Drug pricing politics in Washington just took a sharp turn. Pfizer Inc (NYSE:PFE, ETR:PFE) has struck a deal with President Trump to support his “Most Favoured Nation” (MFN) plan, which links US drug prices to those in other major markets.
In return for a $70 billion investment pledge and commitments to bring more manufacturing back to the US, Pfizer will be exempt from pharma tariffs for three years.
The framework has three pillars: Pfizer will sell almost its entire portfolio to Medicaid at MFN prices, it will launch new drugs in the US at the same level as peer countries, and it will participate in a new scheme called TrumpRx, a website offering discounted medicines direct to consumers who pay out of pocket.
For European drugmakers, JPMorgan sees the implications as manageable.
Medicaid represents only around 6% of US sales on average, with AstraZeneca PLC (LSE:AZN, NASDAQ:AZN), Novartis, Roche and Novo Nordisk exposed at about 5%.
Sanofi and GSK PLC (LSE:GSK, NYSE:GSK) are higher at 10-15%, reflecting their reliance on Dupixent and HIV drugs. JPMorgan estimates that extending MFN pricing to EU pharma would cut group sales by roughly 1% and earnings by 2% before mitigation.
Direct-to-consumer sales models, meanwhile, are already emerging: Novo Nordisk is selling Ozempic at $499, while Novartis, AstraZeneca and others have begun offering steep discounts on blockbuster drugs.
JPM doubts this will dent overall sales but sees it as part of a broader reshaping of how medicines are distributed.
The White House expects other companies to follow Pfizer’s lead, which the US bank argues makes the deal something of a bellwether.
If adopted widely, MFN pricing could level off some US margins but without the sector-wide disruption investors once feared. For European pharma, the message is that the storm may be noisy, but the damage should be contained.