Wall Street analysts are speculating that the popular diabetes and weight loss medication Ozempic could be subject to federal government price negotiations next year as part of the Department of Health and Human Service‘s new program to lower Medicare prescription prices.
Last week, the Biden administration announced the final negotiated prices for the first 10 drugs selected as the most expensive medications covered by Medicare as part of the negotiation program established by the 2022 Inflation Reduction Act, which was passed by Democrats.
Under the legislation, the Centers for Medicare and Medicaid Services have the ability to negotiate directly with pharmaceutical companies for the price of medications — and impose punitive taxes if the drugmakers refuse to comply. During the first round of negotiations, the Biden administration lowered list prices by between 38% and 79%, effective in January 2026.
Although the next drugs selected by CMS will not be announced until February 2025, Ozempic is a likely choice for the next round of negotiations.
BMO Capital Markets analyst Evan Seigerman and five other analysts told Reuters that Ozempic is likely to be included.
Novo Nordisk, the Danish pharmaceutical giant that produces Ozempic as a type 2 diabetes drug and Wegovy for weight loss, has come under fire from the Biden administration this year for the high list price of the potentially life-saving drug.
President Joe Biden and Sen. Bernie Sanders (I-VT) last month directly called on Novo Nordisk to lower the list price of Ozempic voluntarily, or else, the federal government would “do everything within [its] power to end it for them.”
Ozempic and Wegovy, which are both made of the chemical compound semaglutide, have been found to lower the risk of heart disease, which may put a significant dent in the overall costs for Medicare, such as surgeries and hospital stays.
But Medicare spent over $4.6 billion on Ozempic for diabetes management alone in 2022.
And although medication purely for weight loss is not eligible for Medicare coverage government, researchers predict that including Wegovy as a covered drug at its current price would increase the deficit over the next 10 years, should the law be changed to allow CMS to purchase it.
When asked about whether or not the company believed Ozempic would be subject to Medicare negotiations, a spokesperson for Novo Nordisk said it was too early to guess.
“We can’t speculate on which Novo Nordisk medicines will be selected for future negotiations with CMS,” the company’s spokesperson said. “We have opposed government price setting through the IRA and have serious concerns about how the law is being implemented.”
Several insulin products made by Novo Nordisk have been part of the recent round of Medicare drug price negotiation, which is being challenged by the company in court.
The prices for the 10 drugs that will be selected next February for negotiations will take effect in 2027. In 2026, there will be 15 drugs selected, the new prices for which will take effect in 2028.
Vice President Kamala Harris promised as part of her healthcare plan in the 2024 campaign to accelerate the speed of Medicare drug price negotiations to bring down the costs of prescriptions more quickly.