Pharmaceutical companies facing a steep patent cliff are concluding the key to future profits may be customized treatments tailored to patients' genes and lifestyles — not blockbusters aimed at large patient populations.

Why it matters: The pivot could influence which diseases get treated in the decades to come, and how much the health system pays.

• The stakes are huge. More than $500 billion in brand-name drug sales is potentially at risk from generic competition between 2026 and 2032, according to the consulting firm Evaluate.

The latest: The race is on to find new treatments that each generate at least $2.4 billion in global sales, a new Iqvia Institute report finds.

• They're increasingly specialty treatments, biologics and rare disease drugs — with a small group of flagship products accounting for an outsized share of industry sales.
• GLP-1 drugs like Novo Nordisk's Ozempic and Eli Lilly's Zepbound now define that elite category. The next wave could include "biological missiles" that combine antibodies with chemotherapy to target specific cancer cells.
• "As precision medicine continues to advance, similar approaches may extend beyond oncology into areas such as immunology, metabolic disease and neurology," the report states.

Reality check: It's not clear whether all of the innovation will cure more people, or just make health care more expensive.

• Novel RNA drugs and cell and gene therapies are expensive, hard to make and target small groups of patients.
• Widespread concern over high drug prices will force manufacturers to find more unmet needs and build sales more quickly after a drug's launch, according to the report.

Context: Top-selling drugs historically were aimed at large patient populations with chronic conditions like high cholesterol. The ulcer drug Tagamet became the first to exceed $1 billion in sales in 1986.

• Over time, cancer and immunology drugs became major drivers of growth, followed by GLP-1s, which are sparking huge demand for conditions beyond obesity and diabetes but also driving up health costs.
• Iqvia found that blockbusters on average maintain a dominant market position for 12.1 years before losing market exclusivity, or nearly 80% of their commercial life.

Yes, but: A substantial number of top-sellers will lose patent protection and face potential competition from generics between 2028 and 2036.

• Bristol Myers Squibb's blood thinner Eliquis and Merck's cancer blockbuster Keytruda, which are both due to lose market exclusivity in 2028, accounted for a combined $65 billion in global sales in 2024.

Follow the money: Drugmakers and biotechs searching for new blockbusters not only have to figure out how to grow outside of crowded categories but also how much payers value new classes of drugs, Evaluate says.

• There's also uncertainty over China, where Western drug giants have invested tens of billions of dollars to bolster their product pipelines.
• Evaluate predicts that only autoimmune disease drugs will come close to rivaling GLP-1s, because of their potential to treat dozens of conditions.

Iqvia identifies RNA therapeutics that target disease-causing mutations as a potential middle ground between traditional drugs for chronic diseases and specialized genetic treatments.

The bottom line: Successful innovating while ensuring patients have access to the new treatments "will ultimately determine whether the growth in blockbuster medicines observed over the past 25 years can continue at its extraordinary pace," Iqvia concludes.

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One of the great economic puzzles of 2026 has been this: If the labor market is so strong, why has wage growth been so weak? New data points to health care as a major culprit.

The big picture: Employers' overall spending on worker compensation has continued rising at the same steady clip as last year — but more of that spending is going to employee health benefits, leaving less for wages and salaries.

• Factor in elevated inflation, and private-sector employers' costs for wages and benefits have fallen 0.6% in real terms in the last year.
• That helps explain Americans' deep dissatisfaction with economic conditions despite low layoffs and unemployment.

State of play: The Employment Cost Index, released quarterly, is the gold standard for understanding what employers pay workers — not just wages, but health and other benefits.

• It shows the sharpest rise in employers' health insurance costs in 20 years — and a corresponding pullback in cash raises.

By the numbers: Overall compensation costs for the private sector are up 3.4% over the 12 months ended in September, little changed from the 3.5% rise in the comparable period ending September 2025.

• But wage and salary compensation was up only 3.1% this year, compared with 3.6% a year ago. Health benefit costs rose 6.4%, compared with 6.1%.

What they're saying: "The sharp deceleration in wage growth we see in the monthly jobs report looks to be mostly a mirage," Guy Berger, senior adviser on labor markets at Access/Macro, tells Axios.

Between the lines: Employers staring at massive increases in health insurance costs have only so many ways to respond. They can cut back on benefits, look for cost savings and increase employee out-of-pocket contributions.

• Or, they can absorb the costs by keeping a lid on other forms of compensation like pay raises.
• The ECI data points to the latter.

The intrigue: Berger calculates that if health care costs were growing at more like a 3% annual rate, as they were not long ago, wage growth would be 0.2 to 0.3 points faster.

The bottom line: American workers may not pay insurance premiums directly, but rapidly rising prices are helping pinch paychecks.

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