Washington: Customer, Price-Setter and Tariff CollectorThin moat

Johnson & Johnson (JNJ) — moat facet

J&J's largest customer, the United States government, now sets some of its prices and grants its tariff exemption.

J&J's most important customer is also its regulator. The United States was 57.1% of sales in 2025, $53,752 million of $94,193 million12, and the filing lists governments increasingly becoming the primary payors of healthcare expenses among its pricing pressures3.

Washington and J&J drug prices2023Xarelto, Stelara,Imbruvicaselected2026governmentprices in effectJan 2026Erleada onthe 2028 listJan 2026agreement:Medicaid, TrumpRx,tariff exemption2027Xarelto andStelara toleave the listJ&J Form 10-K FY2025; J&J release, 8 January 2026
The largest customer now sets prices product by product.

The government now sets some prices directly. Under the Inflation Reduction Act the first Medicare selected-drug list included Xarelto, Stelara and Imbruvica, subject to a government-established price from 20264. CMS has indicated it will remove Xarelto and Stelara from the list from 2027, and in January 2026 it published the list for 2028, which includes Erleada5. J&J's Janssen sought Supreme Court review of its constitutional challenge in December 20256.

In January 2026 J&J agreed with the administration to participate in TrumpRx.gov and to provide Medicaid access at prices comparable to other developed countries; the agreement also gives J&J's pharmaceutical products an exemption from tariffs7. CNBC reported that specific terms were not disclosed, including revised prices or which medicines are covered8.

The relationship is therefore a trade: prices in exchange for tariff relief and continued access. J&J described the deal as meeting the requests laid out by President Trump to the industry9.

J&J is also resisting on one front. Its policy limits deliveries of discounted 340B drugs to contract pharmacies for most of its products, subject to exceptions, while continuing to offer 340B discounts to covered entities10. The 340B programme requires manufacturers to provide significant discounts to covered entities11, and the policy is J&J's attempt to limit how far those discounts spread. It is a small example of a large company pushing back against its most powerful customer.

The most powerful payer has become a counterparty whose terms are negotiated politically rather than commercially. Follow the United States share of sales, 57.4% in the second quarter of 20261213, together with the price line in J&J's sales bridge; a rising share with falling price would mean J&J is more dependent on the customer squeezing it hardest.

Moat trajectory: Narrowing

More products are entering government price-setting; the January 2026 agreement traded prices for tariff relief.

The number that tests this moat
Reported
United States share of sales, latest quarter
57.4% ($14,533M of $25,310M, Q2 2026)

Dependence on the customer that sets prices; rising share with falling price would mean more exposure to the harshest payer.

