A pharmacist displays boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes made by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023.
George Frey | Reuters
Ozempic, the popular diabetes treatment developed by Novo Nordisk, is expected to be included in the upcoming price negotiations between manufacturers and Medicare. This follows the Biden administration’s release of the first 10 drugs that will be subject to such talks, with the aim of reducing medication costs for Medicare Part D. The changes are set to take effect by 2026.
Ozempic is likely to be eligible for negotiations in 2025, along with other drugs selected that year, with price changes coming into effect in 2027. Analysts predict that Ozempic will be a top candidate for negotiations due to Medicare Part D’s expenditure of over $2 billion on the drug in 2021, which approaches the spending on some of the medicines included in the current round of price talks. Overall, Medicare Part D spent $98 billion on medications in 2021.
Given the high demand for Ozempic and similar drugs that aid weight loss, experts anticipate that Medicare will continue to invest significantly in Ozempic in the coming years. Cantor Fitzgerald analyst Louise Chen states, “Ozempic is going to be the biggest one that people are going to watch really closely in the second round of negotiations.”
Rybelsus, another diabetes drug produced by Novo Nordisk that contains the same active ingredient as Ozempic, may also be included in the negotiations. However, most Part D plans currently cover both drugs for patients with Type 2 diabetes and do not offer coverage for off-label uses such as weight loss. Novo Nordisk’s obesity injection Wegovy, which also utilizes the same ingredient, is unlikely to be targeted for negotiations at present due to Medicare’s lack of coverage for weight loss drugs.
A spokesperson for Novo Nordisk did not provide a direct comment on the potential inclusion of Ozempic in the next round of talks. However, they stated that the company supports policies to ensure patients can afford their medicines while criticizing the negotiation process conducted by the federal Centers for Medicare and Medicaid Services (CMS).
Ozempic, Wegovy, and Rybelsus are part of a drug class called GLP-1s, which mimic a hormone that suppresses appetite. These drugs, particularly Wegovy and Ozempic, gained attention in the weight loss industry last year, with notable individuals like Elon Musk reportedly using them. However, these injections come with a high cost, ranging from approximately $900 to over $1,300 per month. Although Medicare and private insurers typically negotiate discounts and rebates for covered drugs, the extent of these price reductions is unclear.
Ozempic was not eligible for negotiations in the current round due to the federal government’s selection guidelines. These guidelines require drugs to have been on the market for at least seven years after initial approval or licensing in the U.S. by the time the Biden administration publishes the list of selected products. Ozempic was approved by the FDA for diabetes treatment in December 2017, making it ineligible for the initial round of drugs. However, it is expected to be eligible for the next list, which will be published in February 2025.
Several analysts agree that Ozempic’s high expenditure in 2021 positions it as a top contender for the second round of negotiations. If the price of Ozempic is slashed by 40%, Medicare could save an estimated $1.3 billion, compared to around $342 million in savings for Rybelsus at the same percentage reduction. The extent to which patients pay out of pocket for Ozempic is uncertain, as its list price in the U.S. is $936 per month. Nevertheless, a lower negotiated price for Ozempic would likely benefit the approximately 28% of Medicare beneficiaries who have diabetes.
Uncertain Outlook for Wegovy
There remains the possibility that negotiations will also impact Wegovy, particularly if Medicare begins covering the injection and other weight loss treatments before the second round of talks. Recent research highlighting Wegovy’s heart health benefits suggests that it may be included in negotiations.
Novo Nordisk released late-stage trial data earlier this month, demonstrating that Wegovy reduces the risk of serious heart-related problems such as heart attacks or strokes by 20%. These results indicate that Wegovy offers significant health benefits beyond weight loss, potentially leading to expanded usage and increased coverage by insurers. Some analysts believe that savings resulting from the first round of negotiations could pave the way for Medicare to cover Wegovy. Four out of the 10 drugs selected for negotiations cost Medicare over $17 billion annually before any discounts or rebates. Lowering prices for these drugs could potentially free up Medicare’s budget and facilitate coverage for popular GLP-1s like Wegovy, according to Wells Fargo analyst Mohit Bansal.
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