⚠ Prices Set in WashingtonHigh threat

AbbVie (ABBV) — threat to the moat

Medicare will set the prices of four AbbVie drugs by 2028, and AbbVie has already traded price concessions for tariff relief.

AbbVie's pricing is increasingly decided by the United States government. Medicare selected Imbruvica for government-set prices beginning in 2026, Vraylar and Linzess beginning in 2027, and Botox beginning in 20281. In January 2026 AbbVie agreed with the government to provide pricing concessions and American research and capital investments in exchange for exemptions from tariffs2.

Selected for government-set prices, 2025 sales ($M)3,769Botox Therapeutic (2028)3,621Vraylar (2027)2,869Imbruvica (2026)907Linzess (2027)AbbVie Form 10-K FY2025
About $11.2 billion of sales under government prices.

The first result is visible. Imbruvica's revenue fell 29.4% in the second quarter of 20263, the year its government price took effect. The four selected drugs sold about $11.2 billion in 20254.

The stakes are high because AbbVie's business is so American: about 76% of 2025 net revenues5. Government programmes already take large discounts, $21,283 million of Medicaid and Medicare rebates in 20256, before any government-set price.

AbbVie's defence is to keep launching drugs faster than policy can reprice them. Skyrizi and Rinvoq, not yet selected, grew about 24% in the second quarter7.

The agreement with the government came with a commitment. The 10-K refers to $100 billion of American research and capital investment8 under the voluntary agreement, alongside the pricing concessions. AbbVie spent $1,214 million on property and equipment in 20259, so most of that commitment will have to be research spending, which the company would largely make in any case.

The test of this threat is whether Skyrizi or Rinvoq is selected for a government-set price before 2033. A selection would bring the pricing cliff forward years ahead of the patent cliff.

The number that tests this threat
Reported
Medicaid and Medicare rebate provisions
$21,283M (2025)

What public programmes already take; growth faster than revenue, or a Skyrizi selection, would sharpen the threat.

