Somewhere among ridiculing political opponents, shaming generals and threatening cities, and letting the government shut down this week, Donald Trump and Pfizer, the pharmaceutical giant, reached a “voluntary” agreement to lower some prescription drug prices for Medicaid patients.
It arrived amid threats of huge tariffs rather than reason, but let’s give this administration, like the last, credit for achieving some notional sanity about pricing that more matches that in industrialized countries elsewhere. Pfizer also talked of building U.S. manufacturing sites, a complicated process that can take a decade.
It was a good news headline, seemingly reflective of what we might expect of a White House of either party.
The obvious hope remains that Pfizer’s rivals will do likewise to keep business parity and consider extensions to Medicare and commercial insurers.
Still, more than a cursory look suggests that the change will affect a smaller part of the population that the White House was suggesting, that it will not drop medicine prices across the board, nor change the origin of medical manufacturing anytime soon.
Pfizer did the deal to avoid Trump’s absurd proposal to put 100% tariffs on importing its brand-name products from where they are made.
None of this is about keeping or making Americans healthy. The pricing deal was about business and tariffs on the one hand, and Trump power and control on the other. Give government and drug companies credit for an agreement that lowers some prices — hard-to-win policies across Democratic and Republican administrations — but don’t mistake it for caring about health.
Focus on Business
Indeed, access to health care and the price of public insurance plans that is at the heart of this government shutdown. At best, Trump Health Secretary Robert F. Kennedy Jr. wants to substitute healthier living habits for concern about providing health care for those who cannot afford it or whose employers are cutting back coverage, and most of his effort seems focused on vaccine resistance and political loyalty issues.
Pfizer agreed to lower the cost of its drugs sold to Medicaid in line with the lower rates paid by other developed countries. Pfizer also promised a $70 billion investment in research and development, and domestic manufacturing, as well as some specialized, if non-essential meds and creams that they will discount. The new discounted prices will reflect formula that includes prices in Canada, France, Germany, Italy, Japan, Britain, Switzerland and Denmark.
But this program does not address Medicare for seniors, and most prescription drugs are underwritten by employer-paid insurance, also not covered in this agreement. And Team Trump is attacking the eligibility for Medicaid itself, meaning there will be a limit of exposure for Pfizer. The price of the same, unidentified drugs will not be lowered for most Americans. Indeed, Medicaid sales represent less than 5 percent of U.S. for Pfizer and other pharmaceutical companies.
The government simply promised not to impose the tariffs and teased a new website called, naturally, “TrumpRx” which they said would make it possible for consumers to buy discounted drugs retail without insurance. The Centers for Medicare and Medicaid Services also is considering drug-pricing controls in the Medicare program. Administration officials said companies that move to lower their prices might get faster FDA reviews when applying for federal approval of future drugs, among other incentives — a claim that seems legally dubious.
As a political matter, any mention of lower prices sounds good. Rather than focus on health, Trump has argued that Big Pharma was asking U.S. consumers to support unequal, lower prices abroad than domestically. He sent tariff warning letters this summer to 17 pharmaceutical companies, calling on them to lower drug prices within 60 days or this week.
Of course, Trump acted unilaterally, skipping by Congress. Sen. Bernie Sanders, I-Vt., has called for a more comprehensive approach, noting after the White House announcement that 87 drugs increased in price after Trump sent the letters to drug manufacturers.
On the Prices
Brand-name drug prices in the United States are three times as high, on average, as those in peer nations.
The government already pays less for drugs for Medicaid than for other public insurance programs, and manufacturers must pay rebates to state Medicaid programs. By law, they must offer Medicaid the lowest price they offer to any commercial health plans.
The average price for top-selling, brand-name drugs in Medicaid was $118 — much less than the $343 average price for drugs in Medicare’s prescription drug program, according to a 2021 report by the Congressional Budget Office. Analysts noted that Medicaid recipients already pay nothing or little for prescription drugs, so any savings would probably accrue to state Medicaid programs.
No one specified which Pfizer drugs would be priced lower for Medicaid. Pfizer’s best-selling drugs include the blood thinner Eliquis, the cancer drugs Ibrance and Xtandi, and the Covid treatment Paxlovid.
Separately, the administration is seeking to lower costs on several brand-name bestsellers, but those talks are going nowhere. Also, companies are considering hiking the cost overseas, which would make comparative costs generally higher.
Several companies have backed the “TrumpRx” idea of offering direct, uninsured retail prices at discount, but those programs have not included the most expensive drugs for cancer or other conditions. The idea is to avoid the middleman costs — including hospitals — but the money comes out of consumers’ pockets.
Incidentally, Pfizer’s stock price was up this week.
