AstraZeneca makes deal with Trump to lower drug prices and avoid tariffs | US healthcare
Donald Trump announced a deal with U.K.-based drugmaker AstraZeneca for a “most favored nation” drug pricing model aimed at making prescription drugs more affordable and avoiding the administration’s tariff threats.
The company will sell some drugs at a discount under the government’s Medicaid health plan in exchange for a tariff reduction, similar to the drug pricing agreement reached with Pfizer last week.
Trump began his Oval Office announcement Friday evening by boasting that he would sign the agreement sooner, but “we were disrupted by a rigged election.” AstraZeneca CEO Pascal Soriot, who attended the meeting, said Trump and his team of officials “really kept me up at night” during the difficult negotiations to reach the deal.
The agreements create a framework that the White House will use to achieve its goal of lowering U.S. prescription drug prices. The president sent letters to 17 leading drugmakers in July telling them to lower prices. Pfizer and AstraZeneca were the first two companies to reach an agreement with the administration.
Trump said that under the agreement, AstraZeneca will request most-preferred nation pricing from Medicaid and guarantee that pricing for newly launched drugs. This involves matching the lowest price offered in other developed countries.
“For many years, Americans have paid by far the highest prices in the world for prescription drugs,” Trump said, adding that the new agreement could reduce prices to “the lowest price anywhere in the world.”
Trump repeated the wildly false claim that discounted prices for American consumers would reduce the price of prescription drugs by as much as 1,000%.
CNN’s Daniel Dale as explained: “Lowering drug prices by more than 100% would mean Americans would get money to buy their drugs rather than pay for them.” Health economist Timothy McBride told the channel that Trump’s claims “don’t make sense” because a 500 percent price cut would mean that a drug that currently costs $100 would be offered for free, giving consumers a $400 discount.
The president said the actual deal with AstraZeneca included cuts to the prices of the government’s Medicaid health plan for low-income Americans and discounted prices through the “TrumpRx” website.
Pfizer previously agreed to lower prescription drug prices in its Medicaid program for low-income Americans to those in other developed countries in exchange for waivers from tariffs threatened by Trump.
More than 70 million people are covered by Medicaid, the state and federal government program for low-income people. Drug spending in that program dwarfs that of Medicare, which covers people 65 and older or those with disabilities and was not included in Friday’s announcement.
The Medicaid program already charges the lowest drug prices in the U.S., so additional savings could be modest, said Craig Garthwaite, a professor at Northwestern University’s Kellogg School of Management.
“If you look at AstraZeneca’s portfolio, I don’t think there’s a group of drugs that would warrant a huge rebate to Medicaid,” Garthwaite said.
Americans currently pay the most for prescription drugs; That figure is often nearly three times higher than in other developed countries, and Trump has been pressuring drugmakers to lower their prices to the same level as what patients pay elsewhere or face stiff tariffs.
Last month, Trump threatened 100% tariffs on drug manufacturers, increasing pressure on the pharmaceutical industry to accept price cuts and shift production to the United States.
“Tariffs were a big reason why he came here,” Trump said of AstraZeneca CEO Soriot.
Rena Conti, an associate professor at Boston University, said AstraZeneca’s Pfizer-like deal may save tariffs but won’t move the needle on rising U.S. health insurance premiums and out-of-pocket drug costs.
“This is a good thing for companies, and it’s very unclear whether it has any benefit for Americans struggling with prescription drug affordability,” Conti said.
