Commercialization

A new round of pricing deals between the White House and pharmaceutical companies will have negligible effects on sales and profits for the industry while offering relief from government threats, Wall Street analysts said.

In December, President Trump announced agreements with nine more drugmakers that he said would significantly lower the prices of prescription medicines. 

The companies each made separate deals to offer discounts on specific drugs, many of which were already heavily rebated or nearing the end of their exclusivity. In return, the companies will receive three years of relief from Trump’s tariffs.

The deals amount to “another round of pandering on carefully selected drugs,” William Blair analyst Matt Phipps wrote in a note to clients. While the medicines will be offered at discounts for those who pay cash, there’s unlikely to be a significant difference in net prices, he said. The cash prices will likely be well above typical co-pays, meaning people with insurance will buy drugs the same way as in the past.

Indeed, one of the companies involved in the latest round of negotiations, Gilead Sciences, said it expects “the financial impact to be manageable in 2026 and beyond.” That’s likely true of all nine deals, Phipps said, telling clients he does not expect “significant impacts on the companies’ growth prospects.”

For their part, investors continue to push pharmaceutical and biotech stocks higher. Pharma and biotech indexes rose for much of 2025, since dipping last April as Trump threatened the industry with “major” tariffs. The threats led to a flurry of announcements of planned investments in U.S. manufacturing, but in the end the tariffs came with exemptions that significantly blunted their impact.

The latest deals are part of Trump’s push to bring “most-favored-nation,” or MFN pricing to pharmaceuticals. The idea is to align costs for U.S. consumers with those in countries that have price controls. In July, Trump sent letters to 17 large drugmakers giving them 60 days to lower prices or face government action.

Pfizer, AstraZeneca, Eli Lilly, Novo Nordisk and EMD Serono previously struck deals with the White House before December’s batch of agreements with Gilead, Merck & Co., Amgen, Bristol Myers Squibb, GSK, Novartis, Sanofi, Genentech, and Boehringer Ingelheim. Johnson & Johnson followed in early 2026, and analysts expect the two other companies that remain – AbbVie and Regeneron – to fall in line soon.

In addition to specific drug pricing deals, the White House claimed the agreement will “ensure foreign nations can no longer use price controls to free ride on American innovation by guaranteeing MFN prices on all new innovative medicines the nine companies bring to market.”

It’s unclear how that provision will be enforced. And at least one company, Bristol Myers, said its deal means it “will not be subject to future pricing mandates.” The agreements also appear to have offered additional special enticements, with the Food and Drug Administration announcing national priority vouchers for speedy reviews for two Merck experimental drugs on the same day.

The lack of transparency on the negotiations has led Democrats to cry foul. Four top lawmakers sent letters to AstraZeneca, Lilly, Novo and Pfizer seeking information. “Skepticism and scrutiny are warranted as the Trump Administration has repeatedly made announcements that fail to meet their stated goals and instead only increase costs on the consumer,” they said.

The pharmaceutical tariffs President Donald Trump announced in September could have a limited impact on the pharmaceutical industry due to multiple exemptions for generics, exports from Europe and companies already onshoring manufacturing.

The tariffs, unveiled via a post on the social media platform Truth Social, weren’t accompanied by legal documents, leaving key details unclear. However, the 100% levies, which are much smaller than the figure previously floated by the Trump administration, alleviate some uncertainty around U.S. drug pricing policy.

The flurry of drugmaker investments in U.S. drug production in 2025 should exempt a wide swathe of the industry’s drugs from the new levies. The tariffs won’t apply, Trump posted, to companies that are “building their pharmaceutical plant in America,” with “building” defined as “breaking ground” or “under construction.”

Focusing on branded drugs will also prevent price escalation for inexpensive generics, while lowering the risk of new shortages or worsening existing ones.

Meanwhile, tariffs on branded drugs exported from the European Union, which constitute a large share of the medicines made overseas, should be capped at 15% because of a trade agreement reached in August. EU officials reiterated the terms of that deal later on, even as a European pharmaceutical lobbying group criticized the new charges coming from the Trump administration.

In research notes, Wall Street analysts largely saw the news as a positive outcome for the sector, since the 100% levies are significantly less than the 200% or more Trump originally threatened and many companies appear to be exempt. 

“Many large-cap biopharmaceutical companies should not be exposed because they are engaged in some sort of U.S. facility construction activity, but it is difficult to predict which smaller U.S. biopharma companies may face exposure,” Leerink Partners analyst David Risinger wrote in a note to clients.

