Bristol Myers Jumps After US Drug Pricing Deal Removes Key Overhang
Company to provide blockbuster Eliquis free to some patients, securing a three-year exemption from tariffs and future pricing mandates in a strategic win.
Shares of Bristol Myers Squibb (NYSE: BMY) rose Tuesday after the pharmaceutical giant announced a significant agreement with the U.S. government, providing clarity on the future of its blockbuster drug, Eliquis, and removing a key source of investor uncertainty.
The stock climbed 1.7% to $54.24 in afternoon trading as investors digested the news. The deal represents a strategic trade-off: Bristol Myers will provide its top-selling oral anticoagulant, Eliquis, free of charge to the Medicaid program starting in January 2026. In exchange, the company secures a coveted three-year relief from tariffs and an exemption from future government-imposed pricing mandates, a major risk that has weighed on the pharmaceutical sector.
According to a StreetInsider report, the agreement is part of a broader initiative by the White House, with nine major drugmakers reportedly striking similar deals to enhance affordability and access. As part of its commitment, Bristol Myers Squibb will also donate over seven tons of the active pharmaceutical ingredient for Eliquis to help strengthen the U.S. supply chain.
The market's positive reaction suggests investors view the costs associated with the free drug program as a favorable alternative to the potential financial impact of forced price negotiations under the Inflation Reduction Act (IRA), which had created a significant overhang for the industry. By negotiating this agreement, Bristol Myers has achieved a level of regulatory certainty for one of its most critical revenue streams.
Eliquis is a cornerstone of Bristol Myers Squibb's portfolio, generating tens of billions in annual revenue. Securing a predictable framework for its pricing in the coming years is crucial, especially as the drug approaches its eventual patent cliff. This deal allows the company to protect a significant portion of its cash flow while navigating the evolving U.S. drug pricing landscape.
The company, with a market capitalization of approximately $109 billion, has been a focus for investors weighing its robust drug portfolio against future policy risks. Analysts currently hold an average price target of $54.41 on the stock, suggesting the shares were trading near fair value before this catalyst.
This agreement could set a precedent for how major pharmaceutical companies navigate pricing pressures from Washington. Rather than facing mandated price cuts, companies may opt for voluntary programs that provide patient access in exchange for stability. As reported by CNBC, the wider participation of other large pharma companies indicates a potential new template for industry-government relations.
For Bristol Myers Squibb, the deal is a tactical move to de-risk its business outlook, allowing management to focus on its drug pipeline and preparations for the eventual loss of exclusivity for key products. Investors will now be watching to see the detailed financial impact of the Eliquis program and how the newfound regulatory clarity influences the company's long-term capital allocation strategy.