Source: CNN
Ozempic and Wegovy, the blockbuster but costly GLP-1 drugs often used for weight loss, are among the 15 medications that will be subject to the next round of Medicare price negotiations, the Biden administration announced Friday.
But how much consumers will ultimately save depends on many factors, including the incoming Trump administration’s approach to the negotiation process and the type of Medicare drug coverage an enrollee has. Those not eligible for Medicare will not benefit directly.
The 15 drugs on the list were used by about 5.3 million Medicare enrollees and treat a variety of diseases, including asthma, cancer and diabetes. The negotiated prices won’t take effect until 2027.
Medicare spent $14.4 billion on Ozempic and Wegovy, as well as their sister medication Rybelsus, between November 2023 and October 2024. The medications, manufactured by Novo Nordisk and used to treat Type 2 diabetes and obesity, were used by nearly 2.3 million enrollees during that period. Wegovy has also been approved to treat cardiovascular disease.
The other drugs on the list include:
Novo Nordisk, which has filed a lawsuit against the Biden administration for including its insulin medications NovoLog and Fiasp in the first round of negotiations, said in a statement that it “remains opposed to government price setting through the IRA (Inflation Reduction Act) and has significant concerns about how the law is being implemented by this administration.”
“Even as our IRA lawsuit progresses, we remain committed to working with policymakers to advance solutions to ensure access and affordability for all patients,” the company said. “That is why we are deeply concerned about the price-setting process, which could negatively impact patients’ ability to access their medicines and threatens to stifle future scientific development of life-changing medicines for chronic diseases in which there is a real unmet need.”
Expensive medications
The drugs selected for the controversial negotiation program, which was authorized by the 2022 Inflation Reduction Act, include the most expensive medicines taken by Medicare enrollees. In total, Medicare spent about $41 billion on the 15 second-round medications, prior to rebates and discounts.
“These 15 drugs, together with the 10 drugs that Medicare already negotiated, represent about a third of Medicare Part D spending on prescription drugs, which means the lower prices my Inflation Reduction Act is delivering will put money back in seniors’ pockets across the country,” President Joe Biden said in a statement.
The fact that Medicare spends so much on 25 drugs — out of the roughly 8,000 medications it covers — shows the importance of being able to negotiate better prices, Health and Human Services Secretary Xavier Becerra told reporters.
“It lets us go after the biggest cost drivers in the prescription drug field for the Medicare program,” Becerra said.
Change of administrations
While many experts generally considered the first round of negotiations a success, the program’s future is uncertain. Although reducing drug costs was a priority of President-elect Donald Trump’s first term, he spoke about it less during the 2024 campaign. And his nominees for key health care posts — Robert F. Kennedy Jr. for Health and Human Services secretary and Dr. Mehmet Oz for Centers for Medicare and Medicaid Services administrator — have not made their views known.
Republicans have repeatedly criticized the negotiations program, likening it to price setting.
While the drug selection process, deadlines and minimum discounts are largely specified in the law, it remains to be seen how the incoming administration handles the program.
“There may be some different people in the room representing Medicare from the Trump administration,” said Juliette Cubanski, deputy director of the Program on Medicare Policy at KFF, a nonprofit health policy research group. “To me, that raises the question of whether the tenor of the negotiation between Medicare and manufacturers will be different and whether the incoming administration may be a bit friendlier to the manufacturers in the negotiation process in terms of how hard they negotiate lower prices.”
Already drugmakers are pushing Trump to make changes to the program. Eli Lilly’s CEO Dave Ricks told Bloomberg News earlier this week that manufacturers will ask the incoming administration to pause the negotiations to “fix” the Inflation Reduction Act before advancing the next round of discussions. Eli Lilly’s GLP-1 drugs Mounjaro and Zepbound are expected to become subject to negotiations in coming years.
Also, the program faces a multitude of legal challenges, and it remains to be seen whether the Trump administration will continue to defend it in court.
Drug makers and their allies have sued in various federal courts, arguing that the program is unconstitutional in several ways. Also, they contend that the way the administration has carried out the law doesn’t comply with what Congress enacted in the Inflation Reduction Act.
None of the lawsuits have succeed in stopping the negotiation process so far, though the cases are continuing to wind their way through district and appellate courts.
Savings for Medicare enrollees
Ozempic, which the US Food and Drug Administration has approved to treat diabetes, and Wegovy, which is approved for weight loss and the prevention of heart attacks and strokes, are wildly popular. But the high costs of the semaglutide drugs put them out of reach for many people seeking to shed pounds, since fewer insurers cover the medications to treat obesity alone.
The list price for Ozempic is nearly $1,000 for a four-week supply, while Wegovy’s list price is roughly $1,350.
While the negotiations process is expected to yield savings for Medicare, any cost reductions for its enrollees will depend on a variety of factors. They could enjoy lower prices if their plans have deductibles and if they have to pay coinsurance that’s based on a drug’s list price (rather than a flat co-pay), Cubanski said.
Those not enrolled in Medicare will not benefit directly from the negotiations, since the discounts apply only to the federal program. However, the selection of Ozempic and Wegovy for the second round of bargaining could prompt insurers in the commercial market to push for better deals for their policyholders.
The high cost of GLP-1 drugs is also putting a strain on Medicare, which spent $4.6 billion on Ozempic for enrollees with diabetes in 2022, prior to discounts and rebates, according to KFF.
Medicare is not allowed by law to cover drugs for weight loss, but the Biden administration has proposed reinterpreting the statute to permit coverage for the treatment of obesity as a chronic disease. That would expand access to the medications to more than 3 million additional enrollees but also cost Medicare an estimated $25 billion over a decade. (Medicare last year opened the door to coverage of Wegovy for Medicare enrollees with cardiovascular disease who are either overweight or have obesity.)
But it will be up to the Trump administration to decide whether to finalize the coverage expansion. Kennedy has been opposed to using GLP-1 drugs for weight loss, though he has recently softened his view.
For most Americans, the price they pay for medications depends on their health insurance. However, they may have to pay the list price if they have not yet hit their annual deductible or are uninsured. Novo Nordisk provides hefty discounts that can reduce certain patients’ out-of-pocket costs.
Results of initial round of negotiations
The discounts that Medicare wrangled for the initial 10 medications in the program are expected to lead to $6 billion in savings for the federal government, which represents a 22% reduction in total net spending on the drugs, when the lower prices take effect next year, the US Department of Health and Human Services announced in August.
Also, enrollees should see a $1.5 billion reduction in out-of-pocket costs.
The first round included medications for blood clots, diabetes, arthritis and heart failure — such as Eliquis, Xarelto, Farxiga, Januvia, Stelara and Entresto.
“For too long, big drug companies have padded their profits by setting outrageous prices at the expense of American lives, forcing seniors to skip prescriptions they can’t afford,” Nancy LeaMond, AARP’s chief advocacy and engagement officer, said in a statement. “The first round of Medicare drug price negotiation made it clear that this process will reduce the prices of these important products and create billions of dollars in savings for Medicare and its beneficiaries.”