Many Big Pharma companies including Pfizer, Merck and BMS make the drugs that some researchers expect to be selected by CMS for next year’s Medicare price negotiations alongside analysts’ top pick, Novo Nordisk’s Ozempic.
Novo Nordisk’s type 2 diabetes medication Ozempic is widely considered a shoo-in for the next round of Medicare drug price negotiations under the Inflation Reduction Act (IRA). However, analysts and academics also see potential IRA risks for other companies, predominantly in the cancer and diabetes markets.
This month, following IRA criteria and guidance from the Centers for Medicare and Medicaid Services (CMS), researchers predicted 13 of 15 drugs that may potentially be selected for price negotiation by the U.S. government in February 2025, with the prices taking effect in 2027.
Their list, published in the Journal of Managed Care & Specialty Pharmacy, includes four anticancer therapies: AstraZeneca’s Calquence, Astellas Pharma’s Xtandi, Bristol Myers Squibb’s Pomalyst and Pfizer’s Ibrance. There are also 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 the purposes of price negotations because they share the same active ingredient, semaglutide.
Barclays analysts were more reserved in their predictions about which products will likely be subject to Medicare drug price negotiations next year. But they shared the same opinion as their academic counterparts when it came to several drugs, including Ozempic—but not Rybelsus and Wegovy—as well as AbbVie’s gastrointestinal agent Linzess and enzyme replacement therapy Creon. However, Barclays added drugs made by Gilead and Neurocrine to their predictions.
“We expect NVO’s Ozempic, ABBV’s Linzess and Creon, Gilead’s Epclusa [for chronic hepatitis C], and Neurocrine’s Ingrezza [for tardive dyskinesia and chorea associated with Huntington’s disease] to be on the list,” Barclays analysts wrote in a report earlier this month.
The Barclays report also noted that oncology is one of the most expensive areas of drug development, while expressing a concern that “reduced pricing power” has the risk of pushing biopharma companies toward “lower-risk or faster-to-market disease indications, which could reduce incentives” to invest heavily in the cancer space.
At the same time, the analysts argue that “while the IRA may limit revenue growth from pricing, it could help broaden access and drive volumes.”
Why Ozempic and Not Wegovy or Rybelsus?
While the 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, as they represent different formulations of the same active moiety,” industry analysts disagreed. While they unanimously agree that Ozempic is a likely contender for the 2025 list of targeted drugs, they say the other two are not yet eligible.
Under the IRA, single-source drugs are selected for Medicare negotiation based on time on 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, according to HSBC analysts.
Rajesh Kumar, head of European life sciences and healthcare equity research at HSBC Bank, told BioSpace that “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 paper’s researchers make the case that “some Part D plans will cover Wegovy after its approval for cardiovascular risk reduction.”
