Pharma Investors Relieved as Drug Prices Cut Less Than Expected

The US government just slashed $7.5 billion from expected spending on drugs in 2026.

Wall Street’s reaction? A sigh of relief.

Of nine publicly traded companies affected by the initial price cuts negotiated by Medicare, the US health program for senior citizens, only Merck & Co. Inc., AbbVie Inc., Eli Lilly & Co., which partners on Jardiance, and the American depositary receipts of Novartis AG shares fell on Thursday, and the declines were modest.

The reason is that despite the Biden administration’s victory lap over the drug price cuts that will take effect in 2026, they amounted ...