Trump Strikes First Drug Deal: Pfizer Cuts Prices in Exchange for Tariff Relief

TradingKey - On Tuesday, U.S. President Donald Trump announced an agreement with Pfizer under which the pharmaceutical giant will voluntarily slash prices for its drugs in the U.S. market.

Pfizer pledged to offer the majority of its primary care therapies and select specialty branded medications to American patients at discounts averaging 50% and reaching as high as 85%. The discounted drugs will treat conditions — including migraines, rheumatoid arthritis, menopausal symptoms, and atopic dermatitis — that affect more than 100 million patients.

These discounted medications will be sold directly to consumers through TrumpRx.gov, a website specifically established by the Trump administration for this initiative. Trump said the move “will provide enormous help to low-income Americans” and emphasized it as “a critical step forward [in] our work to improve healthcare in hard-working

Beyond pricing, Pfizer also committed to investing $70 billion to bring more drug manufacturing and R&D facilities back to the United States. In return, the U.S. government granted the company a three-year tariff exemption, shielding it from potential tariffs that could arise from a Section 232 investigation into whether pharmaceutical costs pose a national security threat.

This arrangement directly neutralizes two major threats facing Pfizer: it avoids the policy risk of the government implementing “most-favored-nation” (MFN) pricing — which would have tied U.S. drug prices to the lowest international rates — and it exempts the company from tariffs linked to the Section 232 probe into whether drug pricing constitutes a national security concern.

In his statement, Trump explicitly noted that Pfizer is “the first pharmaceutical company to reach such an agreement,” and confirmed that the administration is negotiating with other drugmakers, aiming to finalize similar deals within the coming week. He was blunt about his leverage: “If we don’t make a deal, we’re going to tariff them.”

In a note on Tuesday, BMO Capital Markets analyst Evan Seigerman said the deal is positive for Pfizer’s stock and the broader pharmaceutical sector, as it “adds certainty and shifts POTUS policies potentially away from Pharma tariffs.”

“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 the most favored nation policy or tariffs, he added.