TMTPOST -- Pfizer Inc. stock jumped as much as 7.5% and finished 6.8% higher on Tuesday after the pharmaceutical behemoth reached an agreement to avoid hit by the upcoming hefty sectoral tariffs imposed by the Trump administration.
Credit：Pfizer
U.S. President Donald Trump on Tuesday announced an agreement with Pfizer to sell some of its drugs at huge discounts. That was the administration’s first agreement with a major pharmaceutical company to bring American drug prices in line with the lowest paid by other developed nations, known as the most-favored-nation (MFN) price.
The agreement will provide every State Medicaid program in the United States access to MFN drug prices on Pfizer products, resulting in many millions of dollars in savings, and requires Pfizer to offer medicines at a deep discount off the list price when selling directly to American patients, according to a press release by the White House.
As part of the agreement, Trump said Pfizer plans to offer some of its drugs at a reduced rate on TrumpRx.gov, a new government-run website for consumers to directly buy drugs from manufacturers. “Pfizer has agreed to provide some of the most popular current medications to our consumers at heavily discounted prices anywhere between 50% and even 100%,” Trump said.
In addition to sell its existing drugs to Medicaid patients on TrumpRx.gov, Pfizer also agreed to guarantee the MFN pricing on its new drugs for Medicare, Madicaid and commercial payers.
Pfizer in a statement said it will participate in TrumpRx.gov that will allow American patients to purchase medicines from Pfizer at a significant discount. The large majority of Pfizer’s primary care treatments and some select specialty brands will be offered at savings that will range as high as 85% and on average 50%, per the company.
Pfizer is also committed to investing $70 billion in U.S. research, development and capital projects in the next few years, building upon its more than $83 billion investment in American biotech innovation from 2018-2024.
Pfizer in its statement said the voluntary agreement met all four of Trump’s request in a letter in late July, suggesting the deal eliminates the risks of the government’s any punishment including tariffs.
The threat of tariffs on pharmaceutical imports has been intensified since the Trump administration in April opened a Section 232 investigation into how importing certain pharmaceutical products affects national security. The move was widely seen as a prelude to initiating tariffs on drugs.
The White House on July 31 said Trump had sent letters to 17 major pharmaceutical firms in the West outlining the steps they must take to lower the price of U.S. prescription drugs to MFN levels by September 29. Trump in the letter warned if these companies “refuse to step up,” the U.S. government will deploy every tool in its “arsenal to protect American families from continued abusive drug pricing practices,” without specifying the possible measures.
Trump last Thursday said in a social media post that he will impose a 100% tariff on all branded or patented pharmaceutical products starting on October 1, Wednesday, and companies “building” their pharmaceutical manufacturing plants in America would be exempted from such levies.
Trump clarified that the “building” means the plant is “breaking ground” and/or “under construction”. “There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started,” the president wrote in his post.
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