Big Pharma's Q2 2026 Profits Are In — But Are Patients Still Losing Out on Affordable Medicines?
Big Pharma's Q2 2026 earnings** season, which concluded in early August, showed record profits and raised full-year guidance across most major manufacturers, even as US patient affordability data worsened. This affects patients paying out of pocket in the United States, pharmaceutical companies navigating new pricing regulation, and regulatory affairs professionals working across market access and lifecycle management. It matters now because the Medicare Drug Price Negotiation Program and the Most Favored Nation (MFN) pricing framework are both live policy levers in 2026, directly intersecting with the regulatory and commercial strategy that keeps medicines on the market.
1. At a Glance
At a Glance
- Bristol Myers Squibb reported $13.0 billion in Q2 2026 revenue (up 6% year-on-year) and raised its full-year non-GAAP EPS guidance to $6.75–$7.00.
- Johnson & Johnson posted $25.3 billion in Q2 2026 sales (up 6.6%) and raised full-year sales guidance to approximately $101.1 billion.
- Novartis delivered $14.4 billion in net sales (up 3% in USD) despite a 19% drop in net income, and reaffirmed full-year guidance.
- 40% of US patients report cutting pills in half or skipping doses due to cost, according to KFF polling cited by the Pharmaceutical Reform Alliance (PRA).
- 94% of Americans blame pharmaceutical companies for high drug costs, and 68% distrust drugmakers to price fairly, per PRA's national poll.
- The Medicare Drug Price Negotiation Program, created under the Inflation Reduction Act (IRA), took effect for its first 10 negotiated drugs on 1 January 2026.
- The Most Favored Nation (MFN) pricing policy, formalised through a 2025 executive order, is projected to save up to $529–600 billion over a decade according to competing government and independent estimates.
[Related: Understanding drug pricing regulation is directly relevant to lifecycle management and market access strategy taught in Entry to Regulatory's regulatory affairs training — see here]
Background: Why the Profit-Affordability Gap Is Back in the Headlines
Every August, the pharmaceutical industry's second-quarter earnings season lands squarely alongside ongoing public debate about US drug affordability, and 2026 has proven no exception. The Pharmaceutical Reform Alliance (PRA), a US advocacy organisation, published an analysis on 7 August 2026 highlighting that most major pharmaceutical companies raised or held their 2026 profit forecasts even as US healthcare spending is projected to exceed $6 trillion in 2026, driven partly by demand for GLP-1 medicines. This is happening against a backdrop of two significant, and partially conflicting, US federal pricing interventions: the Medicare Drug Price Negotiation Program under the Inflation Reduction Act (IRA), now in its first year of applicability, and the Most Favored Nation (MFN) pricing framework introduced via a 2025 executive order. Both are designed to narrow the gap between record manufacturer profits and patient-level affordability, but both face implementation and legal uncertainty in 2026.
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The current tension has been building for several years. The IRA, signed into US law in 2022, created the Medicare Drug Price Negotiation Program, under which the Centers for Medicare & Medicaid Services (CMS) selected an initial list of 10 high-cost, single-source drugs for direct price negotiation, with negotiated prices taking effect from 1 January 2026. In parallel, a separate and more sweeping approach — Most Favored Nation pricing — was revived by the current US administration through a 2025 executive order, building on a similar but narrower 2020 attempt that was never implemented. MFN ties US list prices to the prices paid in a basket of other high-income countries, a form of international reference pricing that manufacturers and trade bodies have historically opposed. Understanding how pricing, market access and regulatory lifecycle strategy interact is a core component of the Entry to Regulatory regulatory affairs training programme, which covers marketing authorisation, variations and post-approval regulatory strategy as part of its practical curriculum for EU, UK and US regulations — see the full course details at https://pages.entrytoregulatory.com/courses/
What Big Pharma Actually Reported in Q2 2026
Second-quarter 2026 results from the largest pharmaceutical companies point to a consistent pattern of revenue growth and raised guidance, despite mixed underlying profitability. Bristol Myers Squibb (BMS) reported total revenues of $13.0 billion for Q2 2026 (announced 30 July 2026), a 6% increase year-on-year, with its "Growth Portfolio" — including Reblozyl and newer launches such as Camzyos and Cobenfy — up 15% to $7.6 billion. BMS raised its full-year revenue guidance to $49–50 billion and its non-GAAP EPS guidance to $6.75–$7.00. Johnson & Johnson (J&J) reported Q2 2026 sales of $25.3 billion, up 6.6%, with adjusted EPS of $2.90, beating analyst estimates, and raised its full-year sales guidance to approximately $101.1 billion. Novartis reported net sales of $14.4 billion (up 3% in USD terms), but with core net income down 19% and free cash flow down 12% year-on-year, illustrating that top-line growth has not been uniform across the sector at the margin level.
