Pfizer: First Out of the Gate With a Drug Pricing Agreement; Positioned to Avoid Major Headwind

Key Morningstar Metrics for Pfizer

• Fair Value Estimate: $36
• Morningstar Rating: ★★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

The Trump administration and Pfizer PFE announced an agreement on Sept. 30 that includes most-favored-nation pricing for Pfizer’s drugs in Medicaid programs, discounts for direct sales of Pfizer drugs, and pricing parity with developed markets for new drug launches. Pfizer shares rose more than 6%.

Why it matters: The market has been anticipating an announcement on President Trump’s plans to bring US drug prices more in line with international markets, following a May 2025 executive order and letters to biopharmaceutical CEOs on July 31 that set a Sept. 29, 2025, deadline for firms to lower prices.

• Led by Pfizer, the drug industry seems to have avoided further pricing pressure via rulemaking or legislation by coming to a “voluntary agreement” with the administration.
• Pfizer also pointed to its planned $70 billion US investment in R&D and manufacturing over “the next few years” as helping it to secure a three-year grace period for Section 232 tariffs.

The bottom line: We retain our $36 fair value estimate for narrow-moat Pfizer, as we think this voluntary agreement fits well with our current forecast, with most of the long-term policy pressure coming from rising tax rates as more of the firm’s manufacturing moves to the US.

• Details remain confidential, but we expect more Pfizer drugs to become available for direct purchase through Pfizer’s own platform as well as industry and government-run platforms, likely at prices similar to those offered to large pharmacy benefit managers (a 50% average discount).
• Specific Pfizer drugs highlighted include migraine drug Zavzpret (50% discount), dermatitis drug Eucrisa (80% discount), and arthritis drug Xeljanz (40% discount), which are all smaller products in Pfizer’s portfolio.

Big picture: We think this announcement could allow Pfizer—and investors—to refocus on pipeline advancement, and we point to Metsera and Seagen as two key acquisitions that could result in long-term growth opportunities for this undervalued firm.