The next wave of U.S. drug-price negotiations could put billions of dollars in pharmaceutical revenue under pressure, with Eli Lilly and Co (LLY) and Gilead Sciences, Inc. (GILD) facing more immediate exposure and Merck & Co (MRK) and Bristol-Myers Squibb Co (BMY) confronting a potentially bigger test in the years ahead.
Democrats may have limited ability to pass new drug-pricing legislation, but they can still use congressional investigations and hearings to scrutinize the industry. Meanwhile, Medicare's expanding price-negotiation program, and President Donald Trump's most-favored-nation policy are creating two parallel sources of pressure on drugmakers, making the government's next pricing announcement on Nov. 30 an important milestone for investors.
Two Drug Pricing Fights Are Already Underway
"Two fights are already underway," Chris Gannatti, CIO of WisdomTree, told MarketDash in an exclusive email interview.
The first is Medicare's drug-price negotiation program. It allows the government to bargain directly with pharmaceutical companies over the prices of some of their most expensive medicines.
Fifteen drugs account for approximately $27 billion in Medicare spending, and the Centers for Medicare & Medicaid Services must announce their negotiated prices by Nov. 30.
The resulting prices will take effect in 2028.
The second involves Trump's most-favored-nation policy. It ties U.S. drug prices to lower prices abroad. The administration has announced agreements with 26 drugmakers, but their details largely remain confidential, giving Democrats another potential avenue for congressional scrutiny.
Eli Lilly and Gilead Have More Immediate Exposure
Among pharmaceutical companies, Eli Lilly and Gilead Sciences stand out for their exposure to Medicare negotiations, according to Gannatti.
Lilly has two drugs, Trulicity and Verzenio, on the negotiation list, making it an important company to watch as Washington prepares to announce the new prices. The exposure comes as the drugmaker has built a major business around its diabetes and obesity treatments, making changes to the pricing of its medicines an important consideration for investors.
Gilead faces a different kind of concentration risk. Its HIV treatment Biktarvy accounts for approximately 8% of the company's 2027 revenue, according to one analyst estimate cited by Gannatti.
For most other pharmaceutical companies, Medicare exposure represents just 0% to 3% of sales, he said. That makes the potential impact uneven across the industry, even as political scrutiny broadens.
Merck and Bristol Myers Face a Bigger Test in 2029
The largest financial consequences could emerge further down the road. Merck's Keytruda and Bristol-Myers Squibb's Opdivo are not expected to become eligible for Medicare price negotiations until the 2029 pricing cycle.
"The biggest dollars are further out," Gannatti said.
Lilly and Gilead face more immediate exposure through drugs already selected for negotiations, while Merck and Bristol Myers could confront a much larger pricing challenge later.
Democrats' congressional majority does not guarantee new drug-pricing laws, particularly with Trump able to veto legislation. But hearings, investigations and pressure on Medicare negotiations could keep pharmaceutical pricing firmly on Washington's agenda, making the November 30 announcement an important near-term milestone for investors tracking the sector.
