By stepping out as the first biopharma to win a three-year “grace period” exemption from President Donald Trump’s earlier-announced plans for 100% tariffs, in return for agreeing to manufacture more of its drugs in the United States and apply “most favored nation” (MFN) pricing to those sold to Medicaid patients, Pfizer (NYSE: PFE) not only blazed a trail for other drug and tools developers to follow but made a quick killing on Wall Street to boot.
Pfizer shares surged 14% over two trading days this past week after joining with Trump’s administration to announce an agreement they positioned as both bolstering U.S. leadership in biopharma innovation and leading to lower drug prices.
On the innovation front, Pfizer committed itself to spending $70 billion over the next “few” years toward U.S. capital projects in manufacturing as well as R&D—though unlike the other biopharmas and tools companies that have announced such efforts in recent months, Pfizer did not spell out the projects in which it plans to invest. Pfizer’s U.S. workforce of 31,000 people is based at 13 U.S. manufacturing and distribution sites and seven major R&D facilities.
On the pricing front, Pfizer promised that the treatments it sells in the United States will be “comparable” in price to those marketed in other developed countries, while newly launched drugs will be priced “at parity” with other “key” developed markets. Pfizer also agreed to become the first biopharma to sell its therapies directly to U.S. consumers “at a significant discount” through a direct purchasing platform that the White House plans to name TrumpRx.gov.
How significant? Pfizer says the discounts will average about 50%, rising in some cases to 85%. The White House offered three examples of discounts:
- Eucrisa® (crisaborole)—The phosphodiesterase 4 inhibitor, a topical ointment for mild to moderate atopic dermatitis, will be sold at an 80% discount. (The average retail price for a 60 g tube is $939.84, according to GoodRx.)
- Xeljanz® (tofacitinib)—The oral Janus kinase (JAK) inhibitor indicated for forms of rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, and ulcerative colitis will be offered at a 40% discount. (The average cost of thirty 11 mg tablets [daily dose] is $9,142.)
- Zavzpret® (zavegepant)—The calcitonin gene-related peptide receptor antagonist, a nasal spray indicated for acute treatment of migraine with or without aura in adults, will be marketed at a 50% discount (The average cost for six 10 mg bottles is $1,347.22.)
In return, Pfizer won three years of grace from tariffs on its products based on U.S. Department of Commerce investigations under Section 232 of the Trade Expansion Act of 1962 into whether drug imports by multinational biopharmas threaten national security. That grace all but eliminates a threat that cast a cloud over not only Pfizer but the broader biopharma industry as well.
“Things that people value”
“I can put that behind us and focus on the things that I want to spend my time [on]—cancer treatments, to bring better obesity medicines, to bring better vaccines, to bring things that people value,” Albert Bourla, PhD, Pfizer chairmand and CEO, said September 30 at the Oval Office ceremony at which he and Trump announced their agreement. “Thank you for allowing us to do that.”
Karen Andersen, equity director with Morningstar (NASDAQ: MORN), said in a research note that the firm agreed with Bourla that the deal with Trump will allow it to further concentrate on developing new treatments.
That’s no small challenge for Pfizer since several of its current blockbuster marketed drugs are set to lose exclusivity in the next two years, including Xeljanz® (2026); blood thinner Eliquis® (apixaban; also 2026), which is commercialized in collaboration with Bristol Myers Squibb (NYSE: BMY); breast cancer treatment Ibrance® (palbociclib; 2027); and prostate cancer drug Xtandi® (enzalutamide; 2027).
“We think this announcement could allow Pfizer—and investors—to refocus on pipeline advancement,” Andersen wrote. She cited two acquisitions Pfizer made in recent years with pipeline-restocking in mind: its up-to-$7.3 billion deal to acquire Metsera, announced last month; and its $43 billion buyout of Seagen, which she described as “two key acquisitions that could result in long-term growth opportunities for this undervalued firm.”
Andersen retained her firm’s $36 12-month price target on Pfizer shares: “We think this voluntary agreement fits well with our current forecast, with most of the long-term policy pressure coming from rising tax rates as more of the firm’s manufacturing moves to the United States.”
Investors were more enthusiastic about the deal with Trump, embracing it enough to send Pfizer shares soaring by double digits, double the usual low-single-digit daily gains. The stock jumped 7% from $23.85 on September 29 to $25.48 the following day after the agreement was announced—the biggest one-day gain since November 5, 2021, when Pfizer announced positive clinical news about its COVID-19 antiviral pill Paxlovid™ (nirmatrelvir and ritonavir). Pfizer shares climbed another 7% Wednesday to $27.21, dipped 0.5% to $27.08 on Thursday, but rose 1% to $27.36 on Friday.
