In a significant policy shift, the federal government has secured agreements with nine major pharmaceutical manufacturers to substantially lower the prices of numerous medications. The deals primarily affect the Medicaid program and direct cash purchases, aiming to align U.S. costs more closely with those in other developed nations.
The participating companies include Bristol Myers Squibb, Gilead Sciences, Merck, Genentech (a Roche unit), Novartis, Amgen, Boehringer Ingelheim, Sanofi, and GSK. Senior officials have projected these arrangements will yield “massive savings” for government health programs, though specific financial figures were not immediately disclosed.
The United States has long faced criticism for having the highest prescription drug prices globally, often significantly exceeding costs in comparable countries. The new agreements represent a concerted effort to address this disparity.
While the full terms of each deal vary, core components involve reducing prices for most drugs sold to Medicaid, offering select medications at steep discounts directly to consumers, and committing to price parity for new drug launches in the U.S. with other wealthy nations. In exchange, the companies receive certain regulatory benefits, including a three-year exemption from potential tariffs.
As part of its commitment, Merck announced it will sell its diabetes medications Januvia, Janumet, and Janumet XR directly to consumers at approximately 70% off their current list prices. The company also stated that a forthcoming experimental cholesterol drug, if approved, would be offered through similar direct channels.
These latest accords follow earlier agreements reached with five other pharmaceutical giants. To date, three major firms have not announced participation in the initiative.
Analysts point out that while the impact on Medicaid is notable, the program already receives mandatory deep discounts and represents a relatively small portion of overall U.S. drug spending. A portion of the agreements also stipulates that a share of revenue from the companies’ international sales will be directed to the U.S. Treasury.
Furthermore, the collective of drugmakers has pledged over $150 billion in new investments for U.S.-based research, development, and manufacturing, with Merck alone accounting for $70 billion of that total. Some companies have also agreed to contribute drug ingredients to the national strategic reserve.
The move has been closely watched by investors, who had initially feared more sweeping price controls. The structure of the negotiated deals has largely alleviated those market concerns. One manufacturer publicly stated that the new Medicaid discounts would pressure its prices and profit margins in the coming year.