Company executives were candid on earnings calls about the capital allocation priorities this growth is funding. On its Q2 2026 call, BMS management emphasised the flexibility that strong results provide "to continue investing in growth drivers, pursuing business development opportunities and returning cash to shareholders." Novartis management similarly noted that the performance of its "Priority Brands" supported "a return to net sales growth in quarter 2 faster than we initially expected." These statements sit uncomfortably, in the view of patient advocates, alongside KFF-sourced polling showing that 40% of US patients are cutting pills in half or skipping doses entirely due to cost.
Company | Q2 2026 Revenue/Sales | YoY Change | Full-Year 2026 Guidance |
Bristol Myers Squibb | $13.0 billion | +6% | $49–50 billion revenue |
Johnson & Johnson | $25.3 billion | +6.6% | ~$101.1 billion sales |
Novartis | $14.4 billion | +3% (USD) | Low single-digit sales growth (reaffirmed) |
Regulatory professionals looking to deepen their understanding of how commercial and regulatory strategy interact across a product's lifecycle will find relevant practical training in the Entry to Regulatory course, which includes hands-on assignments covering marketing authorisation, variations and post-approval regulatory submissions as part of its EU, UK and US regulatory curriculum. Full details at https://pages.entrytoregulatory.com/courses/
The US Pricing Reform Landscape Colliding With These Results
Two major US federal pricing mechanisms are now live in parallel with this earnings growth, and both directly affect regulatory and market access strategy. The Medicare Drug Price Negotiation Program, established under the Inflation Reduction Act (IRA) of 2022, empowers CMS to negotiate prices directly with manufacturers for selected high-cost, single-source drugs. The first 10 selected drugs accounted for $56.2 billion in Medicare Part D spending in 2023, and CMS estimates that negotiated prices — effective from 1 January 2026 — could have saved approximately $6 billion had they applied that year.
Running alongside this is the Most Favored Nation (MFN) pricing policy, formalised through a 2025 executive order and expanded in scope compared to a similar, unimplemented 2020 attempt. According to analysis published by the International Society for Pharmacoeconomics and Outcomes Research (ISPOR), the MFN framework comprises three distinct models:
1. GENEROUS — a voluntary Medicaid-facing model
2. GLOBE — a near-mandatory Medicare Part B model
3. GUARD — a near-mandatory Medicare Part D model
Each ties US net prices to the second-lowest net price paid across a defined basket of high-income reference countries. A White House analysis published in May 2026 projected savings of $529 billion over a decade from the policy, plus a further $64.3 billion in state Medicaid savings, while an independent analysis by the American Journal of Managed Care (AJMC) put potential total savings as high as $600 billion, including up to $733 billion attributable specifically to new drug launches.
The trade body response has been consistent and pointed. Steve Ubl, President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), stated in a formal response to Medicare Part D price setting that government-mandated pricing "could lead to higher costs for patients and fewer available medicines as insurers impose coverage restrictions," warning that manufacturers face penalties of up to 1,900% in excise tax for non-compliance under the IRA framework. Legal analysis from the Congressional Research Service (CRS) notes that the legal authority underpinning the 2025 MFN executive order — and its interaction with the existing IRA negotiation programme — remains contested and is likely to face further legal challenge in 2026 and beyond.
