President Trump announced a price reduction agreement with a global pharmaceutical giant.

On December 19, 2025, President Trump announced a price reduction agreement with nine global pharmaceutical giants (including Merck, Bristol-Myers Squibb, GSK, Novartis, Sanofi, Amgen, Gilead, Boehringer Ingelheim, and Genentech).

As a significant step in the "Most Favored Nation Pricing" policy, these companies agreed to lower Medicaid program and cash-pay drug prices to levels consistent with other wealthy nations and to offer substantial discounts through the TrumpRx platform. Simultaneously, the companies pledged massive investments in the U.S. and supply chain donations in exchange for a three-year tariff exemption. This move marks an acceleration of the Trump administration's drug price reforms, now covering 14 top pharmaceutical companies, and is expected to significantly reduce the burden on American patients while promoting a rebalancing of global drug prices. Analysis of the impact on market sectors: The U.S. pharmaceutical industry overall: The agreement strengthens government intervention in drug pricing. In the short term, pharmaceutical stock prices rose (most up 1%-3% on the announcement day) due to the avoidance of tariff threats and gained policy certainty. However, long-term it may compress profit margins, especially for companies with high Medicaid exposure (e.g., Gilead). Pharmaceutical companies are shifting to a "defensive" posture, accelerating domestic manufacturing investments (totaling over $150 billion), which benefits supply chain localization but may dampen incentives for developing some high-priced innovative drugs. Industry merger and acquisition activity may further heat up to address the "patent cliff" and pricing pressures.

Patients and the Healthcare System

Directly benefits low-income groups and cash-paying patients. Medicaid is expected to save tens of billions of dollars, with significant price reductions (some exceeding 70%) for specific drugs (e.g., for diabetes, cancer, respiratory diseases). After the launch of the TrumpRx platform, it will bypass intermediaries, improving accessibility. However, the actual impact requires observation of implementation details; post-discount prices may still be higher than overseas, and not all drugs will be covered.

Global Pharmaceutical Market

Promotes "ending foreign free-riding" and may prompt countries like those in Europe to raise drug prices (an agreement has already been reached with the UK to increase new drug net prices by 25%). The impact on emerging markets like China is indirect: multinational pharmaceutical companies, to offset losses in the U.S., may raise prices or engage in bundled sales in new markets, potentially increasing costs for local innovative drugs. However, it also stimulates opportunities for Chinese pharmaceutical companies to expand overseas (e.g., through licensing out), accelerating domestic innovation.

Related sectors (e.g., insurance, PBM): Trump hinted that the next step would target insurance companies to lower premiums, putting pressure on the health insurance sector. The role of Pharmacy Benefit Managers (PBMs) may weaken due to the rise of direct sales platforms.

This agreement is a milestone in Trump's drug price reform, constituting a substantial benefit for American patients but posing challenges to pharmaceutical companies' profit models. The impact is expected to gradually manifest starting in 2026, potentially reshaping the global drug pricing system.

The Trump administration plans to launch the TrumpRx website in the new year, at which point discounted drugs will be available for consumers to purchase directly on the platform.