Pfizer's Pricing Deal Went Down to the Wire

“Over a weekend in late September, the team of Pfizer officials working with the Trump administration on drug prices got a message: Clear your schedules.

 

Negotiations were reaching a tipping point. CEO Albert Bourla and Chris Klomp, head of Medicare, who was leading negotiations for the administration, had met in Washington and reached a handshake agreement on the contours of a drug price deal. A deadline to avoid tariffs was looming, and there were still a few things to iron out.

 

All the major pharmaceutical companies had been told they needed to come up with a plan to lower prices and manufacture in the U.S., or face consequences including tariffs.

 

Pfizer wanted to make sure that if the company agreed to a deal, it would secure a reprieve on levies and its manufacturing investments could focus on younger and future products rather than infrastructure for drugs about to go generic, according to people familiar with the matter.

 

Talks intensified in the week of Sept. 20. The final deal came together in the wee hours of the morning before a deadline President Trump had set for imposing tariffs. It was signed by Bourla and Health Secretary Robert F. Kennedy Jr. just ahead of the announcement on Tuesday, according to people familiar with the deal.

 

What was revealed that day in the Oval Office, as Bourla stood near Trump, Kennedy and others while giving each other smiling glances, was a win for both parties. Trump got to announce a deal cutting drug prices and a start on a new direct-to-consumer platform dubbed TrumpRx. And Pfizer avoided tariffs with a strategy that would be a minimal hit to its bottom line.

 

The deal was built not just on the team negotiations, but on the longstanding relationship between Bourla and Trump, cultivated over dinners at Mar-a-Lago and regular catch-ups over the phone between the president and chief executive. Bourla recently suggested that Trump's Operation Warp Speed, which was launched to quickly develop Covid-19 vaccines, was the kind of accomplishment that "would typically be worthy of the Nobel Peace Prize." At Tuesday's announcement, Bourla thanked Trump for his friendship and hugged Centers for Medicare and Medicaid Services Administrator Mehmet Oz.

 

It was a moment of triumph for Bourla that has brought on ire from other executives. During a 90-minute call on Wednesday with executive members of PhRMA, the trade group representing the pharmaceutical industry, some other CEOs were angry and felt blindsided, according to people familiar with the meeting. Genentech's CEO Ashley Magargee discussed whether Bourla should be removed as chair, one person said.

 

A Genentech spokesman declined to comment.

 

Bourla pushed back, telling the executives that Trump made clear he wanted better pricing for the public and that the deal showed how companies could avert tariff threats and have certainty to invest in their businesses.

 

"We are in constant dialogue with the U.S. government and have been working with the administration on a number of issues where we share the president's commitment to addressing devastating disease and making medicines more affordable," a Pfizer spokesman said.

 

White House officials said the goal was to preserve innovation while also getting lower drug prices for people.

 

The deal has lifted beleaguered drug stocks by pointing a way for companies to remove the threat of tariffs and deal with U.S. pricing pressures. Shares of Pfizer have surged 14.8% since the deal was announced. Shares of other big drugmakers including Eli Lilly and AstraZeneca also have risen sharply, on the expectation that other companies might strike similar deals that spare them more onerous outcomes.

 

Trump's goal of reshaping how drugs are priced in the U.S. started in his first presidential term, but it wasn't until his second term that he gained momentum.

 

His proposals for pharmaceutical tariffs and a May executive order calling for "most favored nation" pricing -- whereby the U.S. government pays the same as the lowest prices for drugs that other wealthy countries pay -- eventually brought pharmaceutical companies to the negotiating table like never before.

 

Several drugmakers, including Eli Lilly and Johnson & Johnson, announced plans to spend tens of billions of dollars on U.S. manufacturing and research in the coming years as a show of cooperation. Pfizer took a different approach -- waiting to secure a deal before committing to spending billions of dollars more in the U.S.

 

Drugmakers opposed most-favored-nation pricing, arguing that it would deprive them of funding needed to develop future medicines and that it could jeopardize the billions in the recently announced planned investments. At the time, some industry leaders didn't put much stock in an executive order signed by Trump because it seemed the government didn't have the authority to impose the terms.

 

Still, the most-favored-nation proposal kicked off a series of meetings between administration officials and drugmakers, including Pfizer, to hash out the details. Health Secretary Kennedy and CMS Administrator Oz delegated the negotiations to a small team led by Klomp.

 

The initial meetings were cordial, but they hadn't yet dug into substantive issues, and Pfizer had made no commitments, Bourla told an investor conference in June.

 

That month, Pfizer held several meetings with CMS officials, according to people familiar with the matter.

 

The company's takeaway: The Trump administration wanted to negotiate with companies individually, rather than with a powerful trade group like PhRMA. That meant Pfizer and other companies wouldn't be able to discuss their talks with each other to avoid antitrust violations.

 

Some companies started to take small steps toward fulfilling some of the goals outlined by Trump. In July, Pfizer and Bristol-Myers Squibb, which co-market the widely used blood thinner Eliquis, announced they would sell the drug at a discounted cash price through a direct online purchasing service.

 

But Pfizer and other drugmakers weren't budging on broader price cuts. By summer, there was little progress in the negotiations. "We stalled," Oz said at a White House press conference Tuesday.

 

Trump, a Republican, turned up the pressure. In late July he sent letters to the CEOs of 17 drugmakers, including Pfizer, demanding action within two months. He outlined four main goals, including extending most-favored-nation pricing to Medicaid and to newly launched drugs. He demanded that drugmakers return increased revenue from abroad if higher prices could be negotiated in other countries, and that companies participate in direct-to-patient sales of high-volume drugs at lower prices.

 

The letters were notable because they didn't propose applying MFN prices across the board to include commercial insurance or Medicare. This was more limited in scope than what had seemed to be on the table in May.

 

In the letter to Pfizer, Trump crossed out "Dr. Bourla" in the salutation and wrote "Albert" with a marker, a sign of their familiarity. He did the same for his letter to Eli Lilly CEO David Ricks.

 

The letter "asks a lot of us," Bourla told analysts in early August. He said he was having active discussions with Trump, Kennedy and Oz about the letter.

 

"You know that the president is impatient, so he wants the results quickly," Bourla said.

 

The week before Trump's Sept. 29 deadline, he posted that he would implement 100% tariffs on pharmaceuticals on Oct. 1, but that companies that were actively building new U.S. manufacturing capacity would be exempt.

 

The threat of tariffs motivated behaviors and "clearly motivated ours," Bourla said at the White House news conference announcing the deal.” [1]

 

1. Pfizer's Pricing Deal Went Down to the Wire. Whyte, Liz Essley; Rockoff, Jonathan D; Loftus, Peter.  Wall Street Journal, Eastern edition; New York, N.Y.. 04 Oct 2025: A1.