Novo Nordisk’s blockbuster type 2 diabetes medication is a sure bet for the list of the next 15 drugs whose Medicare prices will be negotiated in 2025 and go into effect in 2027, according to analysts and academics.
With the prices for the initial 10 prescription drugs negotiated between Medicare and drugmakers announced last month, speculation has begun about the next set of medications the U.S. government will target. At the top of the potential list is Novo Nordisk’s blockbuster type 2 diabetes drug Ozempic. In fact, analysts contend that Ozempic’s inclusion on this list is a foregone conclusion.
“There’s no way [Ozempic’s] not going to be in there,” Emily Field, director and head of European pharmaceuticals equity research at Barclays, told BioSpace. Five analysts polled last month by Reuters also agreed that the 2027 list will include Ozempic.
The Centers for Medicare & Medicaid Services (CMS) will select 15 Medicare Part D drugs for negotiations by Feb. 1, 2025. The agreed-upon prices will be announced later in the year and go into effect in 2027.
Ozempic was approved in 2017 by the FDA for type 2 diabetes and launched in 2018 with U.S. patent expiry in 2032. HSBC analysts wrote in a report earlier this month that the advent of the IRA “might create price declines earlier than the expiration of patent exclusivity.”
But Field noted that Ozempic’s inclusion in Medicare drug price negotiations is not going to “freak out” Novo investors going forward, in part because the drug is already discounted. “We already know that Ozempic, as of this last quarter, had like a 67% gross-to-net—so, the net price is already pretty low.”
As explained in a Barclays note to investors earlier this month, “given the current supply/demand dynamics and continued innovation, we expect the impact here will be limited to a narrow lowering of Ozempic net price.”
Still, Ozempic would stand apart from the initial 10 drugs whose prices were negotiated this year by virtue of the fact that is has a longer patent life remaining, Field noted.
The initial 10 “are a lot closer to their patent cliffs than Ozempic will be when it goes on the list,” she said. As a result, the recently announced price cuts were “pretty benign.”
According to Barclays, many of the first 10 Medicare negotiated drugs are already sold well below list price and “imply less onerous discounts to current net prices (10-15%) than previously expected, which has driven some relief for names staring down ’26 and later decade inclusion on the negotiation list.”
Rybelsus, Wegovy on Hit List?
Academics also are weighing in on the Ozempic speculation, predicting in a new paper that Novo’s Rybelsus and Wegovy, both of which also have semaglutide as the active ingredient, will also be among the drugs to be targeted in the next round of Medicare price negotiations.
“According to CMS guidance, products containing the same active moiety and manufactured by the same sponsor will be considered a single drug for negotiation. For this reason, we expect that all three branded products for semaglutide manufactured by Novo Nordisk (Ozempic, Rybelsus, and Wegovy) will be considered a single drug, as they represent different formulations of the same active moiety,” the paper’s authors wrote.
But HSBC analysts in their report earlier this month on potential drugs targeted for Medicare price negotiations contend that Rybelsus and Wegovy will not have “IRA applicability” until 2028 and 2030, respectively.
Novo in an emailed response to BioSpace said the company “can’t speculate on which Novo Nordisk medicines will be selected for future negotiations with CMS,” but citing an anonymous company executive, Bloomberg reported last week that Novo itself expects Ozempic will be on Medicare’s 2027 list of 15 drugs negotiated under the IRA. And in written testimony submitted to the Senate health committee this week, Novo CEO Lars Fruergaard Jørgensen acknowledged that Ozempic will be eligible for Medicare price negotiations in less than a year based on current criteria.
“The federal government is the largest single purchaser of prescription drugs in the world, and those negotiations will likely exert a substantial effect on prices in the commercial insurance market as well,” Jørgensen testified on Tuesday. At the same time, he complained that “competing GLP-1 products from Eli Lilly will not be subject to government price-setting under the IRA for another ten years.”
Novo added in its statement to BioSpace that the company has “opposed government price setting through the IRA and [has] serious concerns about how the law is being implemented.”
Novo first sued the Biden administration over the IRA in September 2023, alleging that the drug price negotiations violate the U.S. Constitution. In late July 2024, a New Jersey federal judge handed the company a legal loss in its challenge to the law.