“To us, this represents a win for PFE & signals a broader +’ve [positive] outcome for the industry as it may finally resolve the regulatory overhang tied to tariffs/MFN, which have weighed on the sector for the majority of the year,” Akash Tewari, equity analyst with Jefferies, wrote in a research note.
Industry criticism
In addition to being Pfizer’s CEO, Bourla is also board chair of Pharmaceutical Research and Manufacturers of America (PhRMA), one of the biopharma industry’s two major groups (the other being the Biotechnology Innovation Organization or BIO). So in addition to advancing Pfizer’s interests, he has also sought to advance those of the broader biopharma industry since Trump won election to his second term last November.
Yet PhRMA didn’t endorse the Pfizer deal. In a statement issued by president and CEO Stephen J. Ubl, PhRMA shied away from commenting on the company’s planned discounts: “Each company makes its own decision on how they set prices for medicines.”
And while supporting the Trump administration’s criticism of other nations’ lowballing of prices for U.S.-developed drugs, PhRMA and Ubl criticized MFN as a solution, saying it “would import these same prices into the United States would result in less access to treatments and cures and reduced investment in manufacturing and R&D. It happened in Europe. We don’t want it to happen here.”
PhRMA restated criticisms of pharmacy benefits managers and hospitals as key factors in high drug prices and promoted three of its industry and patient support initiatives—from manufacturing and R&D infrastructure investments it calculated at a combined $500 billion; financial support for 10 million patients; and its launch of AmericasMedicines.com, designed to connect patients with drug manufacturers selling their products directly.
BIO likewise took aim at MFN in a statement issued by president and CEO John F. Crowley: “Importing socialist price controls through most-favored nation policies fundamentally does not address the imbalance in international pricing for innovative medicines.
“MFN will not lower the out-of-pocket prices that most Americans pay for medicines,” Crowley warned. “Even worse, it will jeopardize the entrepreneurial spirit and deter the capital necessary for a vibrant and essential American biotechnology industry to thrive and may cause most harm to small and midsize biotech companies, which are responsible for discovering more than half of all new treatments.”
Minimal impact, biopharma gains
Pfizer investors appear to disagree. One likely reason emerged from Tewari, who projected that MFN will have a “minimal impact” by subtracting between $425 million and ~$723 million in revenues between 2026–2028. That’s just a fraction (0.7% to 1.1%) of Pfizer’s $63 billion in 2024 revenues, with the company guiding investors to between $61 billion and $64 billion for this year, a range it reaffirmed in August.
“In our view, PFE may have done the rest of the industry a favor by giving a framework for a bespoke solution that we feel would be very tenable for the majority of our pharma coverage & would have a de minimis impact on their business going forward,” Tewari added.
Pfizer investors aren’t the only ones whose stock benefited from the deal with Trump. Several biopharma giants also saw their shares gain value between September 29 and Wednesday after Trump said during the Oval Office ceremony that “other drug companies” will commit to similar deals “as we go through the weeks.” Investors appeared to agree with Trump that his administration would soon make more MFN deals, based on the surges of:
- AbbVie (NYSE: ABBV)—Up roughly 10% from $223.16 to $244.38
- Merck & Co. (NYSE: MRK)—Up about 15% from 78.58 to $90.13
- Eli Lilly (NYSE: LLY)—Up nearly 14% from $726.51 to $825.42, boosted by a CNBC report citing an unnamed source stating that Lilly was already in talks with Trump’s administration for a Pfizer-like agreement.
“Lilly has been in active discussions with the administration to further expand patient access, preserve innovation, and promote affordability to our medicines. We do not have specific details to share at this time, but look forward to providing an update in collaboration with the administration soon,” the company said in a statement to news outlets.
Medicaid impacts stocks
David Risinger, a senior managing director and senior research analyst covering diversified biopharmaceuticals with Leerink Partners, observed in a research note that legacy biopharmas’ stocks performed better than those of biotech giants that generate more of their sales via Medicaid.
Medicaid sales accounted for less than 5% of Pfizer’s U.S. sales and a smaller percentage of global sales, Risinger reported, contrasting that with the five highest U.S. and global percentages of five other biopharmas. Roche (Six Swiss: ROG) shares jumped 10% from CHF 256.10 ($322.16) to CHF 282.30 ($355.07) between September 29 and Wednesday, despite Medicaid accounting for 15% U.S. sales and 5% global.
Four other stocks, however, either rose more slowly than Pfizer or declined in price during the same timeframe:
- Vertex Pharmaceuticals (NASDAQ: VRTX)—Medicaid accounts for 25% of U.S. sales and 15% of global sales. Stock yo-yoed, dipping 0.9% from $395.31 to $391.64 on Tuesday, then bouncing back 3% the following day to $404.21.