How the EU and UK Are Approaching the Same Affordability Problem Differently
It is important not to conflate the US pricing reform landscape with the very different regulatory and market access frameworks operating in the European Union and the United Kingdom. Neither the EU nor the UK operates anything directly equivalent to Most Favored Nation reference pricing or the Medicare Drug Price Negotiation Program; instead, both rely on Health Technology Assessment (HTA) bodies — principally NICE in the UK and national HTA bodies across EU member states — to assess cost-effectiveness before reimbursement decisions are made. The EU Joint Clinical Assessment (JCA) framework, which became applicable from January 2025 under Regulation (EU) 2021/2282, is beginning to harmonise the clinical evidence dossier requirements that feed into these national pricing and reimbursement decisions, though pricing itself remains a member-state competence.
Biosimilar competition remains one of the most consistently effective affordability levers available to EU and UK regulators, operating quite differently from US-style price negotiation. As previously covered on this blog, the European Commission's European Biotech Act reform package includes proposed biosimilar reforms intended to reduce clinical data requirements, alongside forthcoming European Medicines Agency (EMA) guidance. Distinguishing these EU/UK cost-containment mechanisms — built on HTA and biosimilar competition — from the US's direct price negotiation and international reference pricing approach is essential for any regulatory affairs professional working across multiple markets, since the regulatory instruments, legal bases and stakeholders involved are entirely different in each jurisdiction.
Deepen Your Knowledge: Regulatory Affairs Training on This Topic
Making sense of a story like Big Pharma's Q2 2026 earnings requires regulatory affairs professionals to connect commercial results, US federal pricing policy, and EU/UK market access frameworks into a single coherent picture — a skill set that goes well beyond reading headlines. Professionals need to understand how marketing authorisation status, lifecycle management strategy (including patent and exclusivity planning), and post-approval regulatory submissions interact with pricing and reimbursement decisions across different regulators.
The FULL Introduction to Regulatory Affairs Course at Entry to Regulatory directly addresses these knowledge areas through its coverage of EU, UK and US regulatory frameworks, marketing authorisation processes, variations, and real-world case studies drawn from current industry developments. Rather than treating pricing and regulatory affairs as separate disciplines, the course teaches how they intersect in practice — the same intersection driving this week's Big Pharma earnings story.
This training is most valuable for life science graduates seeking entry-level regulatory affairs roles, pharmacy and healthcare professionals considering a career change, and scientists looking to transition from laboratory or clinical roles into regulatory strategy. No prior regulatory experience is required, and the practical work experience component gives learners direct exposure to the kind of regulatory submissions and case studies discussed in this article.
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Practical Implications for Regulatory Affairs Professionals
Regulatory affairs professionals, sponsors and marketing authorisation holders working across US, EU and UK markets are asking practical questions about how these pricing developments affect submission strategy and lifecycle planning. The table below summarises the most common questions and what has changed.
