US drugmakers rise after Trump announces Pfizer price cuts

By Sneha S K

(Reuters) -Shares of U.S. drugmakers rose after President Donald Trump said on Tuesday that Pfizer will cut the price of all prescription drugs in the Medicaid program for low-income Americans in exchange for tariff relief and added that he expects other drugmakers to follow suit.

Trump referred to another announcement from a drugmaker next week and said that Eli Lilly has been "fantastic" in these negotiations.

Investors and analysts said the announcements appear to be the beginning of the rebound for the sector.

While the "most favored nation" pricing and pharmaceutical tariffs have loomed as a concern for the sector for some time, today's announcement appears to read positively, said BMO Capital Markets analyst Evan Seigerman.

Shares of Pfizer, Eli Lilly, Merck, AbbVie and Bristol Myers Squibb were up between 2% and 7% at the close.

Separately, FDA Commissioner Marty Makary also made comments at the White House event on the commissioner's review voucher under which certain experimental therapies addressing a chronic public health need and meeting specific criteria could be reviewed in one to two months, rather than the standard 10 months.

He is expected to announce five recipients of those vouchers.

"We wouldn't be surprised if we see an announcement of a (voucher) for orfoglipron alongside the Lilly-White House deal, which should be just around the corner," said Bernstein analyst Courtney Breen.

Trump sent letters to 17 leading drug companies in July, telling them to slash drug prices to match those paid overseas — a policy that the president called "most favored nation pricing," or MFN. The drug companies were asked to respond with binding commitments by September 29.

Pfizer is the first company to announce a deal, and will also be part of the White House's new direct-to-consumer website for Americans to buy drugs, called TrumpRx, that will launch in 2026.

"With the worst-case scenario now effectively off the table, this development serves as a meaningful clearing event for the sector," said Daniel Barasa, portfolio manager at Gabelli Funds.

(Reporting by Sneha S K in Bengaluru; Editing by Alan Barona)

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