Medicare plans to negotiate the prices of 15 drugs used for conditions such as diabetes and cancer. The GLP-1 drug Wegovy tops the list of medications expected to be included. Medicare is scheduled to announce this list by February 1, with the negotiated prices taking effect in 2027.
Wegovy made the list because it is not only used for weight loss but also approved to reduce major heart complications. It contains the active ingredient semaglutide, which is also found in Ozempic and Rybelsus, drugs that help manage blood sugar levels in people with type 2 diabetes. Novo Nordisk manufactures these medications, and all three are expected to have their prices negotiated in the upcoming round.
Medicare does not currently cover drugs used solely for weight loss, but the heart-related approval of Wegovy has brought it into the negotiation sphere. This process is part of Medicare’s broader effort to reduce healthcare costs through direct price negotiations. Many Big Pharma companies including Pfizer, Merck and Bristol Myers Squibb (BMS) are expected to have their drugs selected by the Centers for Medicare and Medicaid Services (CMS) for next year’s Medicare price negotiations.
Analysts have identified Novo Nordisk’s type 2 diabetes medication, Ozempic, as a top pick for the negotiations under the Inflation Reduction Act (IRA). However, other drugs in the cancer and diabetes markets are also anticipated to be part of the negotiations. Following the IRA criteria and guidance from CMS, researchers have predicted 13 of 15 drugs that may be selected for price negotiation by the U.S. government in February 2025.
The prices would then take effect in 2027. Their list includes four anticancer therapies: AstraZeneca’s Calquence, Astellas Pharma’s Xtandi, Bristol Myers Squibb’s Pomalyst, and Pfizer’s Ibrance.
Medicare aims for lower drug costs
It also includes three non-insulin antidiabetic agents: Boehringer Ingelheim’s Tradjenta, Merck’s Janumet, and Novo Nordisk’s Ozempic/Rybelsus/Wegovy, which they predicted would be considered a single agent for price negotiations due to the shared active ingredient, semaglutide. While the research paper’s authors argued that Novo Nordisk’s three branded products for semaglutide (Ozempic for diabetes, Rybelsus for diabetes and Wegovy for weight loss) will be considered a single drug, industry analysts disagreed. They unanimously agreed that Ozempic is a likely contender for the 2025 list of targeted drugs, but stated that the other two are not yet eligible.
According to the IRA, single-source drugs are selected for Medicare negotiation based on time on the market: at least seven years for small molecule drugs and at least 11 years for biologics. By February, Ozempic will be eligible for price negotiations, but Rybelsus and Wegovy will not have IRA applicability until 2028 and 2030, respectively. Rajesh Kumar, head of European life sciences and healthcare equity research at HSBC Bank, explained, “Medicare does not reimburse for obesity, so Wegovy is a slightly more nuanced subject.” While weight-loss drugs as an indication are excluded from Medicare coverage by statute, the researchers suggested that some Part D plans might cover Wegovy after its approval for cardiovascular risk reduction.
Lawmakers, patient advocates, and the Biden administration have criticized the high list prices of Novo Nordisk’s obesity and diabetes drugs. Novo Nordisk’s CEO Lars Fruergaard Jørgensen faced scrutiny over these prices but did not commit to lowering them. Instead, he pledged to collaborate with pharmacy benefit managers to improve patient access and affordability.
Jørgensen also criticized Medicare price negotiations, labeling them as “price-setting” with potential adverse effects on drug innovation. Researchers and Wall Street analysts expect Wegovy to be chosen for price negotiations given Medicare Part D’s substantial spending on semaglutide treatments. In 2022, Medicare spent more than $5.6 billion on Ozempic and Rybelsus, with spending projected to have increased to nearly $7.5 billion in 2023 for these drugs.
Other drugs anticipated for price negotiations include Trelegy Ellipta, a prescription inhaler for asthma and chronic obstructive pulmonary disease, and Xtandi, a medication for rheumatoid arthritis. The final list will depend on whether generic versions launch before February.
- StatNews.”Wegovy is among drugs set to be targeted in the next round of Medicare price negotiations, researchers say”.
- BioSpace.”Cancer and Diabetes Drugs Expected to Dominate 2025 Medicare Negotiations Under IRA”.
- CNBC.”Healthy Returns: Weight loss drug Wegovy could face Medicare price negotiations next”.