Pfizer Inc (NYSE:PFE, ETR:PFE) shares jumped 3.5% after Donald Trump said the drugmaker would be the first company offering lower prices on its prescription drugs.
Under a new agreement, the company will "immediately" start offering large discounts to US customers under the "most favoured nation" drug pricing order established earlier this year, the President said in a video address.
Medicines will be available for direct purchase on a US government website, TrumpRx.gov.
President Trump said talks were underway with other pharma companies, which may face an additional 5-8% tariff if no trade agreements are reached.
Pfizer said it would offer a "large majority" of its primary care and some select specialty medications at discounts of up to 85%, averaging around 50%.
As part of the deal, the company said it has agreed to a three-year "grace period" during which time its products won't face tariffs, provided it ups investment in US manufacturing.
The agreement "provides certainty from tariffs and clarity on pricing framework that furthers Pfizer’s ability to expand investment in US-based innovation and return manufacturing to the US," Pfizer said.
A "balanced global pricing approach" has been established, which it said will ensure prices in the US and other developed countries are "both reasonable and sustainable".
Pfizer is the first major drugmaker to publicly agree to the MFN plan outlined in a May executive order signed by President Trump, which is aimed at aligning US drug prices with those in other wealthy countries.
In addition to the pricing commitment, the company is expected to announce a $70 billion investment in US research, development and manufacturing, reports suggested.
In a fact sheet, the White House said that the agreement will provide every state Medicaid program in the country access to MFN drug prices on Pfizer products.
It "ensures foreign nations can no longer use price controls to freeride on American innovation by guaranteeing MFN prices on all new innovative medicines Pfizer brings to market" and requires Pfizer to "repatriate increased foreign revenue on existing products that Pfizer realizes as a result of the President’s strong America First US trade policies for the benefit of American patients".
The agreement requires Pfizer to offer medicines at a deep discount off the list price when selling directly to American patients, with examples given that Eucrisa, a topical ointment for atopic dermatitis, will be made available at an 80% discount when bought directly; Xeljanz, a widely used oral medication for rheumatoid arthritis, psoriatic arthritis, and ulcerative colitis, will be available at a 40% discount; and Zavzpret, a treatment for migraines, will be sold to patients at a 50% discount.