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Price, After RebatesNarrow moat

Gilead Sciences (GILD) — moat facet

Gilead keeps 78% gross margin on what it sells but now hands 41% of gross sales back in deductions, and Medicare and MFN terms will take more.

The weak side of Gilead's moat is price. Its products hold patients for years, but the price they earn is set by negotiation with insurers, pharmacy benefit managers, Medicaid and Medicare, and every one of those has moved against the company recently.

Gilead gross-to-net deductions as a share of gross product sales (%)382024412025Gilead Form 10-K FY2025, gross-to-net table
Three points of price gone in one year.

The evidence is in three numbers. Gross-to-net deductions were 41% of gross product sales in 2025, up from 38%1, mainly because of the Medicare Part D redesign2. Biktarvy was selected for Medicare price negotiation in January 2026, effective 20283. And in December 2025 Gilead agreed to most-favoured-nation prices in Medicaid for select products and in the US market for future launches4.

Against that, the margin on what is left is very high. The product gross margin was 78.4% in 20255 and 79.3% in the second quarter of 20266. Gilead's medicines are cheap to make; the question is only how much of the list price it is allowed to keep.

The rating is narrow and the trajectory narrowing. Gilead has shown it can protect volume through switching and settlements; it has no comparable tool against a government that sets prices.

Currency adds a smaller, separate effect. About 26% of product sales were denominated in foreign currencies in 2025, and exchange movements, net of hedges, added $56 million to product sales7. That is noise beside the $19,953 million of gross-to-net deductions8; the price that matters is the American one, set in negotiations Gilead does not control.

The facet's falsifier is the rebate share. Gross-to-net was 41% in 20259. If it falls back below 38% while volumes grow, price pressure will have proved temporary and this facet should be rated higher.

Moat trajectory: Narrowing

Gross-to-net up 250 basis points in 2025; Biktarvy Medicare price from 2028.

The number that tests this moat
Reported
Rebates and chargebacks, full year
$17.5bn (2025), from $15.5bn in 2024

The cash cost of access; growing faster than net sales means price is leaking.

Source: Gilead Sciences Form 10-K, FY2025 ↗
Aspects of the moat
DIG DEEPER 01
Forty-One Percent Off the List
Gilead's gross-to-net deductions rose to 41% of gross sales in 2025 from 38%, mainly because of the Medicare Part D redesign.
DIG DEEPER 02
The December 2025 Agreement
Gilead's December 2025 deal bought three years of tariff relief with Medicaid MFN prices, MFN prices on new launches and a $32 billion US investment…
DIG DEEPER 03
Epclusa: Competing With Its Own Generic
In hepatitis C Gilead sells against its own authorised generic, and its Epclusa franchise has fallen from $1,965 million in 2019 to $1,272 million in…
DIG DEEPER 04
A Product Margin Near Eighty Percent
Gilead's product gross margin was 78.4% in 2025 and 86.4% excluding acquisition amortisation; its drugs are cheap to make and hard to replace.
⚠ Threats to the moat
⚠ THREAT 01
Medicaid and 340B Follow Medicare
Gilead expects Biktarvy's negotiated Medicare price to raise its Medicaid rebates and lower 340B prices too.
⚠ THREAT 02
The ACA Subsidies Expired
The enhanced ACA premium subsidies expired at the end of 2025, a risk to the insured patients Gilead's US HIV business depends on.
References
  1. ReportedGross-to-net deductions were 41% of gross product sales in 2025, up from 38%, mainly because of the Medicare Part D redesign.
    Gilead Sciences Form 10-K for 2025 - Item 1A risk factors and pricing regulation: the IRA, Medicare negotiation, Medicaid, the ACA and tariffs. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedGross-to-net deductions were 41% of gross product sales in 2025, up from 38%, mainly because of the Medicare Part D redesign.
    Gilead Sciences Form 10-K for 2025 - Item 1A risk factors and pricing regulation: the IRA, Medicare negotiation, Medicaid, the ACA and tariffs. — FY2025 · publ. 24 February 2026 · source ↗
  3. ReportedBiktarvy was selected for Medicare price negotiation in January 2026, effective 2028.
    Gilead Sciences Form 10-K for 2025 - Item 1A risk factors and pricing regulation: the IRA, Medicare negotiation, Medicaid, the ACA and tariffs. — FY2025 · publ. 24 February 2026 · source ↗
  4. ReportedAnd in December 2025 Gilead agreed to most-favoured-nation prices in Medicaid for select products and in the US market for future launches.
    Gilead Sciences Form 10-Q for the quarter ended 30 June 2026 - acquired IPR&D for Arcellx, Tubulis and Ouro, the $1.75 billion Trodelvy impairment, debt, receivables and the December 2025 agreement with the US administration. — Q2 2026 · publ. 6 August 2026 · source ↗
  5. ReportedThe product gross margin was 78.4% in 2025 and 79.3% in the second quarter of 2026.
    Gilead Sciences Form 10-K for 2025 - financial statements, MD&A and notes: income, margins, impairments, acquired IPR&D, cash flow, capital returns and debt. — FY2025 · publ. 24 February 2026 · source ↗
  6. ReportedThe product gross margin was 78.4% in 2025 and 79.3% in the second quarter of 2026.
    Gilead Sciences second-quarter 2026 results release, Form 8-K exhibit 99.1 - revenue by product, income statement, cash flow, balance sheet, pipeline updates and 2026 guidance - income statement, EPS, cash flow, balance sheet and 2026 guidance. — Q2 2026 · publ. 4 August 2026 · source ↗
  7. ReportedAbout 26% of product sales were denominated in foreign currencies in 2025, and exchange movements, net of hedges, added $56 million to product sales.
    Gilead Sciences Form 10-K for 2025 - revenue by product, product group and region (Note 2) and the MD&A discussion of product sales. — FY2025 · publ. 24 February 2026 · source ↗
  8. ReportedThat is noise beside the $19,953 million of gross-to-net deductions; the price that matters is the American one, set in negotiations Gilead does not control.
    Gilead Sciences Form 10-K for 2025 - Item 1A risk factors and pricing regulation: the IRA, Medicare negotiation, Medicaid, the ACA and tariffs. — FY2025 · publ. 24 February 2026 · source ↗
  9. ReportedGross-to-net was 41% in 2025.
    Gilead Sciences Form 10-K for 2025 - customers, wholesalers, distribution and gross-to-net deductions. — FY2025 · publ. 24 February 2026 · source ↗
Sources
Generated October 4, 2026