If you had nothing better to do on Sept. 30, you might have tuned in to a White House event at which President Trump, standing side-by-side with Albert Bourla, the CEO of Pfizer, announced a deal with the big drug company that was described from the podium as “a massive win for the American people.”
Under the deal, according to the administration, Pfizer will sell its drugs to Americans “at a deep discount” from their list price. Pfizer, for its part, said the arrangement ensures that “U.S. patients pay lower prices for their prescription medicine.”
As is the case with so many pronouncements issued from the Trump White House, there’s much less to this deal than meets the eye. Whether it will effectively reduce spending on prescription drugs for most Americans—or any Americans—is highly doubtful.
For Pfizer, however, this is a fabulous deal — never mind that the news media has portrayed it just as the White House and Pfizer hoped, as a major concession by the company to help the average consumer.
The truth is that the company won’t be suffering any significant reduction in revenue or profits by offering these “discounts.” It will, however, be exempted for three years from tariffs of 100% that Trump had threatened to impose on drugmakers.
How do we know that Pfizer is the principal beneficiary of the deal? Its stock price has risen nearly 15% in the five trading days since the announcement. Do you think that a deal that cut consumer prices for a company’s most popular products would really produce a stock market gain? Me neither.
Accordingly, it’s proper to take a close look at what we know, and more importantly, what we don’t know, about this deal.
“We’re still in a place where we don’t know everything we want to know,” says Peter Maybarduk, head of the access to medicines group of the nonprofit consumer organization Public Citizen. “That’s unfortunate, but it’s also by design.” Public Citizen has filed a Freedom of Information Act request for documentation about the deal.
Pfizer and the White House both describe the deal terms as “confidential.” Pfizer told me that “more details” will be made available as the January implementation date draws nigh. The White House asserts that this deal is secret because it’s working out deals with other drug manufacturers.
“What is being negotiated hasn’t been vetted by many people for loopholes,” Maybarduk told me. The field of drug pricing, he observes, is so complex and involves so many participants that it is immensely vulnerable to being gamed — as has been happening for decades.
What we do know isn’t encouraging. Here’s what’s been said.
The deal has three main components. One is a commitment by Pfizer — “voluntary,” the company says — to offer all state Medicaid programs “most favored nation” prices on its drugs. In other words, it will match the prices charged in a basket of developed countries. What’s unknown is: Which countries are in the basket? How are their comparable prices to be calculated, given the web of rebates and discounts that are common in the pharmaceutical universe?
Because we don’t know that, we don’t know how much state Medicaid programs will save, if anything. Medicaid, a state-federal program serving low-income Americans, by law already pays the lowest drug prices of any government program, in some cases as low as or lower than prices in many foreign countries.
It’s unlikely that Medicaid patients will see any price breaks. By law, their co-pays are capped at $4 per prescription for “preferred” drugs and $8 for others. In most states, their co-pays are even lower—no more than $3 per script, and in some states as low as 50 cents or even zero. (California’s Medicaid program, Medi-Cal, doesn’t charge co-pays for drugs.)
The second component involves “TrumpRx,” a website that will be activated sometime next year and that purports to “offer medicines at a deep discount off the list price when selling directly to American patients,” the White House said .
But that’s not how TrumpRx would work. According to the White House, TrumpRx will merely refer users to the consumer-discount websites already operated by individual drug companies, which are aimed at patients without insurance coverage for their prescriptions. “The federal government is not going to operate a pharmacy,” a White House spokesman told me.
Utilizing these discounts won’t be a practical choice for many patients. That’s because they’ll have to pay in cash, and even the discounted prices on some drugs are still unaffordable.
It’s fair to say that discounts on some cheaper drugs may matter to some patients. Pfizer provided me with sample discounts on three of its drugs — Duavee, which is for postmenopausal women, will be reduced to $30 a month from a list price of $203; Eucrisa, a dermatitis treatment, will fall to $162 monthly from $692; and Toviaz, for overactive bladders, to $42 from $290.
But the discounts for other Pfizer products mentioned in the White House announcement won’t make the drugs especially accessible. For example, the current price of nearly $6,100 a month for Xeljanz, a treatment for rheumatoid arthritis and other inflammatory conditions, will be discounted by 40%, but that means that cash customers will still be on the hook for about $3,645 a month, or $43,740 a year.