Several drugmakers also subsequently cut deals with the administration to gain tariff reprieves in exchange for lowering the prices of some drugs in the U.S. Those agreements, though, also don’t appear likely to significantly damage earnings prospects.

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By Evaluate

Biopharma is back, but not everyone is benefitting. Qualified optimism is the mood music as the sector heads into 2026.

After several years of a tough financing climate and sparse investor support, particularly on the public markets, a cautious recovery makes sense. When it comes to backing R&D, the stock market needs unequivocal evidence to get excited. For the first time in a while, excitement is translating into big valuations.

There is no halo effect warming those yet to deliver, however. Perhaps that will come, if the sector keeps hitting endpoints. The biotech sector does not need or want another boom – it needs more risk-taking from investors.

Pharma also needs to keep spending – October and November 2025 saw $36bn deployed on biotech buyouts, with the approaching patent cliff forcing management teams into action. A strong takeout theme always helps tempt money into a sector and more M&A is expected for 2026.

Commentators say the biotech sector that is emerging from the long drought is smarter, leaner and higher quality, run by investors and executives who know how to spend money wisely. For the rally to continue, that needs to be proved correct in 2026.

2026 Top Sellers

What can we expect from this reshaped pharma market in 2026? The incretin space will remain the big theme in 2026, with all eyes on the fierce battle between market leaders Novo Nordisk and Eli Lilly. The US pharma giant is set to take the lead in the metabolic space in 2026 with tirzepatide – some analysts reckon the drug has $100bn potential. Lilly’s highly valued suite of follow-on projects has investors betting on market dominance for years to come.

Top Selling Drugs in 2026

Lilly became pharma’s first $1tn market cap company in 2025, a fortune that contrasts starkly with Novo Nordisk’s stock market decline. The FDA approved “Wegovy in a pill” for obesity in December. Stronger than expected demand would provide a fillip for Novo Nordisk and initial sales in 2026 will be a big focus.

Meanwhile, Merck & Co will be heartened to see Keytruda retaining its position as the top-selling drug brand in 2026, although this is only achieved when adding in sales of a new subcutaneously administered formulation of the cancer blockbuster. Called Keytruda Qlex, the product offers convenience over the original intravenous drug and provides valuable franchise extension as this class of checkpoint inhibitor nears the end of its patent-protected life.

Waiting in the Wings

If the top sellers of 2026 are well-established names, what are the drugs set to hit the market in 2026 and what will their impact be? This question takes us straight back to the GLP-1 arena with Evalute’s data forecasting that the top two potential launches by 2032 sales are set to be Novo Nordisk’s Cagrisema and Eli Lilly’s Orforglipron – both targeting obesity and type 2 diabetes.

Beyond obesity, Gilead and Arcellx’s anito-cel is causing a stir in the blood cancer space, generating highly competitive data to Legend/J&J’s blockbuster Carvykti. In solid tumors, hormone-driven breast cancer could see new options in 2026, with projects from Celcuity and AstraZeneca going before regulators.

Immunology and inflammation will continue to run hot in 2026. Several novel projects in this therapy area are approaching the market or late-stage data readouts in 2026. Roivant is a big player here, with a wide pipeline across various ‘vant subsidiaries and the company could see its first blockbuster approval in 2026 with brepocitinib.

There is more detailed analysis in the full 2026 Preview report by Evaluate which is available here.

Novo Nordisk and Eli Lilly will sell their GLP-1 drugs for obesity and diabetes to some Medicare enrollees for $245 a month under an agreement hammered out with the Trump administration, the White House announced.

Through the deal, the two companies will also offer some of the same drugs through an online government portal for about $350 a month. Lilly and Novo were additionally required to sell starter doses of their coming oral obesity medicines for $149 a month. They’ll have to offer all their weight loss drugs to state Medicaid programs at “most favored nation” prices, too. Novo’s pill was approved in December and launched weeks later.

The figures represent discounts to the list prices of Wegovy and Zepbound, which are $1,350 and $1,080 a month, respectively, as well as the $499 monthly charge on Lilly and Novo’s direct-to-consumer sites. But comparisons are different when weighed against the “net” prices that follow negotiations with insurers.

The outgoing Biden administration in its waning days sought to extend Medicare and Medicaid coverage to Wegovy and Zepbound, but the Trump administration shelved that effort.

