Why Pfizer struck a drug-pricing deal with the Trump administration

Pfizer strikes deal to lower prices

Pfizer reached a last-minute deal with the Trump administration in late September to lower drug prices and avoid sweeping pharmaceutical tariffs. Negotiations accelerated in the days before a White House deadline, with CEO Albert Bourla and Health Secretary Robert F. Kennedy Jr. finalizing the agreement hours before the announcement. For Trump, the deal was a political win that showcased progress on drug costs; for Pfizer, it was a way to neutralize tariff threats with minimal impact on its bottom line, the Wall Street Journal reported.

What Pfizer agreed to

Under the agreement, Pfizer will extend “most-favoured-nation” pricing to Medicaid, ensuring the US government pays no more than wealthy countries for its medicines. The company also pledged to launch new drugs at parity with international prices and to offer discounted products through TrumpRx, a direct-to-consumer platform scheduled for 2026. These concessions apply mainly to Medicaid patients, a group that accounts for less than 5 percent of Pfizer’s US sales, limiting the revenue impact.

What Pfizer received in return

In exchange, Pfizer secured a three-year reprieve from tariffs on drugs manufactured overseas. That protection allows the company to focus new US investments on future medicines rather than infrastructure for older products nearing patent expiration. The deal lifted uncertainty hanging over Pfizer and helped push its shares up 14 percent, with other drugmakers’ stocks also rallying on expectations of similar arrangements.

Trump’s broader strategy

The deal reflects Trump’s escalating campaign to reshape the drug industry in his second term. Earlier, he signed an executive order calling for most-favoured-nation pricing and threatened 100 percent tariffs on imported pharmaceuticals. He also sent letters to 17 CEOs demanding lower prices and new US manufacturing investments. While the administration initially targeted sweeping changes, it pivoted toward negotiating individual deals—giving companies like Pfizer a chance to cut tailored arrangements.

Behind-the-scenes dynamics

Bourla’s personal relationship with Trump was central to the outcome. The two men cultivated ties over dinners at Mar-a-Lago and regular phone calls, with Bourla praising Trump’s Operation Warp Speed vaccine program as Nobel-worthy. At the Oval Office announcement, Bourla hugged CMS Administrator Mehmet Oz and thanked Trump publicly, underscoring the close partnership. Yet the deal sparked anger among some industry peers, with executives at rival companies accusing Pfizer of cutting ahead of the trade group PhRMA.

Industry reaction and implications

The deal has divided the pharmaceutical sector. Some CEOs fear that Pfizer’s move sets a precedent that could weaken their negotiating position, while others see it as a model for securing tariff relief and regulatory clarity. Analysts noted that Pfizer’s concessions were relatively modest, given its existing Medicaid discounts, while the benefits were substantial in avoiding tariffs. Still, critics argue that the White House’s approach fragments industry unity and risks politicizing pricing policy.

What comes next

Trump hailed the Pfizer agreement as the first of many, promising more deals with other drugmakers. Companies such as Eli Lilly and Johnson & Johnson have already pledged billions in US investments, while others may now face pressure to follow Pfizer’s lead. For patients, the immediate impact is limited, as most insured Americans will still face the same costs through their health plans. But politically, the administration has secured a narrative victory—and signalled that drug pricing remains at the heart of Trump’s domestic agenda.