Does that solve the cost problem for patients without insurance coverage? To ask the question is to answer it.
Drug companies launched these discount sites for uninsured patients years ago, hoping to foster the impression that they cared about patients overburdened by their list prices.
For consumers, the bottom line is that TrumpRx won’t move the needle on drug prices. In any event, it’s not relevant to the 90% of Americans who receive their prescriptions via their own health plans or government programs such as Medicare, Medicaid, and the Department of Veterans Affairs, since their drugs are already covered.
The third component concerns tariffs, which Trump has threatened to jack up to 100% on pharmaceutical imports from several overseas countries. At the White House announcement, Bourla said: “Tariffs are the most powerful tool to motivate behavior,” he said, “and clearly motivated ours.”
That sounds like an admission that Pfizer’s deal had more to do with protecting its bottom line by staving off tariffs than with giving American consumers a break.
Bourla was quoted in Pfizer’s news release as stating that the deal addresses “two critical fronts, tariffs and pricing that have suppressed the industry’s valuations to historic lows.”
Is that so? Pfizer’s stock price, which closed Monday at $26.43, drifted along in the low single digits through the 1980s and most of the 1990s, when Trump’s tariffs weren’t an issue. Its price-earnings multiple, currently about 14.1x, fell as low as 4.6x in 2013; over the last 15 years the multiples of drugmakers Merck and Eli Lilly ranged from about 10x to 30x. At this moment, Merck’s multiple is 13.7 and Lilly’s 55.37, which are all far from calamitous for manufacturing companies. I asked Pfizer to explain what Bourla was referring to, but haven’t received a reply.
In any case, Pfizer recorded a profit of more than $8 billion on revenue of $63.6 billion last year, for a handsome profit margin of 12.6%. Bourla collected compensation of nearly $80 million from 2022 through 2024.
When contemplating Trump’s approach to drug pricing policy, remember that during his first term his efforts were aimed more at feeding his appetite for braggadocio than crafting coherent policies. Pfizer gave him what looked like a big win in July 2018 when it announced a rollback of price increases that had taken effect a week or so earlier. Trump ran with the ball, taking credit for what he claimed by tweet to be “great news for the American people!” (Bourla was Pfizer’s chief operating officer at the time; he rose to CEO a few months later.) Merck followed with a rollback of its own.
But it was an illusion. By that December, both companies had restored the price increases. They both exploited qualifications they had inserted in their original announcements — Pfizer had said only that it was “deferring” the price increases, Merck that it was reducing the average net price of its entire product portfolio, but in practice it cut the price of expensive drugs that weren’t selling. It cut the price of one drug, Zepatier, by 60%, but Zepatier was such an also-ran among hepatitis C treatments that its sales were effectively zero.
It’s also true that Trump’s claim to be “delivering on promises to put American patients first” is mocked by his administration’s other initiatives in bioscience — specifically, its freezing or canceling of billions of dollars in grants to universities for basic science, including biological research. Academic research is a cornerstone of U.S. pharmaceutical R&D: A 2020 study found that “NIH funding contributed to research associated with every new drug approved from 2010-2019, totaling $230 billion.”
The grants have been cut off in response to ginned-up accusations that the universities haven’t done enough to combat antisemitism, or because they involved gender studies or “diversity.” No one in the press room on Sept. 30 asked about the inconsistency between boasting about a “landmark” deal protecting U.S. based pharmaceutical research and development, and cutting off funding for, well, pharmaceutical R&D.
No one disputes that Americans pay too much for their prescriptions, typically more than consumers in other countries. There are multiple ways to address this issue through legislation and regulation. This isn’t that. This is Trump making deals that he can boast about, but his claim that he’s found a way to permanently reduce U.S. drug prices is just blather.
Trump didn’t extract concessions from Pfizer — the company squeezed a concession from him. Its savings from its tariff exemptions will probably outpace its revenue and profit reductions from price cuts. Trump did get what he wanted, however, a talking point for a complaisant press. American patients? They’re getting almost nothing.
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