- Gilead Sciences (NASDAQ: GILD)—22% U.S. sales, 16% global. Stock slid 1.3% from $112.62 to $111.15.
- Johnson & Johnson (NYSE: JNJ)—12% U.S. sales, 7% global excluding U.S. medtech sales. Stock rose 2.4% from $181.62 to 186.05.
- Novartis (Six Swiss: NOVN)—Also 12% U.S. sales, 7% global. Shares climbed 5% from CHF 99.05 ($124.60) to CHF 104.02 ($130.85).
Risinger added that the Pfizer MFN deal could benefit biopharma after months of White House criticism about the industry’s sky-high drug prices: “From a public relations standpoint, since the administration claimed a huge win [Tuesday], President Trump may speak less negatively about the industry through to the midterm elections in November 2026.”
Leaders and laggards
- Fortress Biotech (NASDAQ: FBIO) shares tumbled 31% from $3.70 to $2.56 on Wednesday after the company and its majority-owned subsidiary Cyprium Therapeutics acknowledged that the FDA issued a Complete Response Letter (CRL) about their New Drug Application seeking approval for CUTX-101 (copper histidinate) as a treatment for Menkes disease in children. Development and commercialization of CUTX-101 is overseen by Sentynl Therapeutics, a U.S.-based biopharma wholly owned by Zydus Lifesciences, after Cyprium transferred full responsibility in 2023. The CRL noted that cGMP deficiencies had been seen at the facility where CUTX-101 is manufactured. The unidentified facility has since provided responses to the FDA after a September re-inspection of the facility, Fortress said, and Sentynl expects to request a meeting with the FDA to discuss the CRL and resubmission of the CUTX-101 application. Fortress said the CRL did not cite any other approvability concerns or identify any deficiencies in CUTX-101’s efficacy and safety data.
- Kala Bio (NASDAQ: KALA) shares plunged 93% over three trading days after the company said it would cease development of its lead candidate KPI-012 after it failed the 79-patient Phase IIb CHASE (Corneal Healing After SEcretome therapy) trial (NCT05727878), which assessed the human mesenchymal stem cell secretome as a treatment of persistent corneal epithelial defect (PCED). KPI-012 missed the primary endpoint of complete healing of PCED at week 8 as measured by corneal fluorescein staining. KPI-012 also failed to achieve statistical significance in the trial’s secondary endpoints. Kala said it would explore strategic options, while saving cash by halting the development of KPI-012. Kala reported $31.9 million in cash and cash equivalents as of June 30, down 24% from $42.2 million as of March 31. Kala shares nosedived 89% from $19.05 to $2.05 on September 29, then fell another 34% to $1.36 on Wednesday.
- MoonLake Immunotherapeutics (NASDAQ: MLTX) shares cratered 90% from $61.99 to $6.24 on September 29, a day after the company disappointed investors with week 16 results from its Phase III VELA registrational global program consisting of two identical trials, VELA-1 (NCT06411899) and VELA-2 (NCT06411379), both assessing sonelokimab in moderate-to-severe hidradenitis suppurativa (HS). The trials used as primary endpoint the higher clinical response level of HS Clinical Response (HiSCR) 75, which defines a response as an at least 75% reduction in abscess and inflammatory nodule count, and a treatment policy strategy to test the robustness of results. MoonLake said unspecified “intercurrent events” in the higher-than-expected placebo arm precluded VELA-2 from achieving statistical significance in the week 16 primary endpoint using the composite strategy. MoonLake said 35.9% of sonelokimab patients and 25.6% of placebo achieved HiSCR75 in VELA-2, while in VELA-1, sonelokimab achieved statistical significance for all primary and key secondary endpoints, achieving a placebo-adjusted HiSCR75 of 17%, using both strategies.
- Taysha Gene Therapies (NASDAQ: TSHA) shares soared 53% from $3.18 to $4.88 on Wednesday after announcing that the FDA granted its Breakthrough Therapy designation to TSHA-102 as a treatment for Rett syndrome, and finalized alignment with the FDA on the protocol for the upcoming REVEAL pivotal trial and statistical analysis plan (SAP) for the intrathecally delivered AAV9 gene therapy. The trial and SAP are intended to support a planned Biologics License Application (BLA) submission for TSHA-102, following the resolution of remaining clinical and statistical queries. Both the Breakthrough Therapy designation and alignment were based on the FDA’s review of positive clinical evidence from Part A of the REVEAL Phase I/II adolescent/adult female trial (NCT05606614) and pediatric trial (NCT06152237).
