U.S. President Donald Trump shakes hands with Pfizer CEO Albert Bourla (L) as he pronounces a cope with Pfizer to lower Medicaid drug prices within the Oval Office of the White House on September 30, 2025 in Washington, DC.
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President Donald Trump’s long-awaited threat to impose pharmaceutical tariffs may not pose as much of a challenge as drugmakers once feared, following his latest drug pricing cope with Pfizer.
Trump’s Tuesday agreement with the corporate to voluntarily lower U.S. drug prices included a three-year exemption from pharmaceutical-specific tariffs, so long as the firm further invests in domestic manufacturing. Pfizer on Tuesday pledged to place $70 billion into U.S. manufacturing and research, on top of previous investments.
That deal brought relief and clarity to Pfizer and the broader pharmaceutical industry, signaling that many drugmakers could strike similar agreements that may make them proof against the levies for many of Trump’s term.Â
The Trump administration also made it clear that it is going to attempt to secure those drug pricing agreements before it imposes tariffs. Commerce Secretary Howard Lutnick on Tuesday said he’ll let firms finish their negotiations with the administration before setting pharmaceutical-specific levies under the legal authority referred to as Section 232.Â
Trump on Tuesday said he’s working with other drugmakers to secure similar pacts over the following week, and the White House confirmed that Eli Lilly is anticipated to strike the following drug pricing deal. The overwhelming majority of major pharmaceutical firms, including Eli Lilly, Johnson & Johnson, AstraZeneca, AbbVie, Roche, Novo Nordisk and Amgen have unveiled latest U.S. investments in manufacturing or research facilities in recent months to construct goodwill with the president.
Shares of Pfizer and a number of other other drugmakers rose on Tuesday following the agreement. Pfizer’s stock ended greater than 6% higher, while Eli Lilly rose 5%. Shares of AbbVie and AstraZeneca climbed greater than 3%, while J&J and Bristol Myers Squibb’s stocks increased greater than 2% each.Â
The Pfizer deal adds certainty for drugmakers and shifts the president’s policies “potentially away from Pharma tariffs,” BMO Capital Markets analyst Evan Seigerman said in a note on Tuesday.Â
“Today’s deal seems to set a path for other pharmaceutical players to follow, allowing for headline pricing concessions and a Trump ‘win’ without more punitive implementation” of the president’s so-called most-favored-nation policy or tariffs, Seigerman added.Â
Trump in May signed an executive order reviving that controversial plan, which goals to tie the costs of some medicines within the U.S. to the significantly lower ones abroad. As a part of that effort, Trump in July sent letters to 17 drugmakers — including Pfizer — calling on them to take steps to lower drug prices by Sept. 29.Â
“As we expect in regards to the group more broadly, we might not be surprised to see quite a lot of similar agreements to assist remove uncertainty on the [most-favored-nation policy and] tariffs,” JPMorgan analyst Chris Schott said in a note Tuesday.Â
‘Most-favored-nation’ risk could also be manageable
Tuesday’s deal appeared to bring other excellent news to some drugmakers.Â
Pfizer agreed to sell its existing drugs to Medicaid patients at the bottom price offered in other developed nations, or what Trump calls the most-favored-nation price. But Schott said most-favored-nation pricing for Medicaid is “highly manageable” for Pfizer. He said that is partially because Medicaid pricing is already just like international levels for many drugs.Â
Notably, Medicaid represents lower than 5% of the corporate’s U.S. sales and an “even smaller percentage of worldwide sales,” Leerink Partners analyst David Risinger said in a note Tuesday.Â
The identical goes for most of the large drugmakers, in line with data compiled by Schott. Medicaid makes up lower than 5% of Bristol Myers Squibb’s U.S. sales, lower than 7% of Regeneron’s domestic revenue, and around 8% of Lilly’s and AbbVie’s domestic sales.Â
Medicaid also represents around or lower than 10% of U.S. sales for all of J&J, Merck, Amgen and Biogen.
Gilead is among the many drugmakers with greater exposure to Medicaid, with this system making up around 20% of its domestic sales. Medicaid plays a big role in HIV prevention and treatment, especially for underserved populations, which is a core focus for Gilead.Â
The opposite a part of Pfizer’s deal involves the corporate guaranteeing the identical most-favored-nation pricing on its latest drugs for Medicare, Medicaid and business payers. But Schott said he sees a “limited impact” of that provision, as he expects Pfizer and the broader industry to boost their prices for brand spanking new drugs abroad slightly than lower them within the U.S.Â
He added that it is going to likely apply to a small variety of treatments annually and is “way more digestible” for the corporate than any broad implementation for products already available on the market.Â