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Americans face some of the world’s highest drug prices, sometimes up to four times higher than in other countries. While insurance covers many, significant costs remain for some patients. The Trump administration’s new direct-to-consumer program, TrumpRx, launching in partnership with Pfizer, promises relief; but does it offer real savings for most Americans, or is it just a political gesture?
On Tuesday, September 30, President Donald Trump announced a new deal with pharmaceutical giant Pfizer. Under the deal, Pfizer will lower the prices it charges to state Medicaid programs. This agreement promises to bring U.S. drug prices closer to prices in other nations and aims to match levels seen in countries like Japan, Switzerland, Denmark, and Italy.
Officials stated that nearly all of Pfizer’s drugs would be included, although they did not release a full list. Examples mentioned include Eliquis, a popular blood thinner, and Ibrance and Xtandi, two cancer treatments. Pfizer’s best-selling Covid treatment, Paxlovid, is also among its major products.
While the deal covers a broad range of drugs, getting to this point was not easy. Administration officials described the deal as the result of intense overnight negotiations. Dr. Mehmet Oz, the head of Medicare and Medicaid, even suggested that books would one day be written about the talks. Mr. Trump spoke of “impossible” price cuts, claiming decreases could be as high as 1,600 percent. Still, the changes will only apply to Medicaid. Pfizer has not agreed to lower prices for private insurers, employers, or other government programs, such as Medicare, so most Americans with private or federal insurance will not experience these savings.
To understand why this deal matters, it helps to know why drug prices in the US are so high.
- Prices in the United States are averaging 2.78 times those seen in 33 other nations, and the gap between prices is even larger for brand-named drugs, with US prices averaging 4.22 times higher, according to a new RAND report.
In the US, drug manufacturers set the prices, and Pharmacy Benefit Managers (PBMs) negotiate with them on behalf of insurers and employers. There is no one national control. In Europe and other countries, governments negotiate directly and cap prices for their national health systems, sometimes by walking away from deals if prices are too high. Such a negotiation pressures companies to lower their costs. The US cannot do this because Medicare and other government programs are required to cover approved drugs. A significant example of this limitation is Medicare’s “non-interference clause,” which prevents the federal government from negotiating drug prices directly with manufacturers. This policy constraint means that the government has little leverage to refuse high-priced drugs, thus limiting its ability to control pharmaceutical costs effectively.
With U.S. drug prices significantly above international levels, the potential impact of the deal becomes clearer. One key component is TrumpRx.gov, a planned government-run website where consumers can purchase prescription drugs directly from manufacturers, bypassing Pharmacy Benefit Managers (PBMs). The website will feature discounted drug prices, but only for customers who are uninsured or choose not to use their health insurance. Since 92% of Americans had health insurance in 2023 will TrumpRx actually make drugs cheaper for all Americans? The short answer is: no. The deal will only help a small fraction of citizens.
“American citizens [will] continue to pay through the nose to get vital drugs into our bodies,” said Alan Sager, a professor of health law, policy, and management at Boston University. Medicaid programs could see significant savings, although the exact amounts are unclear, as drug prices are generally kept secret. To illustrate the difference: while Medicaid agencies might save millions, Medicaid patients themselves are unlikely to see much direct impact, as they already pay very little out of pocket. For example, a 30-day supply of Xeljanz, a drug to treat rheumatoid arthritis, can cost $5,940 without insurance. Through TrumpRx.gov, this price could drop to approximately $3,600. However, with insurance, the cost is about $60-$80. The bottom line is that any lower Medicaid prices will likely save state agencies and the federal government money, not the enrollees. This information directly contradicts a statement from Dr. Bourla, who said: “The big winner of this deal clearly will be the American patients.”
Another opinion is from Mark Cuban, the owner of Cost Plus Drugs, who gives Trump’s new drugstore venture a “B” but says it could be good for patients. Founded by Mark Cuban and Alexander Oshmyansky in 2022, Cost Plus Drugs is an online pharmacy that aims to make prescription medications more affordable. Similar to TrumpRX, Cost Plus Drugs cuts out PBMs and allows direct-to-consumer access. Unlike TrumpRx, however, Cost Plus Drugs offers drastically lower prices for everyday patients, often reducing the cost of medications from thousands of dollars to just a fraction of the original cost. Cuban notes the efficiency of the administration, but states that the system is still rigged to benefit the big PBMs, as their stock prices have not dropped to date. However, the website has a chance to succeed if it actually forces PBMs to change their practices. Ultimately, Cuban states that TrumpRX has potential, but it is limited in scope and currently structured more as a listing site than a transformative tool.
Overall, TrumpRx captures the tension between politics and policy, ambitions in name, limited in action. While it may ease cost for a select few, its broader value lies in optics, not reform. Politically, it signals that leaders can claim action without delivering change, reinforcing the performative nature of policy in modern American politics. Ultimately, it is a reminder that in U.S. politics, messaging often outweighs meaningful change.
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This article was edited by Fatimah Waqas and Angelina Bland.
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