Pfizer Strikes Deal with Trump to Lower Medicaid Drug Costs
WEDNESDAY, Oct. 1, 2025 — The White House has struck a deal with pharmaceutical giant Pfizer Inc. to lower the cost of prescription drugs for the Medicaid program.
The agreement — announced at the White House Tuesday by President Donald Trump and Pfizer CEO Albert Bourla — comes as the administration pushes for similar deals with other major drug manufacturers.
Under the terms of the deal, New York-based Pfizer will offer what the administration calls "most-favored-nation pricing" to Medicaid. This means the price charged to the government insurance program for low-income Americans would match the lowest price Pfizer offers in other developed nations. Pfizer also agreed to guarantee this pricing for any new drugs it launches.
In letters to executives at 17 pharmaceutical this past summer, Trump noted that U.S. prices for brand-name drugs are sometimes up to three times higher than averages elsewhere, according to The Associated Press.
This new agreement fulfills an executive order signed in May, which set a deadline for drugmakers to voluntarily reduce prices or face new payment restrictions from the government.
In addition to the Medicaid price cuts, Pfizer also agreed to participate in a planned website called TrumpRx, which aims to allow people without insurance to buy certain drugs directly from the manufacturer at an average discount of 50%.
Bourla expressed support for the change. “We are turning the tide and we are reversing an unfair situation,” he said.
However, not all health policy experts are convinced the deal will immediately lead to widespread change.
Stacie Dusetzina, a prescription drug pricing expert and professor at Vanderbilt University Medical Center in Nashville, Tennessee, noted that the specific terms of the deal remain confidential. It is unclear how much the new pricing will differ from what Medicaid already pays Pfizer.
People on Medicaid currently have a minimal co-payment for drugs, but charging the program less could help state budgets that fund the program. For people without insurance coverage, the promised 50% discount might still leave them paying hundreds of dollars monthly for necessary prescriptions.
As controversial insurance coverage and government program cuts made their way into law as part of a massive tax and spending plan passed this summer, Dusetzina said that selling drugs directly to the public won’t help everyone.
“Theoretically, there are some who will benefit, but in general this is not a solution for lowering drug prices,” she said.
These lower drug prices could take effect in 2026, according to senior administration officials.
The administration has been using the threat of imposing tariffs — a favorite negotiating tool of the president — to bring drugmakers to the table.
Beyond pricing, Pfizer also committed to spending $70 billion on domestic research, development and capital projects in the U.S. over the next few years.
Sources
- The Associated Press, Sept. 30, 2025
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