Source: Johnson & Johnson Q2 2026 results release ↗
References
  1. ReportedThe United States was 57.1% of sales in 2025, $53,752 million of $94,193 million, and the filing lists governments increasingly becoming the primary payors of healthcare expenses among its pricing pressures.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  2. Moat Explorer calcThe United States was 57.1% of sales in 2025, $53,752 million of $94,193 million, and the filing lists governments increasingly becoming the primary payors of healthcare expenses among its pricing pressures.
    Moat Explorer calculation from Johnson & Johnson's reported figures ($ millions unless stated). Darzalex royalty: 2,400 / 14,351 = 16.7%. Stelara 2023-2025: 10,858 - 6,078 = 4,780 lost; Tremfya 5,155 - 3,147 = 2,008 gained, 2,008 / 4,780 = 42%. Growth 2023-2025: Darzalex 14,351 - 9,744 = 4,607; Carvykti 1,887 - 500 = 1,387; Erleada 3,574 - 2,387 = 1,187; Spravato 1,696 - 689 = 1,007; five products 4,607 + 2,008 + 1,387 + 1,187 + 1,007 = 10,196. Myeloma medicines Q2 2026: 4,207 + 657 + 260 + 174 = 5,298; 5,298 / 25,310 = 20.9%. Simponi and Opsumit 2025: 2,668 + 2,325 = 4,993. Abiomed: 3,700 / 1,751 = 2.1 times; 1,751 x 1.171^5 = 3,850 by 2030. Shockwave: 12,600 / 1,146 = 11.0 times. Caplyta: 361 x 4 = 1,444 a year; 14,500 / 1,444 = 10.0 times. Acquisitions: 15,146 + 17,541 = 32,687. Goodwill and intangibles: 48,772 + 50,403 = 99,175; 99,175 / 199,210 = 49.8%. Free cash flow 2025: 24,530 - 4,832 = 19,698. Cash uses 2025: 12,381 + 5,953 + 17,541 = 35,875. Capex 4,832 / 94,193 = 5.1%. Surgery: 10,137 / 10,037 - 1 = 1.0%. Electrophysiology: 5,634 / 33,792 = 16.7%. MedTech share of sales: 33,792 / 94,193 = 35.9%; Innovative Medicine 60,401 / 94,193 = 64.1%. Segment income 2025: 22,266 + 4,113 = 26,379; Innovative Medicine 22,266 / 26,379 = 84.4%; MedTech 4,113 / 26,379 = 15.6%. Gross margin 63,937 / 94,193 = 67.9%. MedTech rebates: 6,446 / 33,792 = 19.1%; 5,955 / 31,857 = 18.7%. Return on identifiable assets: Innovative Medicine 22,266 / 78,057 = 28.5%; MedTech 4,113 / 86,482 = 4.8%. Cost of products sold / segment sales 2025: Innovative Medicine 15,646 / 60,401 = 25.9%; MedTech 14,549 / 33,792 = 43.1%. Q2 2026 segment margins: Innovative Medicine 6,249 / 16,384 = 38.1%; MedTech 1,177 / 8,926 = 13.2%. Growth 2023-2025: sales 94,193 / 85,159 - 1 = 10.6%; operating cash flow 24,530 / 22,791 - 1 = 7.6%; dividends 12,381 / 11,770 - 1 = 5.2%. Dividends per share 5.14 / 2.95 - 1 = 74%. Payout 2025: 12,381 / 26,804 = 46%; 12,381 / 26,215 = 47%; 12,381 / 19,698 = 63%. Diluted shares 2,429.4 / 2,812.9 - 1 = -13.6%; Kenvue exchange 190.96 / 2,674.0 = 7.1%. Firefly and Sail initial payments: 1,000 + 785 = 1,785. Consumer sales 2015-2022: (14,953 / 13,507)^(1/7) - 1 = 1.5% a year. Wholesalers: 21.8 + 15.5 + 11.1 = 48.4 (2025); 20.5 + 15.6 + 12.3 = 48.4 (2024); 18.2 + 15.1 + 14.2 = 47.5 (2023); largest 21.8 - 18.2 = 3.6 points. Innovative Medicine rebates: 56,819 / 60,401 = 94.1% (2025); 47,523 / 54,759 = 86.8% (2023); 56,819 / 47,523 - 1 = 19.6%; net sales 60,401 / 54,759 - 1 = 10.3%. Top three products: 15.0 + 6.5 + 5.5 = 27.0% of revenue. United