deal means every state in the country will have access to Pfizer’s most popular national drug prices. Additionally, the agreement ensures that Pfizer brings the most popular national pricing of all new drugs to the market.
With the deadline for responses to Trump’s most popular national proposals, pharmaceutical companies have launched plans that could help them achieve the goals outlined in the executive order. The order specifies that selling directly to patients will be a way to comply as long as the prices offered through these channels are not higher than the best prices in other developed countries. Last week, Bristol Myers Squibb announced that a new direct service website will be launched in January, with the plaque psoriasis drug sotyktu being the first to offer at a huge discount. Since then, AstraZeneca, Novartis and Boehringer Ingelheim have released their own direct-to-consumer online plans. Industry trade group PHRMA has also announced a new website that will connect U.S. consumers with direct purchase plans for drug manufacturers.
Another move some companies have taken is to raise the price of selling drugs overseas. Earlier this month, BMS said that schizophrenia drug Cobenfy will be launched in the UK at a price equal to the US price of the drug. This comes after Eli Lilly announced in August, it reached a deal with the UK to increase the price of the type 2 diabetes drug Mounjaro. Lee Brown, global health care leader in consulting the Third Bridge, said the strategy puts forward a Trump argument that other countries are “freely responsible for U.S. pharmaceutical innovation,” as stated in the White House fact sheet. The strategy also provides pharmaceutical companies with a way to protect their largest market revenue.
“I think [pharma companies] “Trump will win as a victory. That's how he works. He's not really looking for everything. He's looking for something he won't get.”
There is now a framework that allows other countries to absorb higher prices than they used to, said David Risinger, an analyst at Leerink Partners, in a comment sent to investors. He added that Pfizer expects this to open up a way to introduce new drugs at standard prices that are consistent with the U.S. list price overseas. However, Leerink does not expect to increase the price of existing drugs outside the United States due to the challenges of economic challenges.
Trump also threatened to impose tariffs on drugs. If a U.S. Department of Commerce investigation finds this necessary for national security, Section 232 of the Trade Expansion Act allows tariffs. This rationale has been used to justify tariffs on aluminum and steel imports. An investigation into the drug is underway. But Pfizer said that as long as the company invests in U.S. manufacturing, the 232 inquiry under its products will not face three years of tariffs. Over the past year, big pharmaceutical companies unveiled a multi-billion-dollar capital investment plan in the U.S., a recent plan by GSK to spend $30 billion on U.S. manufacturing and R&D websites over the next five years. The announcement came after Trump made a state visit to the UK.
Whether it is necessary to provide medication directly to patients through trumprx.gov or through their own plans remains to be seen, William Blair analyst Matt Phipps said in a study. It is unclear how these new options will affect drug prices for the Department of Veterans Affairs or Medicaid.
“Most of the large biopharmaceutical companies have announced a commitment to invest heavily in U.S. manufacturing and R&D facilities,” Phipps said. “After today’s announcement, we expect more companies to announce direct-to-consumer channels to further appease the Trump administration and to largely eliminate the threat of 100% tariffs and 1,000% price reductions.”
Photo: Mandel Ngan/AFP, via Getty Images
