Summary: Pharmaceutical companies that were not directly approached by the administration to reduce prices are reportedly trying to negotiate their own terms with the White House and the Centers for Medicare & Medicaid Services. Industry participants warn that absent some form of agreement, affected companies could face tariffs and inclusion in Medicare pilot programs that would align domestic prices with lower international levels.
Several people within the pharmaceutical sector say manufacturers who did not receive presidential letters urging price reductions are reaching out to contacts inside the White House and CMS to explore how they might secure comparable arrangements. Six industry sources, including two lobbyists, told industry outlets that companies are trying to establish such deals but did not identify which firms are involved.
A White House spokesman, Kush Desai, said in an email, "The Trump administration of course wants to negotiate deals that meaningfully lower drug prices for American patients with every pharmaceutical company."
Despite the administration's stated objective, one industry source said there has been no formal guidance communicated to companies on the process to follow if they did not receive a letter from the president. That absence of instruction has heightened anxiety among some drugmakers about how to respond if they are left out of the initial round of agreements.
Why companies are seeking their own deals
Industry officials said much of the concern centers on proposed pilot programs that could impose new price-setting mechanisms across substantial portions of the country. Those pilots, if enacted, would require manufacturers to provide rebates for drugs covered by Medicare for many Americans age 65 and older when U.S. prices exceed those paid abroad. For companies without an agreement, that could mean mandated rebates or other measures that reduce U.S. revenues for those products.
To date, 16 of the largest drugmakers, among them Pfizer and Eli Lilly, have reached agreements with the government after receiving letters directing them to lower prices. However, many other companies, including roughly half of those represented by the largest industry trade group, have not been contacted.
Stefan Oelrich, head of Bayer's pharmaceuticals division, said in an interview that he expects firms that did not receive letters will be given the opportunity to strike similar arrangements. "Otherwise that would be very odd, that only because you have size that you would get different treatment," he said.
Smaller and mid-sized companies organizing
Some mid-sized manufacturers have moved to coordinate their response. A group of smaller companies created an industry organization called the Midsized Biotech Alliance of America in part to oppose the proposed price-setting pilots. The alliance includes 11 members, among them Alkermes, BioMarin, Incyte and Alnylam.
Sanofi's chief executive, Paul Hudson, told reporters at a healthcare conference in San Francisco that a significant number of companies remain without deals and face uncertainty about their options. According to Hudson, the terms of some of the existing deals could make it difficult for the government to offer the same arrangements to smaller firms. "It’s very difficult to deliver 30, 50, 80 deals from here. There may just be a sort of catch-all offer from the government or something to try and manage it a certain way," Hudson said. He is scheduled to become the chairman of the major industry trade group later this year.
Program mechanics and potential effects
The deals already struck commit participating companies to reduce prices for drugs sold through the U.S. Medicaid program, which covers low-income Americans. Analysts point out that Medicaid represents only about 10% of total U.S. drug spending, and that Medicaid discounts can exceed 80% in some situations, which limits the scope of the savings from those agreements.
For companies without agreements, the concern is inclusion in Medicare pilot programs known as GLOBE and GUARD. Those pilots would introduce a most-favored-nation-style pricing approach within the much larger Medicare program, effectively bringing Medicare prices closer to the lower prices paid in other countries.
Industry sources also highlighted structural complications for smaller manufacturers. Some mid-sized firms have licensed their products to partners overseas, where the foreign licensees may lack incentive to raise prices. That arrangement could leave the U.S. license holder on the hook for steep price reductions in Medicare if the pilot programs are applied.
Another worry for mid-sized companies is the narrower portfolio of products available to use when negotiating terms. Without multiple high-revenue or lower-performing drugs to offer up in a deal, those companies may find fewer options to craft agreements comparable to those reached by larger peers. "A lot of them are very worried that... they’re going to get stuck with what the bigger guys did that works for them and doesn’t work for the mid-sized guys," one industry lobbyist said.
Implications for markets and policy debates
Pharmaceuticals and related healthcare sectors are closely watching whether a broader mechanism will be developed by the administration to manage companies that were not part of the initial wave of deals. Industry groups and firms are seeking clarity on whether the government will extend similar options widely or create a separate, catch-all approach for those left out. Until such guidance is provided, uncertainty persists around potential impacts to drug revenues and pricing dynamics in Medicare and Medicaid.