States share: 53,752 / 94,193 = 57.1% (2025); 14,533 / 25,310 = 57.4% (Q2 2026). MedTech excluding orthopaedics: (33,792 - 9,258) / (31,857 - 9,158) - 1 = 8.1%. Talc: 5,500 / 76,000 claims = about $72,000 per claim; 5.5 - 3.7 = 1.8 billion. Valuation: 348.19 / 24.242 = 14.4 times (end-2024 market value over 2024 adjusted net earnings); 652.05 / 348.19 - 1 = 87%; 270.57 / 11.04 = 24.5 times; 11.04 / 10.79 - 1 = 2.3%; 277.91 / 270.57 - 1 = 2.7%. Innovative Medicine history: (60,401 / 31,430)^(1/10) - 1 = 6.8% a year; Pharmaceutical pre-tax margins 11,734 / 31,430 = 37.3% (2015), 12,827 / 33,464 = 38.3% (2016), 8,816 / 42,198 = 20.9% (2019); restated growth 52,563 / 51,680 - 1 = 1.7% (2022), 54,759 / 52,563 - 1 = 4.2% (2023), 56,964 / 54,759 - 1 = 4.0% (2024). Additional: 2015 mix 31,430 / 70,074 = 45%; dividend 5.36 / 11.04 = 49%; buybacks 4,253 / 5,953 = 71%; vision 5,468 / 33,792 = 16%; Innovative Medicine international 60,401 - 36,344 = 24,057 against 54,759 - 31,169 = 23,590 (2.0%); United States 36,344 / 31,169 - 1 = 16.6%; myeloma four-product growth 2023-2025 4,607 + 1,387 + (670 - 395) + (463 - 63) = 6,669 of oncology growth 25,380 - 17,661 = 7,719, 86%; Darzalex international 1,772 / 4,207 = 42%; equity gap 99,175 - 81,544 = 17,631; Abiomed 440 x 4 = 1,760; amortisation MedTech 0.5 / 1.3 = 38%; MedTech H1 2026 segment income 2,416 / 2,625 - 1 = -8.0%, SM&A 5,975 / 5,518 - 1 = 8.3%, R&D 1,492 / 1,324 - 1 = 12.7%, cost of products sold 7,438 / 6,964 - 1 = 6.8%, margins 2,416 / 17,562 = 13.8% and 2,625 / 16,561 = 15.9%; Innovative Medicine H1 2026 11,566 / 10,762 - 1 = 7.5%, 11,566 / 31,810 = 36.4%; dividends / operating cash flow 12,381 / 24,530 = 50%; receivables 17,178 - 14,842 = 2,336, inventories 14,191 - 12,444 = 1,747; Q2 2026 dividend 3,227 x 4 = 12,908, one cent x 4 x 2,408M shares = $96M; diluted shares 2,663.9 / 2,812.9 - 1 = -5.3%; MedTech United States 17,408 / 33,792 = 52%; international sales 94,193 - 53,752 = 40,441; oncology share of Innovative Medicine 25,380 / 60,401 = 42.0%; Darzalex sales increase 14,351 - 11,670 = 2,681, royalty increase 2,400 - 2,000 = 400, 400 / 2,681 = 15%; newer myeloma medicines Q2 2026 657 + 260 + 174 = 1,091, 1,091 / 4,207 = 26%; Shockwave international 67 / 335 = 20%; amortisation 2,492 x 2 = 4,984 a year, 4,984 / 26,215 = 19%; US long-lived assets 89,392 - 70,670 = 18,722; surgery international Q2 2026 1,559 / 2,653 = 59%; net interest 1,056 - 971 = 85; dividends per share 5.14 / 4.70 - 1 = 9.4%; MedTech rebates 6,446 / 5,955 - 1 = 8.2%; trailing sales 94,193 - 45,636 + 49,372 = 97,929; net earnings 26,804 - 16,536 + 10,769 = 21,037. MedTech history: (33,792 / 25,137)^(1/10) - 1 = 3.0% a year; Medical Devices 6,826 / 25,137 = 27.2% (2015), 5,392 / 26,592 = 20.3% (2017); restated 4,208 / 27,060 = 15.6% (2021), 4,447 / 27,427 = 16.2% (2022); growth 27,427 / 27,060 - 1 = 1.4% (2022), 30,400 / 27,427 - 1 = 10.8% (2023), 31,857 / 30,400 - 1 = 4.8% (2024) - segment margins, rebates, concentration and geography. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in J&J's Forms 10-K, 10-Q, results releases and market data; operands shown in the source line.