Source: AbbVie Form 10-K, FY2025 ↗
References
  1. ReportedMedicare selected Imbruvica for government-set prices beginning in 2026, Vraylar and Linzess beginning in 2027, and Botox beginning in 2028.
    AbbVie Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing and legal proceedings. — FY2025 · publ. 20 February 2026 · source ↗
  2. ReportedIn January 2026 AbbVie agreed with the government to provide pricing concessions and American research and capital investments in exchange for exemptions from tariffs.
    AbbVie Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing and legal proceedings. — FY2025 · publ. 20 February 2026 · source ↗
  3. ReportedImbruvica's revenue fell 29.4% in the second quarter of 2026, the year its government price took effect.
    AbbVie second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 31 July 2026 · source ↗
  4. Moat Explorer calcThe four selected drugs sold about $11.2 billion in 2025.
    Moat Explorer calculation from AbbVie's reported product revenue and financial statements ($ millions unless stated). Therapeutic areas 2025: immunology 17,562 + 8,304 + 4,540 = 30,406; neuroscience 3,621 + 3,769 + 1,271 + 1,036 + 482 + 381 + 207 = 10,767; oncology 2,869 + 2,792 + 690 + 271 + 33 = 6,655; aesthetics 2,602 + 993 + 1,265 = 4,860; eye care 493 + 410 + 197 + 1,009 = 2,109; other key products 1,317 + 1,512 + 907 = 3,736; all other 2,627; eye care and other products 2,109 + 3,736 + 2,627 = 8,472; total 61,160. 2024: immunology 11,718 + 5,971 + 8,993 = 26,682; neuroscience 8,999; oncology 6,555; aesthetics 5,176; eye care and other 2,242 + 3,648 + 3,032 = 8,922. 2023: 7,763 + 3,969 + 14,404 = 26,136; neuroscience 7,717; oncology 5,915; aesthetics 5,294; eye care and other 2,415 + 3,806 + 3,035 = 9,256. 2022: 5,165 + 2,522 + 21,237 = 28,924; neuroscience 6,528; oncology 6,577; aesthetics 5,333; eye care and other 2,701 + 3,854 + 4,137 = 10,692. Growth 2025: immunology 30,406 / 26,682 - 1 = 14.0%; neuroscience 10,767 / 8,999 - 1 = 19.6%. Immunology and neuroscience 30,406 + 10,767 = 41,173, 41,173 / 61,160 = 67.3%. Immunology share 30,406 / 61,160 = 49.7%. Skyrizi + Rinvoq: 5,165 + 2,522 = 7,687 (2022); 7,763 + 3,969 = 11,732 (2023); 11,718 + 5,971 = 17,689 (2024); 17,562 + 8,304 = 25,866 (2025); H1 2026 9,988 + 4,644 = 14,632; Q2 2026 5,505 + 2,525 = 8,030, 8,030 / 16,990 = 47.3%; 2026 plan 21.5 + 10.1 = 31.6 bn. Shares of revenue 7,687 / 58,054 = 13.2%; 11,732 / 54,318 = 21.6%; 17,689 / 56,334 = 31.4%; 25,866 / 61,160 = 42.3%. Humira: 4,540 / 21,237 - 1 = -78.6%; share 8,993 / 56,334 = 16.0% (2024), 4,540 / 61,160 = 7.4% (2025). Rebates: 65.1 / 61.16 = 1.06; 65.1 / 18.8 = 3.5 times (2019-2025) against net revenues 61,160 / 33,266 = 1.8 times; gross sales 61.2 + 65.1 = 126.3 bn, 126.3 / 61.2 = 2.1 times; managed care 22,307 / 61,160 = 36.5%; Medicaid and Medicare 21,283 / 61,160 = 34.8%; payers 22,307 + 21,283 = 43,590, 43,590 / 61,160 = 71.3%. Geography: US 46,603 / 61,160 = 76.2%; international 14,557 / 61,160 = 23.8%. Gross margin 2025 (61,160 - 18,204) / 61,160 = 70.2%. Government-set price products, 2025 sales: 2,869 + 3,621 + 907 + 3,769 = 11,166, 11,166 / 61,160 = 18.3%. Goodwill and intangibles 35,640 + 52,641 = 88,281, 88,281 / 133,960 = 65.9%. Eye care share 2,109 / 61,160 = 3.4%; aesthetics share 4,860 / 61,160 = 7.9%. Net debt 30 June 2026: 62,481 + 8,341 - 6,569 = 64,253; net debt / operating cash flow 64,253 / 19,030 = 3.4 years. Free cash flow 2025: 19,030 - 1,214 = 17,816; dividends paid 11,657 / 17,816 = 65.4%; operating cash flow / dividends 19,030 / 11,657 = 1.6; dividends declared / net earnings 11,819 / 4,226 = 2.8; dividends per share 6.65 / 1.75 = 3.8 times (2014-2025). Free cash flow yield 17,816 / 468,500 = 3.8%; free cash flow per share 17,816 / 1,771 = 10.06. 2026 adjusted EPS guidance midpoints: (14.37 + 14.57) / 2 = 14.47; (13.96 + 14.16) / 2 = 14.06; (14.08 + 14.28) / 2 = 14.18; (13.91 + 14.11) / 2 = 14.01; (13.87 + 14.07) / 2 = 13.97. Ubrelvy and Qulipta Q2 2026 392 + 350 = 742; 2025 1,271 + 1,036 = 2,307. Skyrizi share 17,562 / 61,160 = 28.7%. Juvederm 993 / 1,428 - 1 = -30.5%. Aesthetics 4,860 / 5,176 - 1 = -6.1%. Gross margin 2023 (54,318 - 20,415) / 54,318 = 62.4%. Skyrizi + Rinvoq 2021 2,939 + 1,651 = 4,590; 2022 7,687 / 21,237 = 36% - therapeutic-area totals, growth and rebates. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in AbbVie's Forms 10-K, 10-Q, results releases, the Q4 2025 call and market data; operands shown in the source line.
  5. Moat Explorer calcThe stakes are high because AbbVie's business is so American: about 76% of 2025 net revenues.