The deal announced with the Trump White House is more expansive, involving both a method of broadening access to obesity drugs and the administration’s push to equalize U.S. prices with those paid in other developed nations. The agreement even dipped into other parts of Lilly and Novo’s portfolio, with both agreeing to discounted prices for migraine and diabetes medicines that are sold through the new government website.

After speaking with Lilly executives, Leerink Partners analyst David Risinger wrote that the company believes the deal will make 40 million more Americans eligible for treatment with its obesity drugs. His team also estimates that the future $245 monthly price for Zepbound is about 55% of current Medicaid and Medicare net prices.

Still, the Medicare price for GLP-1 drugs will be offered through a pilot program that will cover most beneficiaries, Novo said. That may be necessary, as the law that authorized Medicare coverage of prescription drugs specifically bars weight loss products. But it also likely limits which Medicare beneficiaries will qualify, and could have a fixed expiration date. Those that do benefit will have a $50 monthly copay.

The agreement also won’t apply to the vast majority of people who receive their medications through commercial insurance. Risigner’s team estimates that the average U.S. commercial plan pays about $450 to $500 per month for Zepbound and that Lilly said it “does not have any obligations” to cut those prices. The company does expect them to “come down over time, but also expects significant volume upside,” Risinger wrote.

In agreeing to price cuts, Novo and Lilly have been spared from any tariffs on their drugs for three years, a benefit similarly handed to Pfizer and AstraZeneca following deals with the White House. In addition, the Food and Drug Administration awarded Wegovy and Lilly’s experimental obesity pill orforglipron “national priority” vouchers that could drastically shorten regulatory reviews.

Novo expects a negative “low single-digit impact” on global sales growth in 2026, when implementation of the new prices is expected. Lilly didn’t specify how its sales might be impacted.

Eli Lilly responded to a Trump administration plan to lower U.S. drug costs by claiming it will raise prices in European countries to “align” them with the costs paid “across developed countries.”

The effort includes an agreement with the U.K. government to hike the price of the company’s blockbuster diabetes medicine Mounjaro “while maintaining access” for people with the disease, Lilly said.

Lilly didn’t commit to cutting U.S. prices. But it did say that for prices to be reduced in the U.S., the amounts “paid by governments and health systems need to increase in other developed markets like Europe." The company has been working with other, unspecified governments to make other pricing adjustments, too. 

Lilly didn’t specify how it will raise prices in those countries — many of which have nationalized healthcare systems that negotiate drug costs for their entire population — without affecting access. It also didn’t reveal whether the planned hikes would be tied to a drug’s list price or the confidential rebate deals cut between drugmakers and national customers.

The company also pointed out the difficulty of lowering prices in the U.S. because of the healthcare system’s structure.

“The U.S. system is complex and opaque, with multiple cross subsidies, abuse of government programs like 340B, and insurance cost-sharing burdens for patients,” Lilly said.

Through an executive order signed in May, President Donald Trump aimed to link the price paid for drugs in the U.S. to the lowest price paid in other high-income countries. This “most favored nation” policy spurred price negotiations between the federal government and companies, as well as to pushed drugmakers to establish new ways to distribute medicines to patients at a reduced cost.

The “most favored nation” policy came alongside the threat of tariffs on pharmaceuticals, which led many large drugmakers — Lilly among them — to promise to invest billions of dollars in U.S. drug manufacturing.

Semaglutide, the popular drug sold by Novo Nordisk as Ozempic for diabetes and Wegovy for weight loss, was among a group of widely used medicines selected by the U.S. government for the next round of price negotiations under a 2022 law aimed at curtailing pharmaceutical costs within Medicare.

The Biden administration released the list of 15 drugs Jan. 17 in one of its final acts of healthcare policy before President-elect Donald Trump took office on Jan. 20.

Also on the list are Xtandi, Ibrance, Calquence and Pomalyst, blockbuster drugs for cancers of the prostate, breast, blood and bone marrow. Trelegy Ellipta, an inhaler used for asthma and chronic obstructive sleep apnea, is included, as are Otezla, a psoriasis medicine, and Vraylar, an antipsychotic.

Ozempic and Wegovy are particularly significant inclusions. Their use in the U.S. has skyrocketed due to the potency of semaglutide, which is the active ingredient of both, in helping control diabetes and shed weight.

Currently, Medicare is barred from covering drugs solely for weight loss. Wegovy is also approved to lower cardiovascular risk in people with heart disease who are either overweight of who have obesity, however. And last November the Biden administration proposed a rule that would eliminate that restriction and permit Medicare coverage of obesity treatment.

