| President Donald Trump was pleased. Standing before a gaggle of reporters in the Oval Office on Tuesday, he explained that after years of twisting arms and cajoling pharmaceutical executives, he was finally lowering drug costs and “ending the era of global price gouging at the expense of American families.” Pfizer, one of the world’s largest drugmakers, had agreed to voluntarily slash some of its prices by more than 80%, Trump said, and the company’s major pharma peers would soon to follow suit. And then drugmaker stock prices shot up. Pfizer, Merck, Eli Lilly and Johnson & Johnson added billions of dollars in market value despite the president promising they would soon forgo billions of dollars in revenue. What gives? Wall Street had long feared the White House would impose aggressive policies that would hamstring the drug industry’s profitability. Instead, Pfizer signed a voluntary deal that sounds unlikely to have much of an effect on its bottom line, analysts said. The company will reduce what it charges Medicaid, the government insurance program for low-income people. But that program already gets steep discounts from drugmakers. Pfizer also promised to price future drugs on par with what they cost in other wealthy nations. And the agreement came with a key concession: Pfizer secured a three-year reprieve from future tariffs on drug imports. That addresses the “two major overhangs” on the whole pharmaceutical sector, Pfizer Chief Executive Officer Albert Bourla said at the White House meeting, referring to anxiety over drug pricing policy and potential tariffs that was keeping investors on the sidelines. The deal also established a template for Bourla’s C-suite peers, BMO Capital Markets analyst Evan Seigerman said in a note to investors, “allowing for headline pricing concessions and a Trump ‘win’ without more punitive implementation” of tariffs. Where Trump sees a major policy victory, analysts see a massive relief. “For all the hype and commentary around delivering a transformative win for lower drug prices,” Pfizer didn’t change a single numeral in its financial forecast in light of the deal, Cantor Fitzgerald analyst Carter Gould pointed out, suggesting the whole affair was “more optics than bite.” – Damian Garde | 