  3. ReportedThe United States was 57.1% of sales in 2025, $53,752 million of $94,193 million, and the filing lists governments increasingly becoming the primary payors of healthcare expenses among its pricing pressures.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  4. ReportedUnder the Inflation Reduction Act the first Medicare selected-drug list included Xarelto, Stelara and Imbruvica, subject to a government-established price from 2026.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 1A risk factors, Note 19 legal proceedings (talc, Innovative Health, Auris, Tracleer) and the Inflation Reduction Act. — FY2025 · publ. 11 February 2026 · source ↗
  5. ReportedCMS has indicated it will remove Xarelto and Stelara from the list from 2027, and in January 2026 it published the list for 2028, which includes Erleada.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: Innovative Medicine segment, therapeutic-area and product sales analysis. — FY2025 · publ. 11 February 2026 · source ↗
  6. ReportedJ&J's Janssen sought Supreme Court review of its constitutional challenge in December 2025.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  7. ReportedIn January 2026 J&J agreed with the administration to participate in TrumpRx.gov and to provide Medicaid access at prices comparable to other developed countries; the agreement also gives J&J's pharmaceutical products an exemption from tariffs.
    Johnson & Johnson press release: agreement with the United States government on drug prices, Medicaid access, TrumpRx and a tariff exemption. — January 2026 · publ. 8 January 2026 · source ↗
  8. ReportedCNBC reported that specific terms were not disclosed, including revised prices or which medicines are covered.
    CNBC, J&J strikes deal with U.S. government to cut drug prices, gain tariff exemptions. — January 2026 · publ. 9 January 2026 · source ↗
  9. ReportedJ&J described the deal as meeting the requests laid out by President Trump to the industry.
    Johnson & Johnson press release: agreement with the United States government on drug prices, Medicaid access, TrumpRx and a tariff exemption. — January 2026 · publ. 8 January 2026 · source ↗
  10. ReportedIts policy limits deliveries of discounted 340B drugs to contract pharmacies for most of its products, subject to exceptions, while continuing to offer 340B discounts to covered entities.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 1A risk factors, Note 19 legal proceedings (talc, Innovative Health, Auris, Tracleer) and the Inflation Reduction Act. — FY2025 · publ. 11 February 2026 · source ↗
  11. ReportedThe 340B programme requires manufacturers to provide significant discounts to covered entities, and the policy is J&J's attempt to limit how far those discounts spread.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 1A risk factors, Note 19 legal proceedings (talc, Innovative Health, Auris, Tracleer) and the Inflation Reduction Act. — FY2025 · publ. 11 February 2026 · source ↗
