Medicare to negotiate price of Ozempic, Wegovy weight-loss drugs

The Biden administration moved Friday to negotiate the prices Medicare pays for the blockbuster weight-loss drugs Ozempic and Wegovy, medications costing the massive government health program billions of dollars a year.

The announcement kicks off the second round of a new Medicare initiative aimed at lowering prescription drug prices and saving the government money on some of the most expensive drugs used by older and disabled Americans.

The Centers for Medicare and Medicaid Services (CMS) identified 15 drugs it has selected for price negotiations with drug companies, including Rybelsus, another drug that works to combat diabetes and can lead to weight loss; Trelegy Ellipta, which treats chronic obstructive pulmonary disease and asthma; and Xtandi, which treats prostate cancer.

“For some people, this is a big deal,” said Xavier Becerra, the nation’s top health official. “Some folks have to cut their pills in half or skip a dose in their prescription so that they can make their prescription last longer until they can afford to buy the next batch of drugs.”

The targeted drug companies have until Feb. 28 to decide whether they want to participate in negotiations with the federal government, a process that will now be overseen by the incoming Trump administration. Trump officials also must decide whether to pursue a Biden administration proposal to expand access to weight-loss drugs, a plan that would probably cost far more than any savings yielded by negotiations.

Advocacy groups Friday cheered the new list of selected drugs and urged the Trump administration to continue the negotiations. Some Republicans have called for ending or overhauling the initiative, and pharmaceutical companies have sued to block it.

“This has real, meaningful impacts for people in the Medicare program,” said Leigh Purvis, who helps lead work on prescription drugs at AARP, an advocacy group for older Americans. “Every time a new list (of drugs) comes out, AARP is going to be celebrating.”

Friday’s announcement came two weeks before the government’s Feb. 1 deadline to reveal which drugs would be targeted for negotiation – an indication of how the Biden administration has sought to put one final stamp on the initiative.

Last year, Biden officials announced that the first round of negotiations that were completed in 2024 will result in an estimated $6 billion in initial savings. The new prices for the drugs included in the previously announced negotiations are set to go into effect in 2026 and ranged from 38 to 79% lower compared with the drugs’ list prices in 2023. Taken together, the drugs included in both the first and second round of negotiations represent roughly one-third of what Medicare’s voluntary drug benefit spends on medicines, federal officials said.

Democrats spent decades trying to empower Medicare to negotiate the sky-high cost of medicines before the provision was included in the Inflation Reduction Act (IRA), which passed Congress in 2022 without a single Republican vote. President Joe Biden has since name-checked the policy in numerous speeches and remarks, including his Wednesday farewell address in the Oval Office.

“He thinks of it as one of his crowning achievements in the health-care space,” Neera Tanden, the president’s domestic policy adviser, said in an interview Thursday.

Though President-elect Donald Trump is set to take office Monday, Biden’s team does not believe the incoming administration has the authority to change the drugs that have been selected. That’s because the law specifies how Medicare chooses the drugs subject to negotiation, according to a senior administration official who spoke on the condition of anonymity under ground rules set by the White House.

“There’s no ability to come in and adopt a completely different approach to selecting the drugs,” the official said.

Democrats on Friday also drew a distinction between the two presidents’ efforts to crack down on high drug costs – saying that while Trump vowed to negotiate the price of drugs, Biden accomplished it – and vowed to defend the law.

“I challenge the incoming Trump Administration to try to negotiate a better deal,” Rep. Frank Pallone Jr., D-N.J., the top Democrat on the House Energy and Commerce Committee, said in a statement Friday.

Biden officials said the program is poised to continue its work. Erin Richardson, the CMS chief of staff, told reporters Friday that the negotiations process has been driven largely by civil servants within the agency.

“The people in the negotiating room and who did these negotiations are not policy officials. They are career staff who have broad expertise,” Richardson said.

Weight-loss medications have garnered immense national attention and ignited a debate about access and cost. Medicare does not cover the drugs for obesity, though the medications are covered for conditions that are exacerbated by obesity, such as diabetes and heart disease.

The selection of Wegovy, Ozempic and Rybelsus indicates that CMS is treating them as part of a single class of medicine based on the same active ingredient, semaglutide, rather than distinct medications that were approved in different years by the Food and Drug Administration. Though the FDA approved Ozempic in 2017, Rybelsus – a pill form of semaglutide – and Wegovy weren’t approved by the agency until 2019 and 2021, respectively. Ozempic and Wegovy are injectable medications.

