Nine mid-sized drugmakers have agreed to deals with the White House, announcing Monday they will participate in a model Medicaid program to align certain drug prices with those paid by other countries while upping manufacturing in the U.S.
In exchange, those manufacturers have been spared from tariffs under “section 232” of the Trade Expansion Act, which governs imports essential to national security. The White House and the companies didn’t disclose detailed terms of the agreements.
The nine drugmakers — Alcon, Astellas Pharma, BeOne Medicines, BridgeBio Pharma, CSL, Kyowa Kirin, Sun Pharma, Teva Pharmaceuticals and UCB — have agreed to participate in the Centers for Medicare and Medicaid Services’ GENEROUS program, which links Medicaid prices to the lowest charges paid in other countries. Formed in January, that program is due to expire in six years. (Incyte separately announced a similar deal centered around its blood disease drug Jakafi.)
Some manufacturers pledged to equalize the cost for future drugs to those “most favored nation” prices, too. And in their announcements, CSL revealed plans to expand a manufacturing facility in Illinois, while Astellas, Sun Pharma, Teva and UCB pledged to donate active pharmaceutical ingredients to a U.S.-based reserve.
Still, Medicaid, the joint federal-state program that covers healthcare for low-income people, already pays steeply discounted prices for drugs under the terms of a 1990 law that mandates significant discounts. That makes the additional price cuts achieved under Monday’s agreements unclear.
Importantly, the deals don’t apply to commercial insurance, nor to the much larger Medicare program. Medicare spent $163 billion on prescription drugs in 2024, the last year for which the federal government has compiled data. Medicaid, by comparison, paid $54 billion for branded drugs that year.
That difference could blunt the impact of multiple agreements. Medicaid accounts for less than 2% of the sales of BridgeBio’s heart disease drug Attruby, for example, wrote RBC Capital Markets analyst Brian Abrahams in a client note. BridgeBio said it doesn’t expect to be subjected to any future pricing mandates either.
Likewise, BeOne’s lung cancer drug Tevimbra is also involved in Monday’s deals. But Tevimbra will likely see only a small impact from Medicaid discounting, while BeOne got an exemption for the leukemia and lymphoma drug Brukinsa, which has more Medicare sales, Abrahams wrote.
Abrahams doesn’t foresee any of the companies “sustaining any meaningful commercial impact” and added that there could be “incremental upside” on shares because the threat of price controls appears to have abated.
