In a significant move to reduce medication costs, Donald Trump recently forged agreements with nine major pharmaceutical companies. This initiative aims to lower prices for drugs supplied to the Medicaid program and cash-paying patients. The collaboration includes renowned companies such as Bristol Myers Squibb, Gilead Sciences, Merck, and Roche’s US division, Genentech.
Details of the Agreements
The deals entail substantial cuts in drug prices for Medicaid recipients. Senior administration officials highlighted these agreements as a means of achieving “massive savings” on commonly prescribed medications. Although precise figures were not disclosed, the initiative seeks to align US pharmaceutical prices with those in other affluent nations.
Participating Companies
- Bristol Myers Squibb
- Gilead Sciences
- Merck
- Genentech (Roche’s US unit)
- Novartis
- Amgen
- Boehringer Ingelheim
- Sanofi
- GlaxoSmithKline (GSK)
Price Reductions and Consumer Benefits
The agreements allow for a reduction in cash-pay prices for select drugs, which could be available through the TrumpRx.gov website. These drugmakers must ensure that new medicines in the US are priced no higher than those in other countries. In exchange for these commitments, companies will receive a three-year exemption from tariffs.
Merck’s Contributions
Merck announced it would sell diabetes medications like Januvia at up to a 70% discount off the list price. If approved, the company’s experimental cholesterol drug, enlicitide, may also be available directly to consumers.
Background and Additional Agreements
This initiative follows Trump’s outreach in July, where he urged 17 drugmakers to adopt so-called most-favored-nation pricing for Medicaid. Additional companies, including Pfizer and Eli Lilly, have previously engaged in similar deals to control prices.
Future Steps and Investments
As part of their commitments, the pharmaceutical companies pledged over $150 billion towards research and development in the US. Merck alone committed $70 billion to this investment. The agreements also include provisions for the donation of drug ingredients to the US strategic reserve.
Impact on Medicaid Costs
Though Medicaid constitutes around 10% of the total spending on drugs in the US, it benefits from significant price discounts, often exceeding 80%. Pfizer has indicated that the new Medicaid discounts may lead to price and margin compressions next year.
