- US President Trump warned of 5%-8% additional tariffs if drugmakers do not reach a deal with the government
- A 100% tariff on patented pharmaceutical imports starts Oct. 1, sparing companies with US plants
- Pfizer on Tuesday agreed to cut Medicaid drug prices and invest $70 billion in R&D and domestic manufacturing
US President Donald Trump has warned drugmakers of an additional 5% to 8% tariffs if they fail to enter into a deal with the government.
Trump, last week, announced 100% tariff on all patented pharmaceutical imports to the US. However, those drugmakers who setup manufacturing plants in the country would be spared. The levies are to come into effect from Wednesday, Oct. 1.
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On Tuesday, Pfizer Inc. inked a deal with Trump's government to cut the prices of its drugs distributed through the Medicaid program. The company has also committed to invest $70 billion to push on research and development, and ensure domestic manufacturing over the next few years.
In exchange, the pharmaceutical major has received a three-year grace period the tariffs.
Pfizer has also partnered with TrumpRx, a website launched by the US federal government, where people will be able to buy prescription drugs at discounted rates negotiated by the government. Pfizer will sell some of its products at a 50% average discount on the direct-to-consumer website.
This mandate is part of Trump's push to have US drugmakers companies adopt the "most favoured nation" pricing policy on their prescription drugs. This policy involves US residents paying for a prescription drug at an amount that is comparable to what is paid in the developing countries.
The Trump administration has argued that people within the US pay "massively higher prices" for the same drug compared to other countries. It said that the US was "subsidizing prices" for the rest of the world with its high cost for prescription medication, and that this would be discontinued.
The President had also stated in August that he will reduce drug prices by 1,400% to 1,500%.
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