End of Healthcare Policy Uncertainty? What the Pfizer-Trump Deal Means

Since the election of President Trump and the nomination of Robert F. Kennedy Jr. as Health Secretary, the healthcare sector has been under considerable policy uncertainty. This uncertainty pertained largely to drug pricing and tariffs. In investing, uncertainty often creates opportunity as valuations get depressed. However, valuations alone are not enough for stock prices to rise.

For stocks to start to rally, expectations have to have reset far enough that actual events start to positively exceed expectations. The beginning of this process can often be marked by a single event, called a “clearing event”.

What Was the Clearing Event?

On September 30th, The White House announced a deal with Pfizer on drug pricing¹.

What Was the Deal All About?

Pfizer agreed to ²:

• Reduce the price of drugs offered through the Medicaid program in line with other countries, so called most-favored nation. Discounts are said to range from
  50-85% (source: Pfizer).
• Price new drugs automatically under this agreement to Medicaid.
• Introduce a direct to consumer (DTC) program/website with steep discounts called TrumpRx.
• Invest $70 billion in the US and receive three years of exemption from Section 232 tariffs.

Why is This a Clearing Event?

The deal is seen by many as very shrewd. It gives President Trump a very large public win as a direct result of his executive orders and letters to pharma executives. Simultaneously, the details of the deal are benign for Pfizer’s profits. Medicaid accounts for less than 5% of the firm’s revenues³ and is a heavily discounted channel, likely close to most favoured pricing already. DTC savings will come at the cost of margins taken by pharmacy benefit managers (PBMs). It is also unclear how many Americans who have insurance coverage for drugs will opt for DTC. In exchange for large reshoring investments, the firm is exempt from any tariffs for three years – lifting a major risk for the sector. In short, the deal allows both sides to win.

Other companies are also likely to follow suit with similar deals. $368 billion of planned investment in US biopharma manufacturing has been announced (see below chart) to date, with nearly half already breaking ground⁴.

At the time of writing, AstraZeneca was second to secure a similar deal. The optics are the same - the firm’s Medicaid exposure is low⁵ and $50 billion U.S. investment makes sense in the context of tariff reprieve. One underappreciated positive is a joint commitment between these companies and the U.S. government to get other countries, that have highly monopsonistic healthcare systems, to pay more for drugs.

US Biopharma Manufacturing Investment Announcements

Source: William Blair as of September 2025

What Happens Next?

The deal with Pfizer potentially illustrates that healthcare policy risks have been overstated by the market. With $325 billion of reshoring pharma investments announced so far – companies are in a good position to strike further deals. Given solid fundamentals against relative valuations and low expectations, continued policy perception improvement, we believe could lead to healthcare and biotech sectors performing well in the near term and long term

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