CMS Selects Pfizer’s First Medicare Part B Drugs for Negotiation, Q4 Earnings Decline Projected
The CMS named Pfizer’s branded drugs, including its first Medicare Part B products, for the third cycle of its Medicare Drug Price Negotiation Program, exposing list prices to government pressure. Analysts forecast Q4 earnings will decline on waning COVID-19 demand and an approaching patent cliff, despite a 3-year Section 232 tariff exemption.
1. CMS Selects Pfizer Drugs for Medicare Price Talks
The U.S. Centers for Medicare & Medicaid Services this week added two Pfizer-branded therapies—Xeljanz (tofacitinib) and Inlyta (axitinib)—to the third cycle of its Medicare Drug Price Negotiation Program. These agents rank among the top 20 highest-spend drugs under Part D and represent the first Part B-reimbursed products named for negotiation. Collectively, Xeljanz and Inlyta accounted for $3.2 billion in Medicare expenditures in 2024, according to CMS data. The inclusion triggers mandatory discussions on maximum fair prices, potentially cutting costs for more than 1.5 million beneficiaries and impacting Pfizer’s revenue mix starting in 2026.
2. Q4 Earnings Preview Points to Year-Over-Year Declines
Analysts project Pfizer’s fourth-quarter 2025 revenue will fall approximately 2.5% versus the prior year, to $30.5 billion, driven by waning demand for COVID-19 vaccines and therapies. Consensus EPS estimates stand at $0.90, down from $1.15 in Q4 2024, reflecting both lower topline and increased R&D investment in next-generation immuno-oncology programs. While the oncology portfolio is expected to contribute $3.8 billion—up 8% year-over-year—losses of exclusivity in key inflammation assets are set to weigh on gross margin, forecast at 76% versus 79% a year ago.
3. Recent Share Performance Trails Peers
Over the past six months, Pfizer shares have underperformed Merck by roughly 8% and Johnson & Johnson by about 5%. The shortfall stems from a looming patent cliff for its Prevnar 20 pneumonia vaccine (exclusivity expires July 2026), as well as a tepid 2026 guidance calling for mid-single-digit revenue growth and flat adjusted operating margin. Meanwhile, Merck’s oncology blockbuster Keytruda and J&J’s diversified medical devices pipeline have bolstered resilience in their respective stocks.
4. Bullish Regulations Carve Out Pfizer’s Margin Defense
Despite headline risks from The Great Healthcare Plan’s global price parity provisions, Pfizer secured a three-year exemption under Section 232 tariffs on imported active pharmaceutical ingredients—a concession not extended to most peers. Moreover, proposed dismantling of the PBM rebate model could shift reimbursement toward list prices, potentially offsetting some pricing pressure. Combined with anticipated volume gains from the upcoming TrumpRx.gov platform, these factors underpin a positive margin outlook, reinforcing bullish convictions even as regulatory debates intensify.