Trump Secures Drug Price Deals with 9 Pharma Giants to Cut Medicaid Costs

President Donald Trump announced agreements Friday with nine major pharmaceutical companies to sell many of their medicines to Medicaid at prices benchmarked to other wealthy countries and to offer steeply discounted cash prices on select drugs through a new TrumpRx.gov portal, in exchange for three years of protection from potential import tariffs and other concessions worth billions to the industry reuters +1. The deals extended the administration’s “most-favored-nation” (MFN) strategy to 14 of the world’s biggest drugmakers and were touted by Trump as proof the U.S. would “stop subsidizing the entire world” on medicine costs reuters +1.

The latest round covered Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech (a Roche unit), Gilead Sciences, GSK, Merck, Novartis and Sanofi, following earlier agreements with Pfizer, Eli Lilly, AstraZeneca, EMD Serono and Novo Nordisk reuters +1. Together, the companies pledged more than $150 billion in U.S. manufacturing and research investment, promised to donate key drug ingredients to a new national reserve, and secured exemptions from any future sector‑wide pharmaceutical tariffs for three years reuters +1.

Will Patients Actually Pay Less?

The centerpiece of the deal was an MFN formula tying Medicaid prices to the second‑lowest net price after discounts in eight peer nations, including Canada, Germany and Japan, adjusted for income levels politico. Medicaid programs, which already receive substantial statutory rebates, are expected to see lower drug acquisition costs, which could ease pressure on state budgets and potentially support expanded coverage reuters. Bristol Myers Squibb went further, pledging to supply its blood thinner Eliquis free to Medicaid and donate more than six tonnes of its active ingredient to the strategic reserve reuters +1.

For individual patients, impact appeared more limited. Experts noted that Medicaid beneficiaries typically already pay only a few dollars per prescription, so deeper behind‑the‑scenes discounts primarily benefit government finances rather than out‑of‑pocket costs nytimes. The new TrumpRx cash prices—such as Merck’s diabetes drug Januvia at around $100 a month, Amgen’s cholesterol drug Repatha at $239, and GSK’s Advair inhaler at $89—could significantly help uninsured or underinsured patients who pay entirely out of pocket nytimes +1. But health‑policy researchers warned those purchases generally would not count toward insurance deductibles, meaning many insured Americans would still be better off using their coverage, even at higher list prices nytimes +1. “The bottom line is that the agreements will not decrease prices for most Americans,” said Ameet Sarpatwari of Harvard Medical School nytimes.

A Political Win, a Manageable Hit for Pharma

The agreements capped months of escalating White House pressure, including a May executive order threatening sweeping MFN mandates and industry‑wide tariffs of up to 200% on drug imports if companies refused to negotiate statnews +1. By signing, drugmakers gained clarity and a tariff reprieve while avoiding more rigid price controls. Wall Street responded with modest share-price gains of 1–3% for several firms, a sign investors viewed the deals as a manageable compromise rather than a structural shock to profits reuters +1. As Bernstein analyst Courtney Breen put it, the agreements “deliver headlines and minimize any step‑change in company economics” reuters.

Industry executives argued that much of the apparent discount reflected a narrowing of the gap between public list prices and the confidential rebates and discounts already common in the market, particularly for Medicaid and large private insurers reuters +1. Analysts said that while new drugs launched under MFN rules could see lower initial U.S. pricing over time, the commercial market’s complex web of rebates, pharmacy benefit managers and insurer formularies remained largely intact politico +1. Insurers, through their trade group AHIP, cautiously welcomed the moves but immediately pressed the administration to focus next on benefit design and transparency, areas that would determine whether any savings meaningfully reach consumers at the pharmacy counter nytimes +1.

The Bigger Picture

The deals pushed U.S. policy closer to the price‑benchmarking approaches used in Europe and Japan and underscored how much leverage the federal government could exert on a historically resistant industry without new legislation. Yet with Medicaid accounting for roughly 10% of national drug spending and the TrumpRx portal targeting a slice of uninsured or cash‑paying patients, the changes stopped short of a system‑wide reset reuters +1. The next test will come in 2026, when the MFN formulas collide with Medicare’s own negotiated prices under the Inflation Reduction Act and when the three‑year tariff holiday nears its end—points at which both drugmakers and politicians may again be forced to choose between deeper structural reform and another round of high‑stakes bargaining.