Business & Economics
Nine Drug Giants Accept Trump’s ‘Most-Favored-Nation’ Pricing in Exchange for Tariff Relief
On 19 Dec 2025, the White House secured voluntary deals with nine additional pharmaceutical companies to peg U.S. Medicaid and launch prices to the lowest charged in any rich nation, expanding Trump’s MFN drug-pricing program.
Focusing Facts
- The signatories—Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech, Gilead, GSK, Merck, Novartis and Sanofi—bring the tally to 14 of the 17 firms that received Trump’s July ultimatum letter.
- In return, each company receives a three-year exemption from Section 232 import tariffs and access to FDA priority‐review vouchers worth hundreds of millions of dollars.
- Collectively, the nine firms pledged more than $150 billion in new U.S. R&D and manufacturing spending and to donate active pharmaceutical ingredients to a national reserve.
Context
Washington has flirted with drug-price equalisation before—Jimmy Carter’s 1978 Hospital Cost Containment Act failed, and the 2003 Medicare Part D law explicitly barred price negotiations—but nothing this explicit since Nixon’s 1971 wage-price controls. Linking U.S. prices to the ‘cheapest abroad’ turns the post-WWII model on its head: for decades high American prices financed global R&D while Europe imposed reference pricing. Like Reagan’s 1984 Semiconductor Pact or Biden’s 2021 CHIPS Act, the tariff-for-investment swap also signals a return to muscular industrial policy aimed at onshoring strategic supply chains. If these deals hold, they may erode the cross-subsidy that has long funded innovation, forcing either new R&D incentives or slower drug pipelines over the next half-century; if they unravel, the episode will read like Nixon’s temporary price freeze—spectacular headline, modest lasting effect. Either way, it marks another step in the century-long oscillation between laissez-faire healthcare pricing and government intervention in the world’s largest drug market.
Perspectives
Right-leaning media supportive of Trump
e.g., RedState, Legal Insurrection — Frame the agreements as a historic win for U.S. patients and proof of President Trump’s negotiating prowess, promising that Americans will finally pay the world’s lowest drug prices. Lauds the president with superlatives and omits caveats about limited drug lists or opaque contract terms, reflecting a partisan incentive to showcase Trump’s successes while sidelining unresolved questions cited by experts.
Mainstream / centrist U.S. outlets
e.g., CNN via WSIL, The Hill, The Dallas Morning News — Acknowledge the deals but stress that Medicaid already gets steep discounts and that confidential terms make it unclear whether ordinary patients will see meaningful savings. Emphasises expert scepticism and unknowns, potentially downplaying upside in order to cast the initiative as incremental or politically driven, aligning with a tendency to scrutinise Trump-era claims closely.
Business and financial press
e.g., MarketBeat, The Orange County Register — Highlights how the agreements may boost pharmaceutical R&D investment and could be positive for company stock performance while noting it will take years to judge any health impact. Analyzes the story chiefly through an investor lens, which can understate consumer affordability issues and frame corporate concessions as strategic wins rather than public-health measures.