Trump strikes deal with US drugmakers to cut Medicaid medicine costs | Business
Donald Trump and nine major pharmaceutical companies announced deals Friday that would lower drug prices for the government’s Medicaid program and cash payers, in his latest bid to bring U.S. costs in line with those in other rich countries.
Bristol Myers Squibb, Gilead Sciences and Genentech, the US unit of Merck and Roche, have struck deals. Novartis, Amgen, Boehringer Ingelheim, Sanofi and GSK also signed the agreement.
Under the agreements, each drugmaker will lower the prices of most drugs sold to the Medicaid program for low-income people, senior administration officials said, promising “huge savings” on commonly used drugs, without providing specific figures.
U.S. patients currently pay by far the most for prescription drugs; that’s often nearly three times higher than in other developed countries, and Trump is pressuring drugmakers to lower their prices to what patients elsewhere pay.
Details of each deal were not immediately disclosed, but officials said they included agreements to lower direct-to-consumer cash-pay prices for certain drugs potentially sold through the TrumpRx.gov website, to launch the drugs in the U.S. at prices equal to — but not lower than — prices in other rich countries, and to increase production. In return, companies will be able to receive exemption from all tariffs for three years.
Merck said it will sell diabetes drugs Januvia, Janumet and Janumet XR, which will face generic competition next year, directly to U.S. consumers at about 70% of list prices. If approved, the experimental cholesterol drug enlycitide will also be offered through direct-to-consumer channels.
Enlicitide is one of two Merck drugs expected to receive expedited review under the FDA’s new fast track, Reuters previously reported.
In July, Trump sent letters to the leaders of 17 major drugmakers, urging them to offer so-called most-favored-nation prices to Medicaid and to ensure that new drugs are brought to market at prices no higher than those in other rich countries.
Five companies had previously struck deals with the administration to rein in prices: Pfizer, Eli Lilly, AstraZeneca, Novo Nordisk and EMD Serono, the U.S. division of Germany’s Merck KGaA. The other three companies that have not announced deals are Regeneron, Johnson + Johnson and AbbVie. Investors initially feared sweeping U.S. price controls, but details of recent agreements have largely eased those concerns.
Reuters had previously reported that AbbVie was expected to announce a deal on Friday. Drugmakers on Friday committed to “most preferred country” pricing on all new U.S. drug launches in commercial, public and cash-pay markets, including the U.S. Medicare program for people 65 and older, officials said.
Some of the revenue from each company’s foreign sales will also be transferred to the United States to offset costs, officials said. The companies have pledged to invest more than $150 billion in the U.S. for research, development and production, according to officials, but it is unclear whether that includes previous commitments. Some have also agreed to donate drug components to the US strategic reserve.
Merck said it allocated $70 billion of this amount.
Analysts noted that Medicaid, which accounts for just 10% of drug spending in the U.S., already enjoys significant price reductions, exceeding 80% in some cases.
Pfizer, which announced its 2026 financial outlook on Tuesday, said Medicaid reductions will lead to price and margin compression next year.
