Pharma giant Pfizer secures three-year reprieve from Trump tariffs with deal to cut US drug prices

NEW YORK - Pfizer secured a three-year reprieve from US President Donald Trump’s long-threatened tariffs on the pharmaceutical industry on Sept 30 by agreeing to slash some of its US drug prices by up to 85 per cent and selling directly to the American public, a move other major drugmakers are expected to follow.

Pfizer said it will ensure Americans receive comparable prices to those offered in other countries and will launch new medicines at parity, addressing a key complaint that Americans unfairly shoulder the highest medical costs in the world.

It is the latest example of the transactional nature of winning tariff exemptions from Mr Trump, who has unilaterally wielded trade policy to exert power over multiple industries.

He said last week that his administration would impose 100 per cent duties on branded pharmaceuticals starting on Oct 1 unless a company was building US manufacturing plants.

The latest comments from him and his advisers indicate that the threat was a negotiating ploy to get companies to lower prices on their products.

Similar deals could be forthcoming. Eli Lilly said it is in active discussions with the administration to further expand patient access, as the announcement on Sept 30 underscores the urgency of making medicines more affordable. 

US Commerce Secretary Howard Lutnick suggested the administration was holding its national security probe into pharmaceutical imports that could pave the way for new tariffs, as officials engage in talks with major drugmakers.

“While we’re negotiating with these companies, we’re going to let them play out and finish these negotiations,” Mr Lutnick said.

Threat reduction

The latest deal appears to resolve two major threats facing Pfizer.

It averts more damaging pricing policies on medicines, while shielding the company from tariffs tied to the administration’s Section 232 investigation into whether drug costs represent a national security threat.

The deal is a boon for chief executive Albert Bourla, who has struggled to replace flagging sales of Covid-19 vaccines and therapies that were in high demand during the pandemic.

It also earned rare praise from US health officials, including Health Secretary Robert F. Kennedy Jr, who has repeatedly questioned the safety of Pfizer’s Covid-19 vaccine.

Pfizer shares rose 6.8 per cent on Sept 30 after the tariff relief was announced.

The stock had declined 10 per cent in 2025 through the close on Sept 29. 

Wall Street took the announcement as a broad win for drugmakers, with the S&P 500 Pharmaceuticals Index climbing 3.8 per cent.

“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 pricing demands or tariffs, said BMO Capital Markets analyst Evan Seigerman. 

Still, analysts said the impact on patients’ pocketbooks – and the hit to Pfizer’s bottom line – is likely to be meagre.

Prices at the pharmacy counter are the result of an opaque system of negotiation and rebates that render drug pricing a black box.

“For all the hype and commentary around delivering a transformative win for lower drug prices, it’s worth noting that Pfizer’s press release didn’t change a single financial metric or piece of guidance,” wrote Cantor analyst Carter Gould.

“The immediate stock reaction across the group affirms our view this is more optics than bite.”

The pharmaceutical industry has been against the idea of globally linked drug prices amid years of US dominance in biomedical research.

Drugmakers warn it will sap the incentive to invent new therapies and prevent patients from getting medicines they need.

Executives have urged the administration to instead turn its attention to the middlemen in the pharmaceutical supply chain, who negotiate prices on behalf of employers.

Brand-name drug prices in the US are three times as high, on average, as those in peer nations.

Drug companies already give Medicaid, the health insurance programme for lower-income Americans, significantly lower prices than they give American employers and other US government programmes.

Administration officials said the new prices in the US would be benchmarked against those offered in Canada, France, Germany, Italy, Japan, Britain, Switzerland and Denmark.

The officials did not specify which Pfizer drugs would be priced lower for Medicaid, but said almost all the drugs Pfizer makes would be included. 

Pfizer’s best-selling drugs include blood thinner Eliquis; cancer drugs Ibrance and Xtandi; as well as Covid-19 treatment Paxlovid.

Under the plan, Medicaid programmes could see significant savings, though it is not clear how much, because the prices are generally secret.

Medicaid patients, who pay very little for prescriptions themselves, are unlikely to be directly affected.

The Trump administration announced that it will create a new website, TrumpRx, where Americans will be able to use their own money to buy drugs directly from manufacturers, while sidestepping health insurance.

The website, which is still under construction, will go online in 2026 and will include links to direct-to-consumer websites from many major pharmaceutical companies. BLOOMBERG, NYTIMES