The news: The Trump administration is putting off plans to impose a 100% tariff on drug imports, per a Politico report. The levy was set to begin applying to any drugmaker that had not started breaking ground on US manufacturing plants by October 1. But the administration is now delaying as it continues negotiations with drugmakers to lower prices on their brand-name products.

Catch up quick: Earlier this week, Pfizer became the first pharma company to strike a deal with the administration. It will cut many of its drug prices by 40% or more, and in return, receive a three-year delay on tariffs.

As part of the agreement, Pfizer also pledged to:

• Participate in the government’s direct-to-consumer (D2C) prescription drug website, TrumpRx, which will let folks purchase some of Pfizer's medicines at a discount
• Invest an additional $70 billion in US manufacturing and R&D
• Offer its drugs to Medicaid at the “most favored nation" price (lower or comparable prices to those in any developed country)
• Launch new drugs in the US at prices at parity with what European countries pay

Why it matters: The structure of Pfizer’s deal and the delay of pharma-sector tariffs provide both time and a blueprint for other Big Pharma players to devise similar strategic plans to appease Trump’s healthcare team.

Pharma companies can likely be selective when picking which drugs to offer at discounts via TrumpRx. Pfizer said that most drugs in its primary care portfolio and “some” specialty medications will be available for D2C purchase. Pharma firms could pick some of their older drugs that aren’t big moneymakers anymore.

But even with price cuts, specialty drugs will remain out of reach for many. Case in point: Pfizer’s nasal spray medication Zavzpret costs $1,500 without insurance for a package of 6 doses. A 50% discount through TrumpRx reduces the price to $750, but consumers who are without insurance for whatever reason would likely still face affordability challenges.

Pharma companies don’t depend heavily on Medicaid for revenue and likely have no problem offering state Medicaid programs a better deal to meet Trump’s request. Drugmakers are already legally required to give Medicaid the lowest net price they offer to other commercial payers. Most Medicaid members pay only a few dollars for their prescriptions. Medicaid represents less than 5% of Pfizer’s US sales, per Leerink Partners.

Pharma companies could accept pricing parity for new drug launches, knowing rollouts take years and may not take effect until a new administration. For instance, Pfizer is slated to bring to market multiple weight loss drugs following a recent acquisition of anti-obesity drugmaker Metsera. But those products have many stages of development and regulatory approval ahead, and might not launch until closer to the end of the decade anyway. It can take 10 to 15 years from the initial discovery to market approval for many drugs, per PhRMA.

Our take: The concessions Pfizer is making as part of the deal won’t significantly affect its business. Plus, the tariff reprieve adds stability in an uncertain environment.

Other drugmakers can win from a PR perspective and gain political favor by striking similar agreements that avoid the worst-case scenario of heavy tariffs, drawn-out legal battles, or regulatory cost controls on all of their pharma products.

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