New York, Feb 12, 2026, 14:45 EST — Regular session
- AbbVie shares rose about 3% after it sued U.S. health agencies over Medicare pricing for Botox
- The drugmaker says Botox should be excluded from the Inflation Reduction Act’s negotiation program
- Investors are watching for early court moves and the Medicare timeline for 2028 prices
AbbVie shares climbed in afternoon trading on Thursday after the drugmaker sued the U.S. government to block Medicare price controls for Botox, widening a legal fight over Washington’s push to rein in drug costs.
The case matters because Botox is not a side business for AbbVie. The company is leaning on products like Botox and its newer immunology drugs as Humira fades under biosimilar pressure, and investors have been quick to punish any new threat to pricing power.
It also lands as the Medicare negotiation program expands into more medicines, drawing fresh legal challenges even after earlier suits largely fell flat. The street is trying to figure out whether this one is different — or just another long shot.
AbbVie’s complaint argues Botox should be treated as a “plasma-derived product” and exempt from Medicare’s drug price negotiation program under the Inflation Reduction Act, because it contains human serum albumin sourced from human plasma. The company also says the process violates constitutional protections, including “compelled speech” and due process. The suit names the Department of Health and Human Services, the Centers for Medicare & Medicaid Services, HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz; it was assigned to U.S. District Judge Carl Nichols. (Reuters)
AbbVie was up about 2.8% at $227.05, while the S&P 500 ETF was down about 1.1% and the healthcare sector ETF was little changed. Johnson & Johnson rose about 1.6%, while Pfizer slipped about 0.2%.
CMS selected 15 drugs for the program’s “third cycle” in late January, and said negotiations will run through 2026, with any negotiated prices taking effect on Jan. 1, 2028. (CMS)
Drugmakers have been suing to stop the negotiation program since it was created, arguing it amounts to an unconstitutional taking and coerces manufacturers to sign agreements that describe government-set prices as “fair.” Merck and Novartis were among those that sued early on; a federal judge rejected challenges by Johnson & Johnson and Bristol Myers Squibb in 2024. (Reuters)
The lawsuit comes a week after AbbVie’s quarterly report reignited debate over its post-Humira transition, with investors focusing on whether growth from Skyrizi and Rinvoq can offset pressure elsewhere, including in aesthetics. (Reuters)
But this trade can turn fast. Even if AbbVie persuades a judge that Botox fits a statutory carve-out, the government can appeal, and the negotiation program’s broader legal track record has not favored manufacturers so far. A loss would keep Botox on the path toward Medicare-set pricing and could squeeze margins on a product that has been a rare steady grower.
For now, traders will watch for any request to block the program while the case plays out, and for CMS’ next steps on the 2026 negotiation calendar. A nearer date on some investors’ screens is AbbVie’s next dividend payment, scheduled for Feb. 17. (Zacks)
