Will Trump’s Prescription Drug Deals Really Lower Prices?

Dan Gorenstein (DG): Over the last few months, President Trump has gone after the price of prescription drugs.

News montage: The president is going to announce an agreement with pharmaceutical giant Pfizer. He has signed 17 letters to pharmaceutical company CEOs. Setting a 30-day deadline for companies to lower the cost of prescription drugs.

DG: The President has also been unorthodox — threatening tariffs, social media posts, bullying some of America’s biggest drugmakers.

Stacie Dusetzina (SD): If he were a Democrat, there’s no way it would fly.

Michael Cannon (MC): Throwing the rule book out the window.

Darius Lakdawalla (DL): It doesn’t look a lot like capitalism.

DG: Today, we hit pause on all this action, take a deep breath, and explain what this flurry of moves might actually mean for the prices that we pay for the medicines we need.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.

*****

DG: For today’s show, we’re trying to sort out the signal from the noise.

President Trump’s done a lot of stuff to try to lower the price of prescription drugs.

And we wanted to get a handle on what, if anything, is most likely to move the needle.

So we asked Tradeoffs senior producer Leslie Walker to make the rounds… 

Leslie Walker (LW): Hey can you hear me ok? Hello? You froze for a second but I can see you now.

Will you just say a few more things? I just want to hear how your audio is sounding.

DG: With some of the smartest health policy people in the country.

Walker interview montage: I’m Sarah Karlin-Smith. // Michael Cannon. // I’m Rachel Sachs. // I’m Darius Ladkawalla. // My name is Ben Rome. // My name is Brian Reid. // LW: The story we’re trying to do, I’ve nicknamed it “WTFRx.” // I have not seen anything like this before. // I think it’s fine to describe it as madness.

DG: Leslie, sounds like you have been busy, my friend! 

LW: I have. I talked to 10 different experts and there’s obviously a lot we could cover today. But after those conversations, it seems to me like there’s really two big things we should focus on.

The first one really captured the headlines.

President Donald Trump: This is a really big announcement. This is something that most people said was not doable.

LW: It’s a deal that was revealed in the Oval Office on the last day of September between President Trump and Pfizer CEO Albert Bourla.

Albert Bourla: Mr. President, what an honor to be here today in this office to announce a landmark agreement. 

LW: With a portrait of former President Ronald Reagan beaming down on the pair, they outlined this compact that Wall Street Journal reporter Pete Loftus told me raised a lotta eyebrows in the industry.

Pete Loftus (PL): What happened, I would say was unprecedented.

LW: Pete gave me the play by play on this unusual arrangement between the White House and this major corporation. And he told me, Dan, this deal had been months in the making — with Trump ratcheting the pressure up and up.

PL: When things looked like they were stalling, then Trump would issue more announcements to try to really press people. 

LW: At one point, the President threatened to impose triple-digit tariffs on some medicines imported into the country — a potentially massive, multi-billion dollar headache for pharma.

DG: I’m guessing that got Pfizer to ‘yes’ pretty fast.

LW: Indeed, and, Dan, one quick point about the press conference. One source described Trump’s approach to this deal as thuggery.

President Donald Trump: We didn’t have to mention that to Albert. Well, maybe I whispered it to him very slightly.

LW: And there was this sort of weird mash up you hear between the President, arguably, bullying.

President Donald Trump: We had to give ourselves a little bit of an advantage.

LW: But also this kind of backroom, backslapping, behind-closed-doors dealmaking.

Albert Bourla: Is this the coolest office? He has a beautiful office, but the oval is the coolest. Right. What do you think? I think by far.

LW: But more important than the unusual style of this deal, of course, is it’s actual substance.

DG: Right. Is this bullying or backslapping or whatever going to lead to lower drug prices?

LW: Exactly. So let’s look at the terms.

In exchange for Trump backing off his big tariff threat, Pfizer agreed to invest more money in American manufacturing and change how they price certain drugs.

That includes discounts directly to consumers. But only if — and this is a big if — if those consumers are paying totally out of their own pockets, not through insurance.

DG: So how big of a discount are we talking about?

LW: Well, we’re still short on a few details. But Pfizer says at least they’ll knock 50% off these drugs’ sticker prices on average.

