^{Wegovy injection pens arranged in Waterbury, Vermont, US, on Monday, April 28, 2025.}

^{Shelby Knowles | Bloomberg | Getty Images}

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A Pivotal Moment for Global Pharmaceutical Pricing

A sweeping overhaul of how the U.S. pays for prescription medicines is taking shape, and its impact is being felt far beyond American borders. Under the Inflation Reduction Act passed in 2022, the Centers for Medicare & Medicaid Services (CMS) now has the authority to negotiate prices for selected high-cost drugs. On Tuesday night, CMS revealed the next wave of negotiated prices for 15 major drugs that will take effect in 2027, marking one of the most aggressive price-cutting actions in the history of Medicare.

Among the most significant changes is a dramatic 71 percent price reduction for Novo Nordisk’s blockbuster diabetes drug Ozempic. With the U.S. market accounting for more than half of many European drugmakers’ revenue, these reforms are reshaping strategy, leadership, and investment across the pharmaceutical landscape.

At the same time, U.S. President Donald Trump has doubled down on his push to lower drug prices using Most Favored Nation (MFN) principles, tying U.S. drug prices to the lowest prices paid internationally. This combination of legislative and executive pressure is creating a new reality for global pharma companies as they navigate one of their most important markets.

How the Inflation Reduction Act Is Transforming Drug Pricing

The IRA’s negotiation framework gives U.S. regulators unprecedented leverage over drug prices for Medicare beneficiaries. While these measures are designed to lower costs for seniors, the ripple effect reaches companies worldwide due to the U.S.’s outsized role in global pharmaceutical revenues.

European drugmakers—many of which depend heavily on U.S. pricing—are particularly exposed. Novo Nordisk, which generated 56 percent of its 2025 year-to-date sales in the U.S., has acknowledged that misreading market changes was partly responsible for its recent leadership shakeup. AstraZeneca and GSK, meanwhile, have already announced expansion plans in the U.S. to align their operations with Trump’s tariff strategy and maintain market access.

The new 2027 negotiated prices reveal the scope of the impact:

• Ozempic (Novo Nordisk): 71 percent discount
• Calquence (AstraZeneca): 40 percent discount
• Trelegy (GSK): 73 percent discount
• Breo (GSK): 83 percent discount

Across all 15 drugs, discounts range from 38 percent to 85 percent, representing an estimated $8.5 billion reduction in annual Medicare spending.

CMS Deputy Administrator Chris Klomp called the results an example of “serious, fair, and disciplined negotiation,” signaling the administration’s intent to continue pressuring drugmakers.

Diverging Reactions from Leading Pharma Companies

Industry reactions vary widely. GSK welcomed the negotiated outcomes, stating that the company remains committed to working with CMS on pricing reforms. Novo Nordisk, however, criticized the process, arguing that government-mandated prices do not necessarily reduce patients’ out-of-pocket costs and may lead to reduced coverage options or higher premiums.

The disagreement underscores the broader divide between industry goals and policy initiatives aimed at affordability.

Market conditions reflect the tension but also show a degree of anticipation. AstraZeneca and GSK shares saw only modest reactions—each rising less than 1 percent—suggesting that investors widely expected the announced cuts. Novo Nordisk shares, however, climbed 4.7 percent as investors focused on long-term demand for its GLP-1 drugs despite pricing pressure.

CMS is expected to announce another set of 15 drugs for negotiation in early 2026, extending the policy’s reach deeper into the industry.

Most Favored Nation Pricing and Trump’s Push for Lower Costs

While Medicare negotiation is significant, analysts warn that Most Favored Nation pricing may prove far more disruptive. The MFN framework links U.S. drug prices to the lowest prices paid in peer countries—many of which regulate prices tightly.

President Trump signed an executive order in May to advance MFN pricing strategies, and companies are already moving to mitigate potential financial impacts. These adjustments include voluntary price cuts and direct agreements with the Trump administration to reduce costs in exchange for reduced tariff risks or increased market stability.

In early November, Trump announced agreements with Novo Nordisk and Eli Lilly to dramatically cut prices for obesity drugs for Medicare and Medicaid patients starting in 2026. Under the arrangement:

• Wegovy (Novo Nordisk): starting dose $350 per month, trending down to $245
• Zepbound (Eli Lilly): similar pricing path

Additionally, both companies will offer direct-to-consumer discounts through the TrumpRx.gov platform. Novo has also voluntarily lowered out-of-pocket prices for Ozempic and Wegovy to $349 per month, down from $499, intensifying the industrywide shift toward affordability.

AstraZeneca, Pfizer, and other major players have struck similar agreements, signaling a broader recalibration to align with U.S. policy.

Why the U.S. Market Remains Critical for European Pharma

The U.S. pharmaceutical ecosystem is unlike any other in the world. According to a 2024 RAND study, prescription drug prices in the U.S. are nearly three times higher than those in other wealthy countries. This pricing power is a cornerstone of profitability for Europe’s largest drug manufacturers:

• Novo Nordisk: 56 percent of revenue from the U.S.
• GSK: 52 percent
• AstraZeneca: 42 percent

Given these proportions, even small price shifts have large implications for earnings, valuation, and investor appetite. Still, volume growth in critical drug categories—especially obesity and diabetes treatments—may offset some of the pricing pressure.

Analysts such as Emily Field from Barclays note that the IRA negotiation process has become “more predictable,” suggesting that companies are adjusting strategically. The greater uncertainty now lies in the future evolution of MFN pricing policies and how aggressively they may be applied.

A New Era of Pricing Strategy and Regulatory Pressure

As reforms accelerate, pharmaceutical companies are navigating a landscape where pricing, politics, and public sentiment are increasingly intertwined. The U.S. is both their most lucrative market and their most politically volatile one.

While lower prices may reduce near-term revenue, expanded access—especially in obesity medicine—could drive long-term volume that partially offsets discounted pricing. Still, the combination of IRA-driven negotiation, MFN pricing threats, and rising public scrutiny means global pharma companies, particularly in Europe, must rethink their U.S. strategy, regulatory risk management, and investment footprint.

The next major inflection point will come in February 2026, when CMS announces the next group of drugs subject to price negotiation—a decision that is likely to ripple across stock markets and global supply chains.

Pharma leaders now face a new reality: competitive advantage will depend not only on innovation and clinical success but also on navigating the complex, evolving politics of drug pricing in the world’s most important healthcare market.