Novo Nordisk, which manufactures all three drugs, objected to the administration treating them as a single class to negotiate their prices. In a statement, the company said it “remains opposed to government price setting through the IRA and has significant concerns about how the law is being implemented by this administration, including aggregating multiple products that individually would not meet the requirements of the statute.” Novo Nordisk has sued the government over the IRA price negotiations.

Setting a maximum price for Ozempic and Wegovy, in particular, would open a new front in the debate over the cost of some of the most sought-after medications in the nation. The drugs help control blood sugar levels and suppress appetite, slowing the stomach from emptying and sending a signal of fullness to the brain. The question of covering these drugs continues to roil health insurance companies, which are drawn to the life-changing benefits the medications can have for patients but financially pressured by their high cost.

For now, setting a maximum Wegovy price for Medicare beneficiaries would have relatively little impact on Novo Nordisk’s sales, because the program doesn’t cover its primary use as an anti-obesity drug. In addition, analysts say that Novo already offers hefty rebates for its semaglutide-based drugs, which could also mute the financial impact to the company of a maximum price.

The debate over the cost and benefits of GLP-1 drugs, named for the gut hormone they mimic, has emerged as a major societal and political question. Billionaire entrepreneur Elon Musk weighed in last month, writing on his social media platform X that “Nothing would do more to improve the health, lifespan, and quality of life for Americans than making GLP inhibitors super low cost to the public. Nothing else is even close.” (Novo Nordisk’s semaglutide-based drugs stimulate the GLP-1 hormone.)

The Biden administration last year proposed expanding coverage of weight-loss drugs for millions on Medicare and Medicaid, potentially setting up a clash with Robert F. Kennedy Jr., Trump’s pick to lead the Department of Health and Human Services, who has criticized the drugs. Federal officials have projected the move would add $25 billion in Medicare costs and $11 billion in Medicaid costs during the next decade.

Ozempic, Rybelsus and Wegovy accounted for $14.4 billion in gross prescription drug costs for Medicare Part D recipients in the year that ended in October.

The Medicare initiative has faced a legal blitz from the powerful drug industry, which has argued that the program is unconstitutional on several grounds.

Under the law, CMS can negotiate prices for “small-molecule” drugs, such as pills, that were approved by the Food and Drug Administration at least seven years ago. Biologic drugs, which are often more complex, have 11 years from the time of approval before they are subject to negotiation. The maximum prices set by CMS are set to take effect two years later – in 2027, for the drugs the agency unveiled Friday.

That four-year difference for when drugs are subject to a maximum price can have a sizable impact on the fortunes of drugmakers, which have advocated for changing the law to give small-molecule drugs the same runway as biologics.

PhRMA, the drug industry’s largest lobbying group, has called this the “pill penalty,” arguing that it means the government wields disproportionate influence on setting prices for medicines that come in pill form. Industry lobbyists maintain that this will reduce investment in new pill medications even if they may be the most effective and affordable option for patients.

In addition to the weight-loss, asthma and prostate cancer drugs, here are the other medications selected for the second round of negotiations:

• Pomalyst, which treats a rare cancer called Kaposi’s sarcoma, as well as multiple myeloma.

• Ibrance, which treats breast cancer.

• Ofev, which treats idiopathic pulmonary fibrosis.

• Linzess, which treats chronic idiopathic constipation and irritable bowel syndrome with constipation.

• Calquence, which treats chronic lymphocytic leukemia and small lymphocytic lymphoma, as well as mantle cell lymphoma.

• Austedo and Austedo XR, which treat movement disorders including one related to Huntington’s disease.

• Breo Ellipta, which treats asthma and chronic obstructive pulmonary disease.

• Tradjenta, which treats Type 2 diabetes.

• Xifaxan, which treats hepatic encephalopathy and irritable bowel syndrome with diarrhea.

• Vraylar, which treats bipolar I disorder, major depressive disorder and schizophrenia.

• Janumet and Janumet XR, which treat Type 2 diabetes.

• Otezla, which treats oral ulcers in Behcet’s disease, plaque psoriasis and psoriatic arthritis.