Merck & Co. (MRK) shares fell over 3% on June 15. The Centers for Medicare & Medicaid Services (CMS) proposed a permanent framework for negotiating drug prices.
The proposal aims to close loopholes that allow drugmakers to extend patent protection via new formulations. This move introduces long-term negotiation risk for major pharmaceutical companies.
New regulations could impact future earnings and pricing for high-cost drugs starting in 2029. Investors specifically expressed concern regarding Merck’s blockbuster cancer immunotherapy, Keytruda.
Keytruda serves as a primary revenue driver for the company. The drug is expected to enter the Medicare negotiation round in 2029.