Some 5.25 million people covered by Medicare took one of the 15 selected medicines between November 2023 and October 2024, according to information provided by CMS. Over that period, gross spending by Medicare on those products totaled $41 billion, or about 14% of total prescription drug costs under the program’s “Part D” benefit.

“The U.S. has the most innovative treatments in the world,” said former CMS administrator Chiquita Brooks-LaSure on a January call with reporters. “But that’s only meaningful if people can actually access them.”

Medicare’s power to negotiate drug prices in this fashion was granted by the Inflation Reduction Act, which Congress passed three years ago in a significant defeat for the pharma industry.

For the first time, the law allows Medicare to use its scale and market power to extract price concessions from drug companies on certain, select medicines. Only “single-source” branded drugs that lack generic competition and are among the 50 products with the highest spending in Medicare Part D can be picked. Part B drugs, which include medicines administered by physicians, are exempt from the first two cycles of negotiations.

The Inflation Reduction Act also specifies that selected drugs must have been on the market in the U.S. for either seven or 11 years depending on whether they are small molecules or biologics, respectively.

CMS chose 10 drugs for the first round, which concluded in 2024 with the publication of the discounted prices government negotiators extracted from companies. According to the agency, the new prices were on average 38% to 79% lower than the drugs’ list price, or wholesale acquisition cost.

Assessing savings from those efforts is complicated, however. Health plan sponsors that contract with the government to administer Part D benefits already secure drugmaker rebates that can result in lower net prices. Those net prices are not public, so it’s hard to precisely compare the negotiated prices on the first 10 drugs, which take effect in 2026, to what Medicare paid previously.

For this second round, CMS tweaked the rules guiding negotiations, allowing for more meetings with drugmakers and greater input from patients and physicians.

The pharma industry has lambasted the process as essentially price-setting, rather than a true negotiation, because the Inflation Reduction Act gives CMS the power to levy exceptionally steep fines if drugmakers don’t accept the offered “maximum fair price.”

During the first round of negotiations, CMS said it revised its initial offers upwards over the course of meeting with drugmakers. For five of the 10 drugs, the agency reached an agreement with the respective drugmaker as a result of a negotiation meeting. For the other five, the relevant company accepted CMS’ final written offer, per a fact sheet published in August.

Drugmakers have also argued the Inflation Reduction Act’s different treatment of small molecules and biologics is skewing R&D incentives away from the former type of medicine, which is often made in convenient oral doses.

A handful of pharma companies sued to block the law on various grounds, including its constitutionality, but have so far been unsuccessful. In mid-January, generic drugmaker Teva Pharmaceutical joined in, filing a suit in U.S. district court that challenges how CMS has interpreted the law.

On the call with reporters, Brooks-LaSure emphasized how CMS’ actions were taken in accordance with statute. “The law is clear and straightforward in how it specifies the criteria for how the drugs are selected for negotiation,” Brooks-LaSure said. “CMS followed the law’s criteria, and that is how we determined the 15 drugs for selection.”

Novo Nordisk in June terminated a marketing deal for its obesity drug Wegovy with Hims & Hers Health just eight weeks after it began, claiming the telehealth company “has failed to adhere to the law which prohibits mass sales of compounded drugs.”

Hims had marketed compounded Wegovy under laws that permit it to while a drug is in shortage, but the U.S. government said the shortage ended in February. The Danish drugmaker partnered with Hims and other telehealth companies to help its customers transition to branded Wegovy.

Novo said it is taking the action to protect patients from “knock-off drugs made with foreign illicit active pharmaceutical ingredients” that Hims justified under the “false guise of ‘personalization.’” In response, Hims CEO Andrew Dudum said Novo was “misleading the public.”

Novo and rival Eli Lilly struggled to meet demand for their obesity drugs following their respective launches, forcing them to spend hundreds of millions of dollars to expand manufacturing of the complex, injectable peptide drugs. Besides adding factory capacity, Novo’s controlling shareholder purchased the contract manufacturing company Catalent for $16.5 billion and sold three of its factories to Novo Nordisk.

While the drugs were officially in shortage — as declared by the Food and Drug Administration — companies like Hims were permitted under federal law to provide copycat versions of Wegovy and Zepbound manufactured at compounding facilities.

This fueled the growth of Hims and other telehealth companies, which were able to provide them in direct-to-consumer channels as well as better accommodate cash-pay patients who can’t get obesity drug coverage through employers. Some analysts believe cash-pay patients will constitute a much bigger share of the obesity drug market than other types of drugs.

