Medicare: The Buyer That Sets the PriceThin moat

Merck & Co. (MRK) — moat facet

Medicare set Januvia's price in 2026 and Merck expects it to set Keytruda's in 2029.

The American government is becoming the customer that decides Merck's prices. Under the Inflation Reduction Act's negotiation programme, the government set a price for Januvia effective 1 January 2026, and for Janumet and Janumet XR effective 1 January 20271. Lenvima was selected in January 2026, with a price effective in 20282.

Januvia and Janumet sales ($M)5,28820213,36620232,26920242,5442025Merck Forms 10-K FY2023 and FY2025; sums of the two products calculated
Halved since 2021.

The first effects are visible, though they coincide with patent expiry. Januvia and Janumet lost American exclusivity in May 20263, and their combined sales fell 31% to $429 million in the second quarter4. They sold $3,324 million and $1,964 million in 20215, against $1,604 million and $940 million in 20256.

Merck added a second agreement. In December 2025 it signed a three-year agreement with the government on most-favoured-nation pricing goals7, which included providing key products through a direct-to-patient programme8. It has also sued the government over the negotiation programme9.

The largest effect is still ahead and is covered on the root threat about Keytruda: Merck expects Keytruda to be selected in 2027 with a price from 1 January 202910.

The agreement also covered trade. Merck reached an agreement with the Department of Commerce to delay Section 232 tariffs for three years11, alongside the pricing commitments. Washington is now Merck's customer, price-setter and trade authority at once.

Medicare is Merck's customer and its price regulator at once. Januvia and Janumet's quarterly sales, $429 million in the second quarter of 202612, are the number to follow as the first test case; their decline over the next year will show how quickly a government price and loss of exclusivity together erase a franchise.

Moat trajectory: Narrowing

Januvia price effective 2026, Janumet 2027, Lenvima 2028, Keytruda expected 2029.

The number that tests this moat
Reported
Januvia and Janumet sales, latest quarter
$429M, -31% (Q2 2026)

The first drugs under a government price and generics; their decline shows how fast a franchise erodes.

Source: Merck Q2 2026 results release ↗
References
  1. ReportedUnder the Inflation Reduction Act's negotiation programme, the government set a price for Januvia effective 1 January 2026, and for Janumet and Janumet XR effective 1 January 2027.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing, vaccine policy and legal proceedings. — FY2025 · publ. 24 February 2026 · source ↗
  2. ReportedLenvima was selected in January 2026, with a price effective in 2028.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1 business: products, customers, segments and people. — FY2025 · publ. 24 February 2026 · source ↗
  3. ReportedJanuvia and Janumet lost American exclusivity in May 2026, and their combined sales fell 31% to $429 million in the second quarter.
    Merck & Co. Form 10-Q for the quarter ended 30 June 2026 - segment profits on the recast basis, the Cidara and Terns acquisitions, the Halozyme litigation, China shipments, loss of exclusivity events and the balance sheet. — Q2 2026 · publ. 7 August 2026 · source ↗
  4. ReportedJanuvia and Janumet lost American exclusivity in May 2026, and their combined sales fell 31% to $429 million in the second quarter.
    Merck second-quarter 2026 results release, Form 8-K exhibit 99.1 - sales by product and pipeline highlights. — Q2 2026 · publ. 4 August 2026 · source ↗
  5. ReportedThey sold $3,324 million and $1,964 million in 2021, against $1,604 million and $940 million in 2025.
    Merck & Co. Form 10-K for fiscal 2023 - product sales for 2021-2023, the Prometheus, Daiichi Sankyo and Imago charges, impairments, receivables concentration and the Zhifei distribution arrangement in China. — FY2023 · publ. February 2024 · source ↗
  6. ReportedThey sold $3,324 million and $1,964 million in 2021, against $1,604 million and $940 million in 2025.
    Merck & Co. Form 10-K for fiscal 2025 - Item 7 MD&A and product sales note: sales by product, segment and country. — FY2025 · publ. 24 February 2026 · source ↗
  7. ReportedIn December 2025 it signed a three-year agreement with the government on most-favoured-nation pricing goals, which included providing key products through a direct-to-patient programme.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing, vaccine policy and legal proceedings. — FY2025 · publ. 24 February 2026 · source ↗
  8. ReportedIn December 2025 it signed a three-year agreement with the government on most-favoured-nation pricing goals, which included providing key products through a direct-to-patient programme.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing, vaccine policy and legal proceedings. — FY2025 · publ. 24 February 2026 · source ↗
  9. ReportedIt has also sued the government over the negotiation programme.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1A risk factors, patents and exclusivity, government pricing, vaccine policy and legal proceedings. — FY2025 · publ. 24 February 2026 · source ↗
  10. ReportedThe largest effect is still ahead and is covered on the root threat about Keytruda: Merck expects Keytruda to be selected in 2027 with a price from 1 January 2029.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1 business: products, customers, segments and people. — FY2025 · publ. 24 February 2026 · source ↗
  11. ReportedMerck reached an agreement with the Department of Commerce to delay Section 232 tariffs for three years, alongside the pricing commitments.
    Merck & Co. Form 10-K for fiscal 2025 - Item 1 business: products, customers, segments and people. — FY2025 · publ. 24 February 2026 · source ↗
  12. ReportedJanuvia and Janumet's quarterly sales, $429 million in the second quarter of 2026, are the number to follow as the first test case; their decline over the next year will show how quickly a government price and loss of exclusivity together erase a franchise.
    Merck second-quarter 2026 results release, Form 8-K exhibit 99.1 - earnings, charges and 2026 guidance. — Q2 2026 · publ. 4 August 2026 · source ↗
Sources
Generated September 25, 2026