If big pharma was hoping that there would not be drug price negotiations under President Trump, they seem to have had their hopes dashed. That is because Trump is expected to support the Medicare drug price negotiations initiated by the Biden administration, but with some tweaks to give it his own spin. The negotiations are part of the Inflation Reduction Act, passed in 2022, which will see the prices of the first 10 selected drugs reduced in 2026.
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Experts suggest that the Trump administration may push for more transparency in the negotiations in order to make them resemble real-world negotiations. Additionally, there are rumors that the administration is looking for ways to reduce patient out-of-pocket costs and potentially take credit for initiatives already in place. Trump may also try to rebrand the negotiation provision as his own rather than being seen as a continuation of the previous administration’s policy.
Nevertheless, the pharmaceutical industry is closely watching these developments, with top companies like Pfizer (PFE), Bristol-Myers Squibb (BMY), and Eli Lilly (LLY) likely to be impacted. Interestingly, it is worth noting that the FDA’s role in approving new drugs may also be affected, as some experts predict that there will be a more streamlined process in the future.
Which Drugmaker Is the Better Buy?
Turning to Wall Street, out of the three stocks mentioned above, analysts think that PFE stock has the most room to run. In fact, PFE’s average price target of $30.44 per share implies more than 19% upside potential. On the other hand, analysts expect the least from BMY stock, as its average price target of $61.13 equates to a gain of 8.8%.