Key Question | Previous Situation | What Changes Now |
Does Medicare price negotiation affect our EU/UK marketing authorisation timeline? | US pricing and EU/UK marketing authorisation processes were largely independent | Negotiated Medicare prices (effective 1 Jan 2026) may influence global pricing strategy discussions even though the regulatory approval process itself is unaffected |
Will MFN pricing require us to withdraw from reference countries? | No formal international reference pricing mechanism existed in US law | Manufacturers must now assess whether maintaining listed prices in MFN reference countries creates unfavourable US pricing obligations |
How do we plan lifecycle management given the IRA's "pill penalty" structure? | Patent and exclusivity planning did not need to account for negotiation eligibility timing | Small-molecule drugs become negotiation-eligible after 9 years versus 13 years for biologics, changing optimal filing and indication-expansion strategy |
Does EU Joint Clinical Assessment reduce the burden of parallel HTA submissions? | Each EU member state ran fully independent clinical assessments | The JCA framework (applicable from January 2025) is beginning to harmonise clinical evidence dossiers feeding into national HTA decisions |
Are UK NICE appraisals affected by US pricing reform? | NICE cost-effectiveness appraisals operated independently of any US pricing benchmark | No direct legal link exists, but international pricing transparency trends may increasingly inform NICE and industry pricing negotiations |
How should we prepare for potential MFN legal challenges? | Government pricing authority under the IRA had already faced litigation | CRS analysis flags further legal uncertainty over the 2025 executive order's legal basis, requiring contingency planning in regulatory affairs and market access functions |
Does biosimilar competition remain a viable affordability lever in the EU? | Biosimilar entry already reduced EU/UK costs post-patent expiry | Proposed European Biotech Act biosimilar reforms may further reduce clinical data requirements, accelerating market entry |
Key Takeaways
1. Monitor CMS negotiation cycles closely. The Medicare Drug Price Negotiation Program's next selection rounds will determine which additional products face negotiated pricing from 2027 onward.
2. Map your product portfolio against MFN reference countries now. Understand which EU and international markets are used as MFN price benchmarks and how listed prices there could affect US obligations.
3. Separate US and EU/UK strategy explicitly in internal planning documents. Do not assume US pricing reform logic transfers to EU HTA or UK NICE processes — the legal bases are entirely different.
4. Track EU Joint Clinical Assessment outputs. As JCA reports accumulate since January 2025, assess how harmonised clinical evidence affects your national HTA submission strategy.
5. Revisit lifecycle management timing for small molecules versus biologics. The IRA's differentiated negotiation-eligibility windows (9 years small molecule, 13 years biologic) should inform indication expansion and exclusivity planning.
6. Prepare contingency positions for MFN legal challenges. Given unresolved legal questions flagged by the CRS, build flexible pricing and market access scenarios rather than single-path assumptions.
7. Watch biosimilar reform proposals under the European Biotech Act. Reduced clinical data requirements could accelerate biosimilar entry timelines relevant to portfolio and competitor planning.
Take the Next Step in Your Regulatory Affairs Career
Stories like Big Pharma's Q2 2026 earnings season illustrate exactly why regulatory affairs has become such a dynamic and in-demand career path. Understanding how marketing authorisation, lifecycle management, pricing policy and market access decisions interact across the US, EU and UK is a core skill for regulatory affairs professionals at every level — from graduates entering the field to experienced specialists moving into strategic roles. If this article has sparked your interest in how regulation shapes the pharmaceutical industry from the inside, the Entry to Regulatory Introduction to Regulatory Affairs course is a practical next step, whether you are completely new to the field or looking to formalise and advance existing experience. A free introductory webinar is available as a low-commitment way to explore whether the course is right for you, with no obligation to enrol.
Explore the full course details and register for a free introductory webinar at Entry to Regulatory: https://pages.entrytoregulatory.com/courses/
Frequently Asked Questions
Why are pharmaceutical companies reporting record profits while patients struggle with drug costs?
Pharmaceutical company earnings reflect global revenue across entire portfolios, including growth markets and newer high-priced therapies, while patient affordability data in the US specifically reflects out-of-pocket costs for individual prescriptions. These two figures are not directly linked, but advocacy groups argue the contrast highlights a pricing and access gap that current US policy reforms are attempting to address.
What is the Medicare Drug Price Negotiation Program?
It is a mechanism created under the US Inflation Reduction Act (IRA) that allows the Centers for Medicare & Medicaid Services (CMS) to negotiate prices directly with manufacturers for selected high-cost, single-source drugs. The first 10 negotiated prices took effect on 1 January 2026.
Does Most Favored Nation pricing apply in the EU or UK?
No. MFN pricing is a US-specific policy that ties US drug prices to those paid in a defined basket of other high-income countries, including some EU member states, as reference points. It does not alter EU or UK pricing and reimbursement processes directly, though EU countries may be affected as reference-price benchmarks.
How does biosimilar competition affect drug affordability in Europe?
