U.S. Government to Negotiate Prices for 15 High-Cost Medications by 2027

The U.S. government announced on Friday that 15 medications, including Wegovy for weight loss and Ozempic for diabetes, will be part of the Medicare price negotiation plan set to take effect in 2027. This initiative stems from the Inflation Reduction Act signed by the Biden administration in 2022 and aims to reduce Medicare's spending on expensive drugs.

Key Medications Involved

Among the 15 drugs targeted for negotiation are:

• Ibrance and Xtandi (cancer treatments from Pfizer)
• Trelegy Ellipta (treatment for asthma and COPD from GlaxoSmithKline)
• Austedo (for Huntington’s disease from Teva)
• Linzess (for irritable bowel syndrome from AbbVie)

These medications are among the highest expenditures for Medicare, particularly for individuals aged 65 and older or those with disabilities. President Biden emphasized that these 15 drugs, alongside 10 others negotiated last year, account for nearly one-third of Medicare Part D prescription drug spending.

Negotiation Participation and Penalties

Pharmaceutical manufacturers must decide by February 28 whether to participate in the negotiations. Those opting out may face penalties of up to 95% of their drug sales or be required to withdraw their products from Medicare and Medicaid. Historical data suggests that the price reductions implemented in 2026 could range from 38% to 79%, significantly reducing Medicare's drug expenditure.

For instance, Wegovy costs approximately $1,350 per month, while Ozempic is about $935. Despite Novo Nordisk's claims of offering discounts, Medicare's spending on these drugs exceeded $4.6 billion in 2022.

Financial Implications

Government researchers warn that if Ozempic and Wegovy are used at their current prices, they could contribute to an increase in the U.S. deficit over the next decade. By October 2024, around 2.3 million Medicare Part D beneficiaries were reported to be using Novo Nordisk’s semaglutide drugs, leading to total expenditures of over $14 billion for Medicare Part D.

Future Considerations

It remains uncertain whether a future Trump administration would alter the negotiation process. However, Biden administration officials have indicated that any successor might find it challenging to change the negotiation framework, as the law outlines specific criteria for participation.

The inclusion of these 15 high-cost drugs in Medicare's price negotiation plan represents a significant step toward controlling pharmaceutical costs in the U.S. As negotiations commence, the outcomes could reshape the landscape of drug pricing and accessibility for millions of Americans.