U.S. Drug Cost Reduction Efforts: A Tale of Two Administrations
The U.S. administration has launched multiple initiatives aimed at lowering prescription drug costs, including "most-favored-nation" agreements with pharmaceutical companies and the introduction of the TrumpRx.gov website. These efforts run parallel to distinct drug price negotiations conducted by Medicare under the Inflation Reduction Act, leading to diverse price adjustments and savings for both consumers and government programs.
Trump Administration's Drug Pricing Initiatives
The Trump administration pursued a "most-favored-nation drug pricing" initiative, designed to align U.S. drug prices with those found in other developed countries. The stated goals were to reduce prices for Medicare and Medicaid beneficiaries, as well as for cash-paying patients. Agreements were forged with at least 15 pharmaceutical manufacturers, a list that includes major players like Novo Nordisk, Eli Lilly, Pfizer, and Johnson & Johnson.
Terms of the Agreements
Under these agreements, participating companies committed to charging the U.S. government prices for new drugs that do not exceed those paid by other high-income countries. This specific provision aimed to enable state Medicaid programs to access reduced prices.
Novo Nordisk and Eli Lilly agreed to a $50 monthly copay for Medicare beneficiaries for certain obesity and Type 2 diabetes medications, with prices of $245 per month for Medicare and state Medicaid programs.
Expanded coverage for these medications was made available to overweight or obese patients meeting specific health criteria. These included a body mass index (BMI) over 27 with established prediabetes or cardiovascular disease; a BMI over 30 with uncontrolled hypertension, kidney disease, or heart failure; or a BMI over 35.
Starting doses of prospective obesity pills, once approved by the FDA, were offered at $149 per month for individuals covered by Medicare, Medicaid, and TrumpRx. Eli Lilly directly reduced its direct-to-consumer price for Zepbound to $299 for the starting dose and $449 for higher doses. Merck's Januvia was projected to be priced at $100 (from $330) via TrumpRx, and Amgen's Repatha at $239 (from $573).
In return for these commitments, participating companies received a three-year exemption from certain tariffs. Companies also agreed to invest in U.S. manufacturing operations, with a stated total investment of at least $150 billion. This included Johnson & Johnson's plans to construct two new manufacturing facilities as part of its $55 billion U.S. investment plan.
The TrumpRx.gov Platform
The TrumpRx.gov website was launched to provide discounts on brand-name prescription drugs for consumers who pay cash instead of using health insurance. The platform does not sell drugs directly but instead directs users to drug manufacturers' direct-to-consumer ordering sites for discounted prices.
Functionality and Eligibility
The website was initially projected for a 2026 launch but ultimately went live with 43 drugs from five companies: AstraZeneca, Eli Lilly, EMD Serono, Novo Nordisk, and Pfizer. Discounts from an additional 11 companies were expected to follow.
Eligibility for some discounts required customers to declare they were not enrolled in a government insurance program like Medicare and would not seek insurance reimbursement or apply costs towards a deductible.
Examples of discounts offered included 33% off Pfizer's Xeljanz (for autoimmune disorders), 93% off EMD Serono's Cetrotide (for fertility treatments), and 83% off Gonal F. Wegovy pills were stated to be available for as low as $149 a month, a significant reduction from $1,349, through TrumpRx.
The platform primarily aims to benefit uninsured individuals, those with high deductibles, or patients whose medications are not covered by their insurance, such as some obesity or fertility treatments. Analysts suggested that for most insured individuals, utilizing existing health insurance might remain more economical, and some drugs on TrumpRx had less expensive generic alternatives available elsewhere. The website itself advised patients with insurance to compare co-pays, as they may be lower.
Medicare Drug Price Negotiations
Separately, Medicare conducted drug price negotiations under the Biden-era Inflation Reduction Act, passed in 2022. This legislation ended a two-decade prohibition on Medicare negotiating drug prices. The latest round of negotiations finalized lower prices for 15 medications, with these new prices set to take effect in 2027.
Negotiated Discounts and Savings
Discounts secured included 71% for Ozempic, Wegovy, and Rybelsus (used for obesity and Type 2 diabetes); 38% for Austedo (for Huntington's disease); and 85% for Janumet (a Type 2 diabetes medication).
The Centers for Medicare and Medicaid Services (CMS) estimated that if these newly negotiated prices had been in effect in 2024, the program would have saved approximately $12 billion. Drugs selected for negotiation were based on criteria such as a lack of generic or biosimilar competition, high Medicare spending, and having been on the market for a specified number of years. AARP, an advocacy organization, expressed satisfaction with the negotiation outcomes.
Price Discrepancies and Market Impact
A notable discrepancy was observed between pricing secured through Trump administration deals and Medicare negotiations for similar drugs. While the Trump administration's deal for Ozempic and Wegovy set prices at $245 per month, Medicare negotiations resulted in prices of $274 per month for Ozempic, Wegovy, and Rybelsus. Novo Nordisk stated it anticipated further clarification from CMS regarding pricing and coverage mechanisms, expressing concerns about the Inflation Reduction Act's impact on patients.
An analysis by 46brooklyn, a drug price research firm, indicated that 16 major pharmaceutical companies, including some participating in the administration's deals, raised list prices on 872 brand-name drugs in the first two weeks of 2026. The median increase was 4%. Companies such as Pfizer and Merck, which had made agreements, increased prices on some products, citing investment in new medicines, expenses, and clinical value. White House officials stated that list prices were not the primary focus of their deals, which applied specific discounts to state Medicaid programs and cash-paying patients for certain prescriptions.
Conversely, 18 significant price cuts were observed in the first days of 2026. Four of these involved drugs selected for Medicare drug price negotiation.
These included a 75% cut for Fiasp (an insulin product) and 37-44% reductions for AstraZeneca's Farxiga, Boehringer Ingelheim's Jardiance (both for diabetes and heart failure), and Bristol Myers Squibb's Eliquis (a blood thinner). Analysts suggested Medicare negotiations were a factor in these reductions, alongside other market dynamics. For the ten drugs chosen for Medicare negotiation, outside of Medicare, four had large list price reductions, four showed no changes, and two had price increases.
Future Initiatives
The administration indicated plans to expand the list of discounted drugs on TrumpRx.gov by securing more agreements with pharmaceutical companies. The administration also advocated for Congress to pass "The Great Healthcare Plan," which aims to lower health insurance costs and enable health plans to cover purchases made through TrumpRx.gov. President Trump also indicated his intention to convene a meeting with health insurance companies to discuss reducing their prices.