Pfizer found a way to boost its ailing stock - agree on drug pricing with TrumpRx

By Tomi Kilgore

Pfizer will match its drug prices with those in other developed countries and will avoid paying any tariffs as long as it invests more in U.S. manufacturing

Pfizer's stock surged after CEO Albert Bourla announced an agreement with the Trump administration aimed at lowering drug prices in the U.S. and removing tariff uncertainty.

Shares of Pfizer Inc. powered higher Tuesday after the drug giant announced a "voluntary" agreement to meet several of President Donald Trump's demands to lower drug prices for Americans.

The company (PFE) said it would lower U.S. drug prices to match those of other developed countries, which was a key point of contention for the Trump administration, and the reasoning behind the executive order Trump signed in May that instituted a "most favored nation" policy for prescription drugs.

Pfizer will also effectively cut out the middleman, saying it will participate in the government's direct-purchasing platform - TrumpRx.gov - which will allow people to buy drugs straight from the company "at a significant discount." The company said the discount, for a large majority of its primary care treatments, will be as high as 85%, and average about 50%.

Trump had vowed late last year to "knock out the middleman," referring to pharmacy-benefit managers, or companies that sell the drugs that drugmakers make.

Also read: FTC takes fresh swipe at drug middlemen, says some prices marked up over 1,000%.

With its actions, Pfizer will receive a three-year grace period in which its products under investigation won't face tariffs, provided the company invests further in manufacturing in the U.S. The company backed that up by saying it would invest an additional $70 billion in research in development projects in the U.S. over the next few years.

Read: Trump announces 100% tariffs on pharmaceuticals unless drugmakers are building U.S. factories.

"We now have the certainty and stability we need on two critical fronts, tariffs and pricing, that have suppressed the industry's valuations to historic lows," said Chief Executive Albert Bourla.

Pfizer said specific terms of its deal with the government were confidential.

The stock ran up 6.8% on Tuesday, enough to pace the S&P 500 index's SPX gainers. Although it has now gained 3.5% over the past three months, it has still dropped 13.3% over the past 12 months and has tumbled 59% since the Dec. 16, 2021 record close of $61.25.

Other drugmakers also benefited, as Merck & Co. Inc. shares (MRK) rallied 6.8%, Eli Lilly and Co.'s stock (LLY) climbed 5% and shares of Johnson & Johnson (JNJ) gained 2%.

Meanwhile, shares of UnitedHealth Group Inc. (UNH), which is in the PBM business through its Optum RX unit, were flat. To be sure, UnitedHealth had taken issue with the government's and drugmakers' assertions that PBMs were to blame for high drug prices, saying it's actually the drugmakers' fault.

CVS Health Corp. (CVS) also has a PBM - CVS Caremark - and its stock eased 0.2%.

Meanwhile, Pfizer's Bourla assured that lowering drug prices won't hurt pharmaceutical innovation - it was often argued that this was why drug prices were kept so high in the U.S. In fact, Bourla said it would strengthen innovation.

"We've established a balanced global pricing approach that continues to recognize the value of innovation while ensuring prices in the U.S. and other developed countries are both reasonable and sustainable, maintaining the strength of the U.S. market alongside other developed nations," Bourla said.

-Tomi Kilgore

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09-30-25 1910ET