  12. ReportedFollow the United States share of sales, 57.4% in the second quarter of 2026, together with the price line in J&J's sales bridge; a rising share with falling price would mean J&J is more dependent on the customer squeezing it hardest.
    Johnson & Johnson second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 15 July 2026 · source ↗
  13. Moat Explorer calcFollow the United States share of sales, 57.4% in the second quarter of 2026, together with the price line in J&J's sales bridge; a rising share with falling price would mean J&J is more dependent on the customer squeezing it hardest.
    Moat Explorer calculation from Johnson & Johnson's reported figures ($ millions unless stated). Darzalex royalty: 2,400 / 14,351 = 16.7%. Stelara 2023-2025: 10,858 - 6,078 = 4,780 lost; Tremfya 5,155 - 3,147 = 2,008 gained, 2,008 / 4,780 = 42%. Growth 2023-2025: Darzalex 14,351 - 9,744 = 4,607; Carvykti 1,887 - 500 = 1,387; Erleada 3,574 - 2,387 = 1,187; Spravato 1,696 - 689 = 1,007; five products 4,607 + 2,008 + 1,387 + 1,187 + 1,007 = 10,196. Myeloma medicines Q2 2026: 4,207 + 657 + 260 + 174 = 5,298; 5,298 / 25,310 = 20.9%. Simponi and Opsumit 2025: 2,668 + 2,325 = 4,993. Abiomed: 3,700 / 1,751 = 2.1 times; 1,751 x 1.171^5 = 3,850 by 2030. Shockwave: 12,600 / 1,146 = 11.0 times. Caplyta: 361 x 4 = 1,444 a year; 14,500 / 1,444 = 10.0 times. Acquisitions: 15,146 + 17,541 = 32,687. Goodwill and intangibles: 48,772 + 50,403 = 99,175; 99,175 / 199,210 = 49.8%. Free cash flow 2025: 24,530 - 4,832 = 19,698. Cash uses 2025: 12,381 + 5,953 + 17,541 = 35,875. Capex 4,832 / 94,193 = 5.1%. Surgery: 10,137 / 10,037 - 1 = 1.0%. Electrophysiology: 5,634 / 33,792 = 16.7%. MedTech share of sales: 33,792 / 94,193 = 35.9%; Innovative Medicine 60,401 / 94,193 = 64.1%. Segment income 2025: 22,266 + 4,113 = 26,379; Innovative Medicine 22,266 / 26,379 = 84.4%; MedTech 4,113 / 26,379 = 15.6%. Gross margin 63,937 / 94,193 = 67.9%. MedTech rebates: 6,446 / 33,792 = 19.1%; 5,955 / 31,857 = 18.7%. Return on identifiable assets: Innovative Medicine 22,266 / 78,057 = 28.5%; MedTech 4,113 / 86,482 = 4.8%. Cost of products sold / segment sales 2025: Innovative Medicine 15,646 / 60,401 = 25.9%; MedTech 14,549 / 33,792 = 43.1%. Q2 2026 segment margins: Innovative Medicine 6,249 / 16,384 = 38.1%; MedTech 1,177 / 8,926 = 13.2%. Growth 2023-2025: sales 94,193 / 85,159 - 1 = 10.6%; operating cash flow 24,530 / 22,791 - 1 = 7.6%; dividends 12,381 / 11,770 - 1 = 5.2%. Dividends per share 5.14 / 2.95 - 1 = 74%. Payout 2025: 12,381 / 26,804 = 46%; 12,381 / 26,215 = 47%; 12,381 / 19,698 = 63%. Diluted shares 2,429.4 / 2,812.9 - 1 = -13.6%; Kenvue exchange 190.96 / 2,674.0 = 7.1%. Firefly and Sail initial payments: 1,000 + 785 = 1,785. Consumer sales 2015-2022: (14,953 / 13,507)^(1/7) - 1 = 1.5% a year. Wholesalers: 21.8 + 15.5 + 11.1 = 48.4 (2025); 20.5 + 15.6 + 12.3 = 48.4 (2024); 18.2 + 15.1 + 14.2 = 47.5 (2023); largest 21.8 - 18.2 = 3.6 points. Innovative Medicine rebates: 56,819 / 60,401 = 94.1% (2025); 47,523 / 54,759 = 86.8% (2023); 56,819 / 47,523 - 1 = 19.6%; net sales 60,401 / 54,759 - 1 = 10.3%. Top three products: 15.0 + 6.5 + 5.5 = 27.0% of revenue. United States share: 53,752 / 94,193 = 57.1% (2025); 14,533 / 