AbbVie (ABBV) stock returned 38.4 percent over the past twelve months, significantly outperforming the S&P 500's 9.8 percent return. The shares closed on November 6 just 1.2 percent below their year high, but face a fresh headwind: management told analysts on October 30 to model a lower government-negotiated price for its psychiatry drug Vraylar beginning in 2027.
Vraylar is a $4.2 billion revenue driver for AbbVie in fiscal 2026—5.9 percent of total revenue—and the company projects it will grow further. Global sales reached nearly $1.1 billion in fiscal Q3 2026, a 14.3 percent increase. The Inflation Reduction Act allows Medicare to select certain high-cost drugs and publish negotiated prices; AbbVie has not disclosed the exact impact.
The company's experience with Imbruvica, its cancer drug, offers a cautionary parallel. Imbruvica sales fell 26.1 percent in fiscal Q3 2026, with management attributing the decline to IRA pricing and competitive pressure. The drug has declined in three consecutive fiscal years: down 6.9 percent in fiscal 2024 and 14.3 percent in fiscal 2025.
AbbVie's total revenue still grew 10.3 percent in fiscal Q3 2026, lifting reported earnings to $2.37 a share and adjusted earnings to $3.82 a share. But investors are pricing the stock at 49.8 times last twelve months earnings—well above the S&P 500's 21.8 multiple—leaving limited room for downside surprises.
One bright spot: AbbVie won a federal district court ruling that the IRA cannot select Botox Therapeutic for price negotiation because one of its three ingredients derives from human blood plasma. Botox generated $3.77 billion in fiscal 2025 revenue, slightly larger than Vraylar that year. The government can appeal, and management does not expect a price to be published while any appeal is pending.