The Administration has hinted more markdowns are coming soon.

AstraZeneca last week jumped on board too offering discounts of up to 80% on some of their drugs.

One more wrinkle here, Dan: All these cash prices, Trump announced, will be available through a brand-new, government website TrumpRx.gov.

DG: Wait, wait, is the White House launching its own pharmacy? Like should CVS and Walgreens watch their backs? 

LW: No, not quite. It’s been described more like a search engine, a clearinghouse for consumers to connect to other websites where they can buy drugs directly.

That said, I did scroll on over to TrumpRx to check it out and as of right now, it’s just a giant picture of the president with the words “Coming Soon.” 

DG: Okay, so that’s the first part of this deal: discounted prices on some drugs available on this new kind of repository but only if you are paying out of pocket. 

LW: That’s right.

DG: What’s the verdict from those experts you talked to, Leslie? How much will this actually affect drug prices? Because it sounds like to me, this is an example of more ‘noise’ than ‘signal.’

LW: Yeah, most folks I talked to said the impact of these discounts, for most people, will be minimal. 

For starters, consumers could already find many of these markdowns elsewhere. This website just aggregates them in one place.

And the other reality is that for most people, brand name drugs are much cheaper to buy through insurance than with cash.

The one exception might be drugs that your insurance doesn’t cover, like weight loss drugs or infertility treatments, which Trump announced late last week will also be discounted on TrumpRx.

DG: Coming soon. And what about for folks without insurance, Leslie? I mean I know we’re expecting to see more people in that position, in large part thanks to the so-called Big Beautiful Bill that President Trump helped push through Congress.

It could kick some 10 million people off Medicaid and Obamacare.

LW: Right, for those folks, Vanderbilt professor Stacie Dusetzina told me a 50% discount sounds good on paper but in practice, for brand name drugs, that would still leave you owing hundreds or thousands of dollars a month.

SD: If you have income low enough to be on Medicaid, these cash pay programs are a joke. There’s no way you have the funds to be able to pay for that type of drug coverage, or lack thereof.

LW: Stacie pointed to research showing that for many people having to pay just $100 at the pharmacy counter — even for a drug they really need — is a deal breaker. They just aren’t gonna do it.

But, Dan, this Pfizer announcement also came with one other big promise. 

President Donald Trump: Other countries are paying a fraction of what we pay for the same exact drug, same exact pharmaceutical, everything.” And I said, “No, it’s not right.”

LW: President Trump has long called out companies for charging Americans two, three, even four times more than consumers in places like France or Germany.

Now Pfizer and as of a few days ago, AstraZeneca, are promising to stop doing that, with a few caveats.

DG: Leslie, before we get to those caveats I just wanna jump in here and say this approach is what policy wonks call “most favored nation” pricing or sometimes “reference pricing.”

Meaning, just to be clear, that in this case, America gets as good of a deal as anyone else. 

LW: Yes, thanks for keeping up with the glossary of terms, Dan. Appreciate that.

DG: Watch the jargon, Walker! 

LW: Sorry, but here are the caveats, though. This policy, as of right now, appears to have a pretty limited scope. These favorable prices only apply in two instances.

One, for brand new drugs — stuff hitting the U.S. market for the very first time. And two, in the Medicaid program — that’s the public insurance program for low-income and disabled Americans.

DG: Got it. And what’s the verdict from your drug nerds here on this ‘most favored nation’ plan? 

LW: Here the consensus was like that emoji on your phone that’s like shrug, hands up, who knows?

DG: Who knows.

LW: I thought this story that Darius Lakdawalla, who’s an economist at USC, told me pretty well captured how a lot of folks reacted to this piece of that press conference.

DL: I had somebody call and ask me about the Pfizer deal and they sent me the transcript of the press conference and said, “Tell me what this means.” I’m like, I have no idea what this means. If you read the transcript, all of the relevant details that an analyst would be looking for are absent.

LW: Details like, which countries? Which prices? If a new drug launches in France for $10,000, is that the price we pay? Or do we get whatever discounted price the French government negotiates in secret with Pfizer — let’s say, $6,000?

DL: There’s an endless list of questions that you’re just never going to get answered without detailed guidance documents, and so far, those have not been forthcoming. 

