Trump strikes deal with US drugmakers to cut Medicaid medicine costs

Core Insights - Donald Trump and nine major pharmaceutical companies have reached agreements to significantly reduce drug prices for the Medicaid program and cash payers, aiming to align US costs with those in other wealthy nations [1][2] Group 1: Price Reductions and Agreements - Drugmakers will cut prices on most drugs sold to Medicaid, promising "massive savings" on commonly used medicines, although specific figures were not disclosed [2] - The deals include agreements to lower cash-pay prices for select drugs, launch drugs in the US at prices equal to those in other wealthy nations, and increase manufacturing [3] - Merck plans to sell its diabetes drugs at approximately 70% off list prices directly to US consumers, with potential for its experimental cholesterol drug to be offered through direct channels [4] Group 2: Previous and Current Deals - Five companies had previously made agreements with the administration to control prices, while three companies have yet to announce deals [6] - Drugmakers committed to "most-favored-nation" pricing for all new US drug launches across various markets, including Medicare [7] Group 3: Financial Commitments and Investments - Companies pledged to invest over $150 billion in US research and development and manufacturing, with Merck contributing $70 billion of that total [8] - A portion of revenues from foreign sales will be remitted to the US to help offset costs [8] Group 4: Medicaid and Market Impact - Medicaid, which represents about 10% of US drug spending, already benefits from significant price discounts, sometimes exceeding 80% [9] - Pfizer indicated that Medicaid discounts would lead to price and margin compression in the upcoming year [9]