Trump announces Pfizer deal to slash drug prices, invest $70 billion in US manufacturing

Washington, D.C.: Pharmaceutical giant Pfizer has agreed to reduce drug prices and invest $70 billion in domestic manufacturing facilities as part of a deal with the Trump administration, President Donald Trump announced on Tuesday.

Speaking alongside Pfizer CEO Albert Bourla at the White House, Trump hailed the agreement as a major victory in his months-long campaign to tackle high drug costs in the United States.

“I can’t tell you how big this is,” said Trump, noting that the agreement had come after extensive negotiations and mounting pressure on drugmakers to lower prices.

Under the terms of the deal, New York-based Pfizer will offer "most-favoured-nation pricing" to Medicaid — a model that ensures the company charges the lowest price available in any other developed country for its medicines. The same pricing policy will also apply to newly launched drugs.

Bourla welcomed the move, saying,

“I think today we are turning the tide and we are reversing an unfair situation.”

The announcement came amid a looming federal government shutdown and an ongoing political standoff over healthcare spending. It also follows a May executive order from Trump that gave drugmakers 30 days to voluntarily cut prices or face new payment restrictions from the government.

Trump revealed that he had used tariff threats — a strategy he has frequently employed — to persuade pharmaceutical companies to strike deals, although he acknowledged such tariffs could have inadvertently pushed prices even higher.

“This is something that most people said was not doable,” the president said.

However, Trump’s claim that drug prices could fall by “14, 15, 1600%” drew scrutiny, with observers pointing out that a 100% reduction would already make a drug free, and cuts beyond that would imply patients being paid to take medication — a mathematical impossibility.

Major manufacturing boost

As part of the agreement, Pfizer will invest $70 billion in U.S. manufacturing facilities, aligning with the administration’s push to bring more pharmaceutical production back to American soil.

While the White House has yet to release detailed information about the planned investment, Trump has long argued that domestic drug production is essential for economic and national security.

Pfizer, one of the largest U.S. drug manufacturers, produces key treatments such as the COVID-19 vaccine Comirnaty, Paxlovid, Eliquis, and several cancer and pneumonia therapies.

Broader push to rein in prices

The deal is part of a broader push by the Trump administration to reduce prescription drug costs in the U.S., where brand-name drugs are often priced up to three times higher than in other developed nations.

In late July, Trump sent letters to the heads of 17 major pharmaceutical companies, urging them to adopt most-favoured-nation pricing for Medicaid, new drugs, and even medications sold directly to consumers and businesses.

He has frequently argued that the U.S. “subsidises care in other countries” due to its inflated drug prices.

Though Medicaid patients often pay only a nominal co-payment, the reduced prices are expected to provide significant relief to state budgets that jointly fund the low-income healthcare programme.

In recent years, drugmakers have begun offering direct-to-consumer access for certain medications via online platforms, as telehealth and virtual care gained popularity during the pandemic.

With Tuesday’s announcement, Trump said more pharmaceutical companies would follow suit:

“They’re all coming in over the next week,” he added.