Trump Secures Drug Price Cuts Through Tariff Threats

President Donald Trump announced agreements with nine pharmaceutical companies on December 20, 2025, to align U.S. prescription drug costs with lower prices in other developed nations. The initiative, termed Most Favored Nation pricing, brings the total number of participating global drugmakers to 14 out of 17. Participating firms—including Amgen, Bristol Myers Squibb, GSK, Merck, and Sanofi—agreed to match Medicaid prices to international levels and offer discounts of up to 70% off list prices for certain medications.

To secure these deals, Trump used the threat of 10% tariffs, granting participating companies a three-year exemption. Other incentives include priority vouchers from the Food and Drug Administration to expedite drug reviews. In return, the companies pledged $150 billion in combined investments for U.S. research and manufacturing, with Merck contributing $70 billion. Bristol Myers Squibb committed to providing the blood thinner Eliquis to Medicaid for free and donating six tons of the drug to a national strategic reserve.

The administration will launch TrumpRx.gov in January 2026 to allow consumers to purchase medicines directly from manufacturers. Following the announcement, Trump claimed during a press conference at Mar-a-Lago that some drug prices had been reduced by 1,000% to 3,000%, a statement that drew ridicule from economists and analysts for being mathematically impossible. Democratic lawmakers and health experts have criticized the initiative, questioning if the tariff exemptions constitute a quid pro quo and doubting the actual impact on net pricing.