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Pharmaceutical Companies Agree to Lower Drug Prices for Medicaid, Cash-paying Patients
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Published December 20, 2025, at 17:55 (UTC)
Jakarta – Nine major pharmaceutical companies have reached an agreement with the U.S. government to lower drug prices for both the Medicaid program and patients who pay cash. This move represents the latest effort by President Donald Trump to address concerns about high drug costs in the United states.
following the announcement,shares of the involved pharmaceutical companies saw a modest increase,rising between 1% and 3%. Investors appear to be responding favorably, interpreting the agreement as a way to eliminate the threat of potential tariffs imposed by the Trump administration for the next three years.
Courtney Breen, an analyst at Bernstein, stated that the agreement demonstrates pharmaceutical industry leaders proactively collaborating with the current administration while minimizing meaningful changes to their financial performance. This agreement confirms that pharmaceutical industry leaders are capitalizing on the momentum to work with the current administration, while minimizing major changes to the company’s economics,
Breen said.
Details of the Agreement
The core of the agreement involves each participating pharmaceutical company lowering the prices of most drugs sold to individuals enrolled in the low-income Medicaid program. Senior U.S. government officials have promised significant savings on commonly used medications.
However, analysts caution that Medicaid only accounts for approximately 10% of total drug spending in the U.S. The U.S. healthcare system already benefits from significant price discounts through various programs and negotiations. Thus, the overall impact on national drug spending might potentially be limited.
Participating Pharmaceutical Companies
The nine pharmaceutical companies involved in the agreement have not been publicly named as of December 20, 2025. Further details regarding the specific drugs subject to price reductions and the extent of those reductions are also pending release.
Medicaid and U.S. Drug spending
Medicaid is a government-funded healthcare program providing coverage to low-income individuals and families. In 2023, Medicaid accounted for approximately $78.8 billion in prescription drug spending, representing roughly 10% of the total $778.5 billion spent on prescription drugs in the U.S.Statista. The majority of drug spending is driven by private insurance (approximately 40%) and Medicare (approximately 35%).
| Payer | Percentage of U.S. Drug Spending (2023) | Approximate Spending (USD Billions) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| private Insurance | 40% | $311.4 | |||||||||
| Medicare | 35% | $272.5 | |||||||||
| Year | Total Passenger vehicle Sales (Millions) | Imported Passenger Vehicle Sales (Millions) | Domestic EV Sales (Millions) |
|---|---|---|---|
| 2022 | 26.86 | 1.15 | 6.89 |
| 2023 | 23.80 | 0.95 | 9.59 |
