Drugmakers know the script by now. Washington picks a handful of blockbuster medicines, haggles with their makers, and then publishes the “maximum fair price” that Medicare will pay.
The second round of those Inflation Reduction Act negotiations is about to land, and Wall Street is already gaming out the winners and losers.
The White House has set a September 29 deadline for companies to respond to President Trump’s July letter on drug pricing.
Goldman Sachs reckons the administration may use the moment to reveal some of the 15 negotiated prices for 2027, well ahead of the statutory November 30 publication date.
Last year, the Centers for Medicare & Medicaid Services jumped the gun by a fortnight, so it wouldn’t be out of character.
Investors are braced for steeper discounts than the first round. That cohort of 10 drugs ended up with average price cuts of about 22% against Medicare’s net price, even if the headline numbers looked bigger.
This time Goldman expects deeper reductions, especially for the two franchises drawing the most attention: Novo Nordisk’s semaglutide family, Ozempic, Wegovy and Rybelsus, and Teva’s Austedo.
Novo’s weight-loss and diabetes blockbusters are already subject to heavy rebates. Goldman forecasts a 50% discount on the Medicare side, which in practice means little impact on its obesity model because Wegovy’s coverage under Part D is limited to patients with cardiovascular disease.
For Eli Lilly, that could even tilt the playing field toward its rival treatments, Mounjaro and Zepbound, if plans seek alternatives that allow more generous rebates.
Teva’s Austedo, used to treat Huntington’s and tardive dyskinesia, is expected to take a 30% price hit. Analysts model flat 2027 sales as the lower price cancels out underlying growth.
The company insists long-term guidance remains intact, pointing to an under-penetrated market and better commercial execution.
Beyond those flashpoints, most names look less exposed. Goldman stresses that while discounts may bite, the impact on sector valuations should be muted.
Biopharma stocks are already trading at steep discounts to the S&P 500, with investors jittery over policy risk as much as fundamentals.
For UK investors with stakes in names such as AstraZeneca and GSK, both of which feature on the latest negotiation list, the story is more about optics than earnings.
Any early announcement will provide headlines, but the investment case rests on pipelines, patent cliffs and execution, not just what Washington decides to pay.