25,310 = 57.4% (Q2 2026). MedTech excluding orthopaedics: (33,792 - 9,258) / (31,857 - 9,158) - 1 = 8.1%. Talc: 5,500 / 76,000 claims = about $72,000 per claim; 5.5 - 3.7 = 1.8 billion. Valuation: 348.19 / 24.242 = 14.4 times (end-2024 market value over 2024 adjusted net earnings); 652.05 / 348.19 - 1 = 87%; 270.57 / 11.04 = 24.5 times; 11.04 / 10.79 - 1 = 2.3%; 277.91 / 270.57 - 1 = 2.7%. Innovative Medicine history: (60,401 / 31,430)^(1/10) - 1 = 6.8% a year; Pharmaceutical pre-tax margins 11,734 / 31,430 = 37.3% (2015), 12,827 / 33,464 = 38.3% (2016), 8,816 / 42,198 = 20.9% (2019); restated growth 52,563 / 51,680 - 1 = 1.7% (2022), 54,759 / 52,563 - 1 = 4.2% (2023), 56,964 / 54,759 - 1 = 4.0% (2024). Additional: 2015 mix 31,430 / 70,074 = 45%; dividend 5.36 / 11.04 = 49%; buybacks 4,253 / 5,953 = 71%; vision 5,468 / 33,792 = 16%; Innovative Medicine international 60,401 - 36,344 = 24,057 against 54,759 - 31,169 = 23,590 (2.0%); United States 36,344 / 31,169 - 1 = 16.6%; myeloma four-product growth 2023-2025 4,607 + 1,387 + (670 - 395) + (463 - 63) = 6,669 of oncology growth 25,380 - 17,661 = 7,719, 86%; Darzalex international 1,772 / 4,207 = 42%; equity gap 99,175 - 81,544 = 17,631; Abiomed 440 x 4 = 1,760; amortisation MedTech 0.5 / 1.3 = 38%; MedTech H1 2026 segment income 2,416 / 2,625 - 1 = -8.0%, SM&A 5,975 / 5,518 - 1 = 8.3%, R&D 1,492 / 1,324 - 1 = 12.7%, cost of products sold 7,438 / 6,964 - 1 = 6.8%, margins 2,416 / 17,562 = 13.8% and 2,625 / 16,561 = 15.9%; Innovative Medicine H1 2026 11,566 / 10,762 - 1 = 7.5%, 11,566 / 31,810 = 36.4%; dividends / operating cash flow 12,381 / 24,530 = 50%; receivables 17,178 - 14,842 = 2,336, inventories 14,191 - 12,444 = 1,747; Q2 2026 dividend 3,227 x 4 = 12,908, one cent x 4 x 2,408M shares = $96M; diluted shares 2,663.9 / 2,812.9 - 1 = -5.3%; MedTech United States 17,408 / 33,792 = 52%; international sales 94,193 - 53,752 = 40,441; oncology share of Innovative Medicine 25,380 / 60,401 = 42.0%; Darzalex sales increase 14,351 - 11,670 = 2,681, royalty increase 2,400 - 2,000 = 400, 400 / 2,681 = 15%; newer myeloma medicines Q2 2026 657 + 260 + 174 = 1,091, 1,091 / 4,207 = 26%; Shockwave international 67 / 335 = 20%; amortisation 2,492 x 2 = 4,984 a year, 4,984 / 26,215 = 19%; US long-lived assets 89,392 - 70,670 = 18,722; surgery international Q2 2026 1,559 / 2,653 = 59%; net interest 1,056 - 971 = 85; dividends per share 5.14 / 4.70 - 1 = 9.4%; MedTech rebates 6,446 / 5,955 - 1 = 8.2%; trailing sales 94,193 - 45,636 + 49,372 = 97,929; net earnings 26,804 - 16,536 + 10,769 = 21,037. MedTech history: (33,792 / 25,137)^(1/10) - 1 = 3.0% a year; Medical Devices 6,826 / 25,137 = 27.2% (2015), 5,392 / 26,592 = 20.3% (2017); restated 4,208 / 27,060 = 15.6% (2021), 4,447 / 27,427 = 16.2% (2022); growth 27,427 / 27,060 - 1 = 1.4% (2022), 30,400 / 27,427 - 1 = 10.8% (2023), 31,857 / 30,400 - 1 = 4.8% (2024) - segment margins, rebates, concentration and geography. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in J&J's Forms 10-K, 10-Q, results releases and market data; operands shown in the source line.
Sources
Generated September 24, 2026