President Donald Trump and the pharmaceutical giant Pfizer announced an agreement Tuesday to lower medication costs for Medicaid patients, advancing Trump’s “Most Favored Nation” pricing effort to reduce the cost of American prescription drugs.
Trump announced alongside Pfizer CEO Albert Bourla in the Oval Office the pharmaceutical giant would implement a series of new policies to reduce drug prices for American patients as early as the beginning of next year.
“This is the biggest price reduction, times, maybe 10 times 15 times, than has ever been given before, and it’s gonna have a huge impact,” Trump said.
Multiple other companies are in the process of negotiating Most Favored Nation drug pricing, meant to bring U.S. drug prices in line with those of other developed nations, senior administration officials said.
Pfizer’s commitment will only apply to Medicaid patients, beginning in early 2026. But senior administration officials told reporters that they expect the price reductions to have ripple effects across the market.
In a letter sent to 17 major pharmaceutical companies this summer, Trump set the deadline of Monday, Sept. 29, for the industry to start implementing Most Favored Nation policies by raising international prices to reinvest in lowering prices for American patients.
Officials said that the goal of Most Favored Nation is to bring parity between U.S. net pharmaceutical prices and those of the other G7 countries, as well as Switzerland and Denmark.
Bourla said that Pfizer is meeting all four points outlined in Trump’s letter, including to significantly reduce prices across its portfolio for Medicaid patients.
The Pfizer CEO also said that prices for all new drugs listed by Pfizer will have the same list price in the United States as they will in other developed countries.
Bourla said that the deal is “reversing an unfair situation” of Americans paying a “disproportional cost” for medical innovation compared to other countries.
Americans pay three times more for brand-name prescriptions than people in other developed countries, according to a White House fact sheet published in July. The U.S. also makes up 75% of global pharmaceutical profits despite having less than 5% of the world population.
Medicare Director Chris Klomp highlighted during the Oval Office press conference four examples of drugs from Pfizer that will see price reductions of 40% to 85%, including their postmenopausal osteoporosis, migraine, rheumatoid arthritis, and dermatitis drugs.
“This is about access. This is about having access to life saving medications. These are real prices. These are net prices. They’re not made up. They’re not funny numbers,” Klomp said.
Bourla said that the “big winner of this deal will be the American patient.”
Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz said that the deal with Pfizer came together just last week with a “major breakthrough” in negotiations that have been ongoing since the winter.
“With this partnership, we began to deal with the fundamental challenges we have, which is protecting medical advances for the future, while at the same time securing the prices of Americans want today,” said Oz.
Food and Drug Administration Commissioner Dr. Marty Makary said at the press conference that pharmaceutical companies that meet the Most Favored Nation framework will have expedited drug approals from his agency.
“If you equalize your prices, then we’re going to put your future applications at the front of the line,” said Makary.
Senior administration officials said that there are “multiple other manufacturers” that are on the verge of a deal.
Trump said that his threats of tariffs on pharmaceutical companies are putting significant pressure on companies to voluntarily comply because “nobody wants to play that game.”
“We took away the advantage by the fact that we have tariffs. We took away the advantage that they would have of just saying no, and we couldn’t do anything about it,” said Trump.
Senior administration officials also told reporters that Pfizer has committed to bringing all of its manufacturing capacity to the United States in the next several years. This follows Trump’s announcement last week that he plans to implement a 100% tariff on all pharmaceutical products that are made overseas.
Trump said that deals with other companies will be announced as soon as next week.
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“We’re going to show you some 1,000% drops in prices. There has never been anything like this in the history of medicine, and it’s an honor,” Trump said.