    Moat Explorer calculation from AbbVie's reported product revenue and financial statements ($ millions unless stated). Therapeutic areas 2025: immunology 17,562 + 8,304 + 4,540 = 30,406; neuroscience 3,621 + 3,769 + 1,271 + 1,036 + 482 + 381 + 207 = 10,767; oncology 2,869 + 2,792 + 690 + 271 + 33 = 6,655; aesthetics 2,602 + 993 + 1,265 = 4,860; eye care 493 + 410 + 197 + 1,009 = 2,109; other key products 1,317 + 1,512 + 907 = 3,736; all other 2,627; eye care and other products 2,109 + 3,736 + 2,627 = 8,472; total 61,160. 2024: immunology 11,718 + 5,971 + 8,993 = 26,682; neuroscience 8,999; oncology 6,555; aesthetics 5,176; eye care and other 2,242 + 3,648 + 3,032 = 8,922. 2023: 7,763 + 3,969 + 14,404 = 26,136; neuroscience 7,717; oncology 5,915; aesthetics 5,294; eye care and other 2,415 + 3,806 + 3,035 = 9,256. 2022: 5,165 + 2,522 + 21,237 = 28,924; neuroscience 6,528; oncology 6,577; aesthetics 5,333; eye care and other 2,701 + 3,854 + 4,137 = 10,692. Growth 2025: immunology 30,406 / 26,682 - 1 = 14.0%; neuroscience 10,767 / 8,999 - 1 = 19.6%. Immunology and neuroscience 30,406 + 10,767 = 41,173, 41,173 / 61,160 = 67.3%. Immunology share 30,406 / 61,160 = 49.7%. Skyrizi + Rinvoq: 5,165 + 2,522 = 7,687 (2022); 7,763 + 3,969 = 11,732 (2023); 11,718 + 5,971 = 17,689 (2024); 17,562 + 8,304 = 25,866 (2025); H1 2026 9,988 + 4,644 = 14,632; Q2 2026 5,505 + 2,525 = 8,030, 8,030 / 16,990 = 47.3%; 2026 plan 21.5 + 10.1 = 31.6 bn. Shares of revenue 7,687 / 58,054 = 13.2%; 11,732 / 54,318 = 21.6%; 17,689 / 56,334 = 31.4%; 25,866 / 61,160 = 42.3%. Humira: 4,540 / 21,237 - 1 = -78.6%; share 8,993 / 56,334 = 16.0% (2024), 4,540 / 61,160 = 7.4% (2025). Rebates: 65.1 / 61.16 = 1.06; 65.1 / 18.8 = 3.5 times (2019-2025) against net revenues 61,160 / 33,266 = 1.8 times; gross sales 61.2 + 65.1 = 126.3 bn, 126.3 / 61.2 = 2.1 times; managed care 22,307 / 61,160 = 36.5%; Medicaid and Medicare 21,283 / 61,160 = 34.8%; payers 22,307 + 21,283 = 43,590, 43,590 / 61,160 = 71.3%. Geography: US 46,603 / 61,160 = 76.2%; international 14,557 / 61,160 = 23.8%. Gross margin 2025 (61,160 - 18,204) / 61,160 = 70.2%. Government-set price products, 2025 sales: 2,869 + 3,621 + 907 + 3,769 = 11,166, 11,166 / 61,160 = 18.3%. Goodwill and intangibles 35,640 + 52,641 = 88,281, 88,281 / 133,960 = 65.9%. Eye care share 2,109 / 61,160 = 3.4%; aesthetics share 4,860 / 61,160 = 7.9%. Net debt 30 June 2026: 62,481 + 8,341 - 6,569 = 64,253; net debt / operating cash flow 64,253 / 19,030 = 3.4 years. Free cash flow 2025: 19,030 - 1,214 = 17,816; dividends paid 11,657 / 17,816 = 65.4%; operating cash flow / dividends 19,030 / 11,657 = 1.6; dividends declared / net earnings 11,819 / 4,226 = 2.8; dividends per share 6.65 / 1.75 = 3.8 times (2014-2025). Free cash flow yield 17,816 / 468,500 = 3.8%; free cash flow per share 17,816 / 1,771 = 10.06. 2026 adjusted EPS guidance midpoints: (14.37 + 14.57) / 2 = 14.47; (13.96 + 14.16) / 2 = 14.06; (14.08 + 14.28) / 2 = 14.18; (13.91 + 14.11) / 2 = 14.01; (13.87 + 14.07) / 2 = 13.97. Ubrelvy and Qulipta Q2 2026 392 + 350 = 742; 2025 1,271 + 1,036 = 2,307. Skyrizi share 17,562 / 61,160 = 28.7%. Juvederm 993 / 1,428 - 1 = -30.5%. Aesthetics 4,860 / 5,176 - 1 = -6.1%. Gross margin 2023 (54,318 - 20,415) / 54,318 = 62.4%. Skyrizi + Rinvoq 2021 2,939 + 1,651 = 4,590; 2022 7,687 / 21,237 = 36% - revenue mix, concentration and geography. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in AbbVie's Forms 10-K, 10-Q, results releases, the Q4 2025 call and market data; operands shown in the source line.
  6. ReportedGovernment programmes already take large discounts, $21,283 million of Medicaid and Medicare rebates in 2025, before any government-set price.
    AbbVie Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing and legal proceedings. — FY2025 · publ. 20 February 2026 · source ↗
  7. ReportedSkyrizi and Rinvoq, not yet selected, grew about 24% in the second quarter.
    AbbVie second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 31 July 2026 · source ↗
  8. ReportedThe 10-K refers to $100 billion of American research and capital investment under the voluntary agreement, alongside the pricing concessions.
    AbbVie Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing and legal proceedings. — FY2025 · publ. 20 February 2026 · source ↗
  9. ReportedAbbVie spent $1,214 million on property and equipment in 2025, so most of that commitment will have to be research spending, which the company would largely make in any case.
    AbbVie Form 10-K for fiscal 2025 - Item 1 business: products, customers, competition and research. — FY2025 · publ. 20 February 2026 · source ↗
Sources
Generated September 25, 2026