Trump’s Pharmaceutical Tariff Threat Dims as Pfizer Deal Reassures Drugmakers: What It Means for the Industry

On September 30, 2025, President Donald Trump made headlines by shaking hands with Pfizer’s CEO, Albert Bourla, to announce a deal aimed at lowering Medicaid drug prices. This move has given many in the pharmaceutical industry a sense of relief. The agreement includes a three-year exemption from tariffs if Pfizer continues investing in U.S. manufacturing. Pfizer already committed to investing $70 billion more in this sector.

This deal isn’t just good news for Pfizer; it sets the stage for other drugmakers to negotiate similar agreements. Trump aims to close more deals with other pharmaceutical companies, with Eli Lilly reportedly next in line.

Market reactions were swift. Following the announcement, Pfizer’s stock rose, and shares of other major drugmakers like Eli Lilly and AbbVie also gained.

Analysts see this agreement as a way to ease fears about potential tariffs on the pharmaceutical industry. Evan Seigerman from BMO Capital Markets noted that it might push drug pricing negotiations in a more positive direction, allowing companies to offer pricing concessions without the burden of new tariffs.

The “most favored nation” pricing that Trump has pushed for intends to tie U.S. drug prices to the lower prices in other developed nations. However, expert opinions suggest this might not be as problematic as it seems. For many companies, the impact of Medicaid—a significant focus in this deal—is limited. For instance, Medicaid accounts for less than 5% of sales for major companies like Bristol Myers Squibb and Regeneron.

Gilead is an exception, as it has about 20% of its sales tied to Medicaid, a program crucial for HIV treatments among underserved groups. Still, analysts expect companies will adjust prices for their new drugs internationally rather than lowering U.S. prices significantly.

In sum, this agreement between Trump and Pfizer represents a significant moment for the pharmaceutical landscape, potentially leading to a wave of similar deals. As the industry adapts to these new pricing strategies, patients may witness changes in how much they pay for various medications.



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