Healthcare ETF XLV struggles in 2026 amid policy shifts and key drug pricing updates.

The Health Care Select Sector SPDR ETF (XLV) is down about 3% year-to-date despite a 14% gain over the past year. The fund's performance hinges on drug pricing policies and key product pricing, especially from Eli Lilly, which dominates XLV with its GLP-1 franchise. Recent trade deals capped pharmaceutical imports at 15%, easing policy pressures that hurt XLV in 2025. Investors should watch upcoming CMS announcements on Medicare negotiations and Lilly's Q2 earnings for pricing updates on new drugs, which will significantly impact XLV's future trajectory.