Novartis entered into a formal agreement with the U.S. federal government on December 19, 2025, to lower the prices of its medicines sold in the United States and to secure a three‑year tariff exemption for its U.S. manufacturing and research facilities. The deal is part of a broader effort by the administration to align U.S. drug prices with those in other high‑income countries while encouraging domestic investment.
Under the terms, Novartis will offer price reductions on most of its products sold to Medicaid and will list its drugs on the TrumpRx.gov portal, a government‑run platform that provides discounted prescription drugs to state Medicaid programs. The company also committed to launching new medicines at prices no higher than those in other affluent nations, a pledge that signals its willingness to meet the administration’s pricing expectations.
The agreement includes a $23 billion investment commitment that Novartis first announced in April 2025. The company will continue to invest that amount in U.S. manufacturing and research and development over the next five years, a move that supports its “U.S. first” strategy to become a top‑five pharmaceutical player in the country by 2027.
The tariff exemption covers a range of U.S. import duties on raw materials and finished products, providing relief that is expected to reduce production costs and help offset the impact of the price cuts. By securing this exemption, Novartis aims to maintain profitability while meeting the government’s demand for lower drug prices.
Novartis CEO Vas Narasimhan said the agreement “continues our partnership with the U.S. government and reaffirms our commitment to ensuring that innovative medicines reach patients at a fair price.” The company’s participation in the GENEROUS Model, a voluntary initiative that implements most‑favored‑nation pricing in state Medicaid programs, further demonstrates its willingness to collaborate on broader pricing reforms.
Analysts note that while the price reductions may compress margins in the short term, the tariff relief and continued investment in U.S. operations are expected to mitigate the financial impact. The deal also positions Novartis to navigate ongoing legal challenges to the Inflation Reduction Act’s Medicare price‑negotiation program, potentially reducing regulatory risk in the near future.
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