DG: Leslie, given the absence of this critical information, what, if anything, can we definitively say about how much this will impact drug prices here in the US?

LW: Well if you’re gonna twist my arm, fine. Let’s see here.

So, at least for patients in the Medicaid program, which is the first one to get this most favored nation pricing, this won’t do a whole lot. These are low-income folks who already pay little or nothing for their drugs. This policy is not going to change that.

For the Medicaid program itself, states, feds, they already get super deep discounts. So it’s not clear yet if this will be a better deal.

The last thing we do know: There’s a lot of ways for companies to game this policy and keep their prices high.

DG: Those people are consistently clever.

LW: Absolutely. And here’s one play companies are already making: Just launch your product in America, then there’s no need to lower your price to match another country.

DG: So the US market is big enough that skipping one, two or even every other country in the world, might actually make sense financially for some companies?

LW: Correct — and some already do that.

Another option for drugmakers: Try this one. Just hike prices around the globe, rather than lower them in the US.

And if you listen carefully to the words of Chris Klomp, this Trump health official, at that Pfizer press conference when he talked about what this deal really means for drugmakers he kind of seemed to be planting the seed for that possible outcome.

Chris Klomp: They are free to price their drugs wherever they want. These are not price caps. These are not price controls. They can price however they’d like. We’re simply asking them and they are committing not to undercut us in other countries

DG: So Leslie, it seems like whether Americans end up paying high prices or low prices, as long as they’re the same as other countries, the administration could at least say: No one’s getting a better deal than us.

LW: Exactly.

DG: Alright, so just recap before we head to break: it sounds like given what we know as of right now, this agreement with Pfizer may provide some savings but truthfully, there are too few details to really honestly assess what impact it will have, if any.

LW: Yeah, I think that’s the general consensus but I did speak to a few folks who told me this deal could set a pretty powerful precedent going forward. 

This particular deal — the Pfizer one — like you said, it’s narrow, it’s fuzzy, it’s only with one company. But it puts a lot of power in the hands of the President. And that, Michael Cannon with the Cato Institute told me, carries risks. 

MC: Congress never gave the president the power to set prices. Giving a president all of these powers enables them to just set policy by themselves without Congress, and then use all of those powers to try to effect the policies that he prefers. Even if you like the idea of lower drug prices, which I do, it’s incredibly dangerous because the next president could come in and do something that you don’t like with those same powers.

LW: There’s no doubt, Dan, among people around the industry who I talked to that Trump’s actions, and his threats, have absolutely rattled this once kind of untouchable sector.

It’s just not clear yet what that uncertainty will amount to.

DG: When we come back, another decision Trump’s made on drugs that could save some real money. 

BREAK

DG: Welcome back. We’re looking today at what President Trump has, and hasn’t yet, accomplished with his recent surge of action to lower prescription drug prices.

Let’s bring back senior producer Leslie Walker. Hey, Leslie.

LW: Hi again! 

DG: So you told us there are two big things worth talking about today. The first was that Pfizer deal. What’s the other?

LW: Well, Dan, the way one researcher put it to me: The most interesting, and honestly, impactful thing President Trump has done on drug prices is really kind of something he hasn’t done.

Trump has at least, so far, left in place this big policy that Democrats passed under President Biden — this law that, for the first time ever, gave the federal government the power to directly negotiate prices with drugmakers in the Medicare program.

DG: Right, this was a historic moment: Medicare actually going toe-to-toe with drugmakers, a policy dream decades in the making. 

LW: Yes, but one with a target on its back. You know, Project 2025, this kind of policy roadmap that Republicans seem to be following, had called for a total rollback of this law letting Medicare negotiate on drug prices.

And yet, Harvard professor Ben Rome says, here we are.

BR: It seems as though the Trump administration is doubling down and saying they are going to negotiate better than the Biden administration did in the first round of price negotiations last year.

LW: The administration is actually expected any day, maybe any hour, now to announce the prices they’ve negotiated for this next batch of drugs.

We’re talking 15 of the most expensive medicines in the Medicare program, including asthma meds, cancer drugs, and drum roll, please, Dan, the weight loss blockbusters Ozempic and Wegovy.

