President Trump and drug companies agree to lower drug prices
President Donald Trump and nine major drug companies on Friday (December 19) announced a deal to lower the prices of their drugs for the government’s Medicaid program and cash payers, in the latest effort to bring U.S. costs in line with those in other rich countries.
Pharmaceutical companies have raised the prices of hundreds of drugs so far in January, and the cost of everything from coronavirus vaccines to Ozempic is set to rise in 2026, despite the Trump administration’s efforts to strengthen affordability.
Companies raised the list prices of more than 850 drugs by a median of 4% above 2025 prices, according to data from drug pricing nonprofit 46Brooklyn Research. The changes implemented as of January 9 are equivalent to the amount drug companies raised their prices in 2025.
List price is typically not the amount a consumer pays over the counter at a pharmacy or for a mail-order prescription. Factors such as rebates, insurance discounts and copays, deductibles, and coinsurance all determine the amount you need to pay to get your prescription filled.
But list price increases make drugs more expensive for consumers and insurers, “something we see every year,” said Lee Purvis, AARP’s director of prescription drug policy.
Purvis said annual price increases are lower than they were a decade ago, when annual increases typically exceeded 10%. But he said pharmaceutical companies were launching new branded drugs at high prices.
“We know that the median launch price is now approaching $400,000 a year,” Purvis said. “So while the percentage may seem a little small, it can actually lead to quite large price increases.”
How much have prices changed?
Pfizer has raised the list prices of dozens of drugs, including the cancer drug Ibrance, the migraine drug Nurtec and the COVID-19 drug Paxlobid, as well as hospital-administered drugs such as the synthetic opioid Demerol.
The list price of Pfizer’s coronavirus vaccine “Comilnati” has increased by 15%, making it the company’s largest price increase for a non-hospital drug.
Pfizer said in a statement that average list price increases were below the rate of inflation. The pharmaceutical giant said its net price (the amount collected after rebates and insurance discounts) has been declining in recent years.
“This modest increase is necessary to support our investments as we continue to discover and deliver new medicines and address rising costs across our business,” Pfizer said in a statement.
Novo Nordisk and Eli Lilly have each raised the list prices of their blockbuster diabetes drugs Ozempic and Munjaro by 3%. Most insurance companies cover Ozempic and Munjaro when prescribed to treat diabetes, but half of large employers do not cover reduced versions of these drugs, according to a study by benefits consultant Mercer.
In 2025, the companies announced price reductions for weight loss drugs Wegovy and Zepbound for cash-paying consumers. Lilly has lowered the price of its weight-loss drug Zepbound for consumers who buy prescription drugs directly from drug companies. In similar deals, Novo offered discounts on Wegovy to consumers purchasing from pharmaceutical companies, telemedicine partners, or retail pharmacies.
Pharmaceutical companies resist federal pressure to lower prices
This price increase came despite efforts by the federal government to limit price increases for some Americans. The Climate, Health and Inflation Control Act of 2022 allows Medicare to negotiate prices on a limited number of medications for older Americans enrolled in federal health programs.
In January, Medicare enrollees will save an average of more than 50% on out-of-pocket costs on the first 10 drugs prescribed to treat cancer, heart disease, autoimmune diseases and diabetes, according to an AARP analysis. The drugs affected are Eliquis, Jardiance, Charelto, Januvia, Fasiga, Entrest, Enbrel, Imbruvica, Stelara, and Novolog.
President Donald Trump has also threatened tariffs to pressure drug companies to lower prices. In the deal, known as a “most-favored-nation” arrangement, the Trump administration negotiated prices with more than a dozen drug companies to sell drugs at discounted prices to federal health programs and to TrumpRx, the Trump administration’s direct-to-consumer website scheduled to launch in early 2026.
On January 15, President Trump announced his health care plan that he said would pressure drug companies to lower prices.
The president said his plan would “ensure deep discounts on prescription drugs” through most-favored-nation pricing. “Drug prices will be reduced by 80%, 90% in some cases, and these are numbers that no one has ever heard of,” Trump said.
Health analysts expect TrumpRx’s discounts will primarily be used by nearly 1 in 10 Americans without health insurance. Uninsured people could save about $2 billion on branded drug spending through TrumpRx discounts, according to a research note from ING Research.
This represents a fraction of the $700 billion spent on medicines in the United States, ING said.
“The deals the Trump administration has struck with drug companies don’t change the fundamentals of the system,” said Diederik Stadig, healthcare technology economist at ING Research. “They are a workaround for a small portion of the market.”
Rebates and government requirements drive up prices
Experts say list prices often do not reflect drug pricing and reimbursement trends.
46 Brooklyn analyzed changes in drug prices for Medicaid, the federal and state health care program for low-income households and people with disabilities. An analysis based on the frequency of drug prescriptions and purchases showed a slight decline in prices in 2026.
Medicaid often requires drug companies to pay large rebates on drugs. Another federal drug program, called 340b, allows hospitals and health care providers to purchase drugs at a discount and receive high reimbursement from federal health insurance programs. Hospitals and other health care providers make money from the pricing spreads that allow them to provide other services.
Antonio Ciaccia, CEO of 46Brooklyn, said government requirements such as Medicaid rebates and the $34 billion discount often artificially raise drug prices for consumers and insurers in order to generate revenue for hospitals and other health care providers.
He said Congress needs to address such rebate programs to lower drug prices for consumers.
“You can’t have your cake and eat it too,” Ciaccia said. “You either want a lower price or you don’t.”
Contributed by: Reuters
Contact the reporter at alltuck@usatoday.com..
