Ozempic Among the Next Drugs Up for Medicare Price Negotiations
List of drugs account for $41 billion in annual Medicare spending, Biden administration says
The U.S. government named 15 drugs that will be subject to the second round of price negotiations by Medicare, including Ozempic and Wegovy, the drugs at the center of the weight-loss craze.
The Biden administration said the drugs account for $41 billion in annual Medicare spending, and that price negotiations could result in significant savings. U.S. health officials selected the drugs because they account for high Medicare spending due to widespread use or high price tags.
“We have a chance to negotiate a better deal for the American people,” said U.S. Secretary of Health and Human Services Xavier Becerra. “We can try to save them once again billions of dollars.”
On the list of target medicines are treatments for cancer, type 2 diabetes, and asthma.
The government last year negotiated lower prices for the first 10 drugs selected for the new negotiating powers Medicare received from the Inflation Reduction Act of 2022. Those prices will take effect next year in Medicare, the government health insurance program for the elderly and some disabled people. Biden touted $6 billion in savings for taxpayers this year from those negotiations in his farewell letter Wednesday.
The hottest drug on the list is Novo Nordisk’s semaglutide, sold under the brands Ozempic and Wegovy and at the heart of the weight-loss boom that has made Novo NOVO.B -2.59%decrease; red down pointing triangle a fortune.
Semaglutide likely accounted for about $7.5 billion in gross spending by Medicare drug-benefit plans in 2023, according to research in the Journal of Managed Care & Specialty Pharmacy, by health-policy researchers from the University of Washington and the University of California, San Diego. The drug’s global sales were estimated to be about $28 billion last year, according to Factset.
A steep price cut for semaglutide in Medicare could dent Novo’s sales growth modestly, though analysts still expect semaglutide’s global sales to double over the next four years.
A price cut, however, could save Medicare and its members billions of dollars.
“There’s going to be pretty significant savings to Medicare,” said Sean Sullivan, a professor of pharmacy and health policy researcher at the University of Washington.
A price cut for semaglutide in Medicare could also have spillover effects, pressuring prices for Eli Lilly’s LLY 1.45%increase; green up pointing triangle Mounjaro diabetes drug and Zepbound for weight loss, Sullivan said.
Semaglutide is sold as Ozempic and Rybelsus for diabetes, and Wegovy for obesity. All three brands will be treated as a single drug for Medicare price negotiations purposes because they share the same main ingredient.
Ozempic accounts for most of the Medicare spending on semaglutide, but Wegovy is poised for higher spending. Last year, some Medicare drug plans began covering Wegovy for people with both excess weight and cardiovascular disease. The Biden administration proposed expanding Medicare coverage to include its use in people with obesity alone, though that hasn’t taken effect and its fate is uncertain under the incoming Trump administration.
If Medicare were to cover anti-obesity drugs, it would increase federal spending by about $35 billion from 2026 to 2034, the Congressional Budget Office estimated last year. The CBO predicted semaglutide would be selected for negotiation and that its price would fall substantially beginning in 2027.
Semaglutide sells for list prices ranging from $997 a month for Ozempic and Rybelsus to $1,349 a month for Wegovy.
Federal negotiators will be seeking a much lower price. Already, Novo Nordisk offers rebates and discounts that have cut roughly 50% or more off list prices, analysts say.
As a result, U.S. government negotiators are expected to use those existing net prices as a ceiling for their offers, to seek further cuts that go beyond 50% off the list price.