DG: Very interesting, Leslie. I wonder if Medicare will get a better deal than Costco! I saw they just started selling weight loss drugs for $499 a month.

LW: Always hard to beat Costco! But this is one of the big things experts told me they’ll be watching for: just how aggressive the administration gets at the negotiating table. The law leaves them a lot of discretion.

DG: Alright, so,  Leslie, I know we don’t have the exact prices yet but big picture, what type of impact do insiders expect these Medicare price negotiations to have?

LW: Right. For patients, the picture is muddy. The prices of the negotiated drugs will of course be lower. But whether patients see any savings at the pharmacy counter depends on a person’s deductibles, copays, all that fun stuff.

The big winner here, experts told me, really is the federal government and taxpayers. They pay the bulk of the costs here and they will definitely see billions of dollars a year in savings.

DG: Wow, okay, so that’s real money.

LW: Yeah, the first round of negotiations under President Biden saved something like $6 billion a year and we’re talking about more drugs this time around.

One caveat here, though. Vanderbilt professor Stacie Dusetzina did point out that Republicans, as part of their Big Beautiful Bill, did make one major tweak to this negotiation policy.

I will spare you the many weeds but it basically shields more drugs from these negotiations and that could ultimately reduce taxpayer savings by almost $9 billion over the next decade.

That’s on top of some other ways we’re starting to see drugmakers game these negotiations.

DG: Okay, so on whole, what you’re telling us Leslie, is this is a policy that sure, has some limits, but should ultimately deliver serious savings — at least to the federal government.

LW: Yeah, I think so.

DG: Something that strikes me, Leslie, about these Medicare negotiations is that in some ways, President Biden and President Trump had a pretty similar approach.

Let’s get drugmakers to the table and let’s drive a harder bargain. They’ve just gone about it in very different ways.

In Biden, a very traditional, bureaucratic approach and with Trump, it’s more of a back room, fly by the seat of your pants deal that gets hashed out over lunch.

LW: Yeah, you know I made a similar observation to the Harvard professor Ben Rome. And he said he likes Trump’s spirit but worries about its staying power. 

BR: I’m totally in favor of the let’s make a deal mentality. You just have to do it over and over again for every new drug that comes out. You can’t do it once now and assume that the problem is solved and going to go away in perpetuity.

LW: This particular corner of health policy, Dan, it requires just so much persistence, so much attention to detail, and it’s not clear yet to folks that this administration has the appetite for that kind of work.

DG: Last question, Leslie. Whenever a politician calls for lower drug prices, you typically hear this chorus of folks, often economists, pharma insiders, chime in saying “Whoa, be careful. Slow down.”

Because if your price cuts are too big or too blunt, you could end up killing the incentives, the cash that companies need to chase that next life-saving, game-changing therapy. 

Is that a risk here with any of the policies that President Trump is pursuing?

LW: Important question for sure. The reality is that any policy that puts a major dent in revenues for companies is gonna change some behavior. It’s gonna reduce some investment somewhere.

And the only policy, at least today, that we’ve discussed that seems clearly poised to do that is these Medicare price negotiations.

Companies have already begun to blame those negotiations for a drop in the number of clinical trials we’re seeing for certain drugs, but it will take a lot longer to fully understand that law’s impact on innovation.

There is one other thing though, that’s got some folks really worried.

DG: What’s that?

LW: Well, I don’t know how to succinctly say it but it’s basically all the stuff going on at HHS under Secretary Robert F. Kennedy.

You know, the major cuts to research grants, which have historically played a big role in drug discovery. There’s the changes to vaccine policy that could dissuade companies from entering that space. Staffing cuts, policy changes at the FDA that could slow the approval of new drugs.

All this stuff, it’s just like the Pfizer deal — it’s still lacking details, it’s constantly changing, but folks were clear. Those are the kinds of policy decisions that could have a real effect on the kinds of drugs we do and don’t see coming to market now and for decades to come. 

DG: Well, Leslie, I’m not sure where any of us will be decades from now but I do know that at least in the months ahead you’ll continue to help us stay on top of this story. Appreciate your work.

LW: Absolutely. Thanks, Dan.

DG: I’m Dan Gorenstein. This is Tradeoffs.