Wall Street analysts speculate that the popular diabetes and weight-loss drug Ozempic could be the subject of pricing negotiations with the federal government next year as part of a new Health and Human Services program to lower Medicare prescription prices.
Last week, the Biden administration announced the final negotiated prices for the first 10 drugs selected as the most expensive drugs covered by Medicare as part of the negotiating program established by the Inflation Reduction Act of 2022 passed by Democrats.
Under the law, the Centers for Medicare and Medicaid Services have the ability to negotiate drug prices directly with pharmaceutical companies – and impose punitive taxes if drugmakers refuse to meet obligations. During the first round of negotiations, the Biden administration cut list prices by 38 to 79 percent, effective January 2026.
Although the next drugs selected by CMS will not be announced until February 2025, Ozempic is a likely choice for the next round of negotiations.
BMO Capital Markets analyst Evan Seigerman and five other analysts said Reuters that Ozempic will probably be included.
Novo Nordisk, the Danish pharmaceutical giant that makes Ozempic for type 2 diabetes and Wegovy for weight loss, has come under fire from the Biden administration this year over the high list price of the potentially life-saving drug.
President Joe Biden and Senator Bernie Sanders (I-VT) last month directly called on Novo Nordisk to voluntarily lower Ozempic’s list price or the federal government would “do everything in its power to put a stop to this.”
Ozempic and Wegovy, both of which consist of the chemical compound semaglutide, have been found to reduce the risk of heart disease, which can significantly reduce overall Medicare costs for things like surgery and hospital stays.
But Medicare spent over $4.6 billion on Ozempic’s diabetes treatment alone in 2022.
And although drugs intended solely for weight loss are not covered by the government-run Medicare health insurance program, researchers predict that if Wegovy were included as a covered drug at its current price, the deficit would grow over the next decade if the law were changed and CMS allowed its purchase.
When asked whether the company expected Ozempic to be the subject of Medicare negotiations, a Novo Nordisk spokesman said it was too early to speculate.
“We cannot speculate on which Novo Nordisk drugs will be selected for future negotiations with CMS,” the company spokesman said. “We have opposed government price fixing by the IRA and have serious concerns about the law’s implementation.”
Several Novo Nordisk insulin products were part of the recent round of Medicare drug pricing negotiations, and the company has now challenged those negotiations in court.
The prices for the 10 drugs selected for negotiations next February will come into force in 2027. In 2026, 15 drugs will be selected, whose new prices will come into force in 2028.
As part of her 2024 health care plan, Vice President Kamala Harris promised to speed up drug pricing negotiations under Medicare to more quickly reduce prescription drug costs.
