The news: AstraZeneca reached a deal with the US government to lower prescription drug prices in exchange for a three-year reprieve from tariffs on its US drug imports.

Unpacking the news: The deal is very similar to the one Pfizer recently struck with the Trump administration. AstraZeneca said it will lower prices in the US for some of its existing medications, as well as new drugs it brings to market, while committing to manufacturing more products domestically.

• AstraZeneca will give state Medicaid programs the most-favored nation drug prices (which are about what other developed countries pay for the same drugs).
• The pharma company will also apply most-favored nation prices to newly launched medications.
• AstraZeneca will cut the prices for some of its products for cash-pay patients who purchase drugs directly from the pharma company’s direct-to-consumer (D2C) website, including medications to treat chronic obstructive pulmonary disease (COPD) and asthma. The portal, called AstraZeneca Direct, will connect to TrumpRx, an online marketplace that links consumers to pharma brands’ D2C drug purchasing portals.
• AstraZeneca also reaffirmed its plan to invest $50 billion in US manufacturing and R&D over the next five years, and projects that by the end of the decade, half of its revenues will be generated in the US. For context, about 43% of AstraZeneca’s 2024 US revenues were US-based.
• In return for the above, AstraZeneca will be exempt from tariffs on its US drug imports for three years.

The impact on US drug prices: Americans pay nearly three times more for prescription drugs than people in other wealthy countries, per 2024 RAND research. Pharma manufacturers and middlemen like pharmacy benefit managers wield outsized influence over US drug prices, while most other developed countries curb costs through government controls.

Consumers who have health insurance will almost always get a better price through their plan than via a pharma company’s direct sales platform. For folks without insurance or whose plans have less generous coverage, the cash-pay price of a brand-name drug would likely still be too expensive. In short: Big Pharma’s drug pricing deals with the Trump administration aren’t going to significantly impact how much Americans end up paying for their prescription drugs.

Yes, but: Requiring drugmakers to match US prices for new treatments to those abroad could prove impactful over time.

Pharma companies typically price new drugs higher to recoup billions in R&D costs. Most-favored nation regulations could force drugmakers to hike up prices in European countries to offset price cuts in the US. However, specifics for this piece of the agreement are light, and it’s possible pharma firms figure they could agree to most-favored nation prices on new products for now without firmly committing to anything from a business perspective.

The final word: As more pharma companies ink drug pricing deals with the government, we’ll be watching to see whether they mirror Pfizer’s and AstraZeneca’s. If they do, it signals the sector views the terms as favorable, since core revenue drivers remain largely untouched. Still, pricing pressure won’t subside anytime soon, with more drugs expected to be up for Medicare price negotiations. Big Pharma shouldn’t view these latest agreements as the end of the line, but rather as important learning moments for which drug pricing concessions will appease the administration.

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