Published by Global Banking & Finance Review®
Posted on December 17, 2025
3 min readLast updated: January 20, 2026
Add as preferred source on GoogleAbbVie and other pharma companies are close to a deal with Trump to lower drug prices, impacting Medicare and Medicaid. Five firms have agreed to terms.
By Deena Beasley, Jarrett Renshaw and Michael Erman
Dec 17 (Reuters) - AbbVie and several other drugmakers are expected to announce on Friday agreements with the U.S. government to lower certain prescription drug prices and meet other demands made by President Donald Trump, according to sources familiar with the situation.
The deals with about five companies are expected to be announced on Friday, several of the sources said.
Bloomberg News reported on Wednesday that the White House is set to announce drug pricing deals with Switzerland-based Novartis and Roche, further easing trade tensions with Switzerland after a standoff over tariffs.
The White House was not immediately available for comment. Novartis said it is in discussions with the administration. Roche and AbbVie did not immediately respond to requests for comment.
If the deals follow previous formats, such as the agreement with Pfizer, the announcements will be welcomed as another "clearing event" for stock prices, Citi analyst Geoff Meacham said in a research note on Wednesday.
The administration is also expected to unveil details of a test project aimed at tying prices paid by the government's Medicare health program for people over age 65 to the lowest prices the drugmakers charge in a select group of other nations, according to a source familiar with the talks.
Trump in July sent letters to the leaders of 17 major pharmaceutical companies outlining how they should provide so-called most-favored-nation prices to the government's Medicaid health program for low-income people, and guarantee that new drugs will not be launched at prices above those in other high-income countries.
He also called on the drugmakers to reinvest their earnings in the United States and to implement direct-to-consumer sales models.
FIVE RESPONSES SO FAR TO TRUMP'S LETTER
So far five companies have agreed to the terms. They are Pfizer, Eli Lilly, AstraZeneca, Novo Nordisk and EMD Serono, which is the U.S. division of Germany's Merck KGaA.
The remaining twelve are Sanofi, Regeneron, Merck, Johnson & Johnson, AbbVie, Amgen, Gilead, Boehringer Ingelheim, Bristol Myers, GSK, Novartis, and Genentech, Roche's U.S. unit.
Trump has long focused on the disparity between drug prices in the U.S. and other wealthy countries, which have government-run health systems that negotiate price discounts before agreeing to coverage.
The specter of tighter price controls by the U.S. government initially spooked investors, but terms of the deals announced so far served to calm many of those fears.
Analysts have noted that Medicaid, which accounts for only around 10% of U.S. drug spending, already benefits from substantial price discounts, exceeding 80% in some cases.
Pfizer, which announced its 2026 financial outlook on Tuesday, said Medicaid discounts would result in price and margin compression next year.
Commercial insurance accounts for just over 40% of drug spending, while Medicare makes up around 30%. The pharmaceutical agreements detailed so far do not apply to those drug prices.
The NYSE Arca Pharmaceutical Index is up about 18% so far this year, outperforming a 15% gain for the broader S&P 500.
(Reporting by Sriparna Roy in Bengaluru and Deena Beasley in Los Angeles; Additional reporting by Jarrett Renshaw in Washington and Patrick Wingrove and Michael Erman in New York; Editing by Maju Samuel, Shilpi Majumdar, Caroline Humer and Daniel Wallis)
A Most-Favored-Nation price is a pricing strategy where a seller agrees to provide the best price available to any buyer to ensure competitive pricing.
Explore more articles in the Headlines category
