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Wall Street had long feared President Donald Trump would follow through with threats to impose aggressive drug-pricing policies, eroding the pharmaceutical industry’s profitability and depressing share prices.
Those fears were largely laid to rest this week after Pfizer Inc. cut a deal with the White House. Trump suggested Indianapolis-based Eli Lilly and Co., maker of the blockbuster weight-loss drug Zepbound, would be next up. Lilly shares were up 6.9% at midday Wednesday, to $815.57 each.
Pfizer led the pack on Tuesday, negotiating a three-year reprieve on drug-import tariffs in exchange for a promise to reduce what it charges Medicaid. The government insurance program for low-income people accounts for a small fraction of Pfizer’s business and already gets steep discounts from drugmakers.
Pfizer also promised to price future drugs on par with what they cost in other wealthy nations—a big-sounding pledge expected to have little financial impact on the company’s bottom line—and to make some of its medicines available for cash-paying patients at a discount on a new website called TrumpRx that launches in early 2026.
The results address the “two major overhangs” on the whole pharmaceutical sector, Pfizer CEO Albert Bourla said at the White House meeting, referring to anxiety over drug pricing policy and potential tariffs that was keeping investors on the sidelines.
Pfizer shares gained as much as 2.6% at the start of trading in New York on Wednesday. They rose 6.8% on Tuesday after the announcement, their biggest gain in four years on a closing basis.
The deal established a template for Bourla’s C-suite peers, BMO Capital Markets analyst Evan Seigerman said in a note to investors, “allowing for headline pricing concessions and a Trump ‘win’ without more punitive implementation” of tariffs.
The White House said it’s in talks with more than a dozen drugmakers to follow suit. On Wednesday, GSK Plc CEO Emma Walmsley told Bloomberg News the UK pharma company is “engaging constructively” with the Trump administration on drug pricing, stopping short of discussing details on the exact contours of any deal.
But already, “the markets see that,” she said, referring to the surge in European pharma companies’ shares on the optimism that others will strike similar agreements. GSK and AstraZeneca Plc rose as much as 3.4% and 7.4% respectively.
Where Trump sees policy victory, analysts see a massive relief. “For all the hype and commentary around delivering a transformative win for lower drug prices,” Pfizer didn’t change a single numeral in its financial forecast in light of the deal, Cantor Fitzgerald analyst Carter Gould pointed out, suggesting the whole affair was “more optics than bite.”
For the vast majority of patients, little will change. Prices at the pharmacy counter are the result of an opaque system of negotiation and rebates that render drug pricing a black box.
More than 90% of Americans have some form of insurance coverage, according to the nonprofit KFF, either through their employers or federal programs like Medicare. Those patients already pay far less than the discounted prices Pfizer has promised to roll out, and Medicaid is already legally required to get the lowest price available for most drugs.
For the roughly 26 million Americans who don’t have insurance, it’s unclear whether the discounted cash prices available from TrumpRx will actually make drugs more attainable. Even at steep discounts, prescription medicines can costs thousands of dollars a year.
It will be difficult to track just how much of a difference Pfizer’s pledge might make. The net prices of branded drugs are closely guarded secrets, as are the byzantine contracts pharma companies sign with the many middlemen who determine which medicines are available to a given patient.
Pfizer’s trip to the White House is expected to be the first of many. Fifteen other major drugmakers received letters demanding they make promises like Pfizer’s, and analysts expect each to answer the call.
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