With the end of the shortage, both Novo and Lilly sought to provide similar types of services through pharmacies and other types of consumer-facing companies, which also included cash-pay options and lower prices for people who paid cash. Lilly initially used online pharmacies like Eversana and Truepill, while Novo partnered with the telehealth companies, including LifeMD and Ro in addition to Hims. Lilly later signed deals with Ro, Teladoc and LifeMD.

In a recent presentation at an investor conference, Lilly finance chief Lucas Montacre said some compounders had continued to combine the active ingredients of FDA-approved obesity drugs with other molecules or vitamins and called them personalized treatments.

“We are enforcing in those agreements that, as long as the product is out of the shortage list, those telehealth services are not compounding either [Zepbound] or [Wegovy],” Montacre said of its deals.

Hims said the deal ended because it was defending the “ability of providers and patients to control individual treatment decisions.”

“In recent weeks, Novo Nordisk’s commercial team increasingly pressured us to control clinical standards and steer patients to Wegovy regardless of whether it was clinically best for patients. We refuse to be strong-armed by any pharmaceutical company’s anticompetitive demands,” Dudum wrote in a post on X.

Pfizer and other large pharmaceutical companies are taking seriously President Donald Trump’s demand that drugmakers make more of their medicines available direct to consumers in the U.S. at lower cost, Pfizer CEO Albert Bourla said.

“We have serious discussions in the industry,” Bourla told investors on a conference call in August. “I’m connected very often individually with all the major companies and they are all ready to roll up their sleeves and execute something like that.”

Pfizer and partner Bristol Myers Squibb recently announced plans to offer their widely-used blood thinner Eliquis at a discounted cash price through an online service. The company previously launched a direct-to-consumer service that allows patients to book telehealth appointments, schedule vaccinations and fill prescriptions for certain medicines, such as those Pfizer sells for migraine and COVID-19.

“We think it is a fantastic way to go ahead, so we will work collaboratively to do it,” Bourla said. 

Obesity drugmakers Eli Lilly and Novo Nordisk have also recently opened up more ways for cash-paying patients to access their weight loss medicines directly. Other companies are signaling interest, too, in exploring ways to sidestep pharmacy benefit managers. These drug-purchasing middlemen extract from drugmakers rebates that insurers say they use to lower overall costs, but not necessarily in ways that are obvious to a prescription-filling patient.

Novo Nordisk is battling back against the threats to its obesity drug business, saying in August that it expects a significant boost from a major insurer deal and wider legal actions against the companies making knockoff versions of Wegovy. 

Competition from Eli Lilly’s rival weight loss drug Zepbound as well as the makers of compounded, “personalized” forms Wegovy have crippled Novo’s market prospects in obesity. The company has lost nearly half of its share value this year, announced a CEO switch and cut its financial forecasts.

But in July, Wegovy became the preferred anti-obesity medication on the national formulary for CVS Health’s pharmacy benefit manager Caremark, giving Novo a leg up on Zepbound in the tens of millions of American patients covered by the company’s plans. That decision has shifted patients to Wegovy “largely in line with what we expected,” said Novo’s U.S. operations head Dave Moore, in August.

Novo also accelerated a push into direct-to-consumer channels for Wegovy, an initiative that’s part of a broader trend among pharmaceutical companies. While direct-to-consumer marketing fueled an increase of total Wegovy cash-pay prescriptions from 4% to 10% in the U.S. since January, growth has been slower than expected, according to Moore. The company “will continue to invest” in the expansion of those channels, he added.

Those efforts, however, will likely necessitate a price cut for Wegovy to make the drug more attractive to those paying cash and “reduce friction” for insured people, CFO Karsten Munk Knudsen said.

Drug compounders, meanwhile, pounced on an earlier supply shortage of Wegovy and Zepbound and have eaten into Novo’s sales in particular. Though the Food and Drug Administration has since declared the shortage over, companies have justified continued marketing of copycat versions by offering “personalization” that adjusts doses or adds vitamins.

Novo executives said they’re pressing the FDA to enforce bans on compounded Wegovy. The company also announced 14 more lawsuits in August seeking to block sales, bringing the total number of court cases it’s started to 132.

Still, a broad change to federal law may be necessary to stop sales, as compounders are currently taking advantage of a legal loophole. “There is nothing categorically that is off the table” in terms of litigation, Moore said.