Biosimilars enter the market once a reference biologic's patent and regulatory exclusivity expire, offering the same active substance at a lower price due to manufacturing competition. Proposed EU Biotech Act reforms aim to further reduce the clinical data burden for biosimilar approval, potentially accelerating this cost-reduction effect.
How can I start a career in regulatory affairs to work on issues like drug pricing and market access?
A structured, practical training programme is the most direct route into the field, particularly for those without existing regulatory experience. The Entry to Regulatory Introduction to Regulatory Affairs course covers EU, UK and US regulatory frameworks, including marketing authorisation and lifecycle management topics directly relevant to pricing and market access work, alongside job search support and real work experience. Full details are available at https://pages.entrytoregulatory.com/courses/.
Further Reading and Reference Sources
1. Negotiated Prices for Initial Price Applicability Year 2026 — Centers for Medicare & Medicaid Services (CMS) (https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026) — Published 2025/2026
2. Savings from Most-Favored-Nation Drug Pricing Policy — The White House (https://www.whitehouse.gov/research/2026/05/savings-from-most-favored-nation-drug-pricing-policy/) — Published May 2026
3. Most-Favored-Nation Prescription Drug Pricing Executive Order — Congressional Research Service (https://www.congress.gov/crs-product/LSB11319) — Legal analysis, 2025-26
4. Bristol Myers Squibb Reports Second Quarter Financial Results for 2026 — Bristol Myers Squibb (https://www.bms.com/assets/bms/us/en-us/pdf/investor-info/doc_financials/quarterly_reports/2026/ghBMY-Q2-2026-Earnings-Press-Release.pdf) — Published 30 July 2026
5. Johnson & Johnson Reports Q2 2026 Results, Raises 2026 Outlook — Johnson & Johnson Investor Relations (https://www.investor.jnj.com/investor-news/news-details/2026/Johnson--Johnson-reports-Q2-2026-results-raises-2026-outlook/default.aspx) — Published July 2026
6. Novartis Delivered Sales Growth in Q2 and Further Advanced Pipeline — Novartis (https://www.novartis.com/news/media-releases/novartis-delivered-sales-growth-q2-and-further-advanced-pipeline-full-year-guidance-reaffirmed) — Published 21 July 2026
7. Big Pharma's Q2 Profits Are In. Patients Are Still Getting the Worst Deal — Pharmaceutical Reform Alliance (PRA) (https://www.pharmareformalliance.com/big-pharmas-q2-profits-are-in-patients-are-still-getting-the-worst-deal/) — Published 7 August 2026
8. Government Price Setting and PhRMA Statement on Medicare Part D — PhRMA (https://www.phrma.org/policy-issues/government-price-setting) — Accessed August 2026
9. International Reference Pricing Comes to America: The MFN Policies Explained — ISPOR (https://www.ispor.org/publications/journals/value-outcomes-spotlight/vos-archives/issue/view/preventive-medicine/international-reference-pricing-comes-to-america--the-mfn-policies-explained) — 2026
10. MFN Drug Pricing Proposal Raises Questions Around Access, Innovation and Commercial Coverage — American Journal of Managed Care (AJMC) (https://www.ajmc.com/view/mfn-drug-pricing-proposal-raises-questions-around-access-innovation-and-commercial-coverage) — 2026
DISCLAIMER
This article is provided for informational purposes only. Regulatory guidance, legislative instruments and health authority policies evolve frequently. Always consult the most current official publications from the relevant health authority and seek qualified professional regulatory advice for specific product development, submission or compliance decisions. Entry to Regulatory training courses are designed for educational and career development purposes.
About the Author: Rabiea is an Honorary Associate Professor at UCL, former MHRA Health Authority reviewer, and CEO of Entry to Regulatory and Advanced Regulatory Consulting. After transitioning from retail pharmacy to regulatory affairs, she has dedicated her career to helping others make the same successful career change. Connect with her on LinkedIn for the latest regulatory affairs insights and career advice.
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