Ozempic could face Medicare drug price negotiations next

Novo Nordisk’s blockbuster diabetes drug Ozempic could be next in the price negotiations between manufacturers and Medicare.

The Biden administration this week announced the first 10 drugs that will be subject to such talks. This consultation is a process aimed at lowering the price of drugs that Medicare Part D spends the most money on. This change he expects to come into force by 2026.

Ozempic is likely to be the subject of negotiations by the time the next drug is selected in 2025, with price changes expected by 2025. Effective in 2027.

With Medicare Part D already spending more than $2 billion on the drug in 2021, multiple analysts expect weekly injections to become the top choice. That’s close to some of the drugs selected in price negotiations this week. total The 2021 Part D spending is as follows: $98 billion.

They expect Medicare to spend a lot of money on Ozempic over the next few years, given the intense demand for the drug and similar treatments that help patients lose unwanted weight.

“The Ozempic will be the biggest round of negotiations that people will be watching very much,” Kantor Fitzgerald analyst Louise Cheng told CNBC.

Novo Nordisk’s oral diabetes drug Libersus could also be on the list as it contains the same active ingredient as Ozempic. Most Part D plans cover both people with type 2 diabetes, but not drugs for off-label use such as weight loss.

Novo Nordisk’s obesity injectable Wegobee, which uses the same ingredients, is likely not up for negotiation in the short term because Medicare does not cover weight-loss drugs.

A spokeswoman for Novo Nordisk did not directly comment on whether Ozempic could be included in the next round of negotiations. A spokeswoman said the company “supports policies that ensure patient access to medicines,” but criticized the negotiation process conducted by the federal Centers for Medicare and Medicaid Services (CMS).

“Unfortunately, we have witnessed aggressive steps taken by CMS to implement unilateral pricing without considering the impact on patients living with chronic conditions and the healthcare system as a whole.” said the spokesperson.

Ozempic, Wegovy, and Rybelsus are a class of drugs called GLP-1 that mimic hormones produced in the gut to suppress a person’s appetite.

Wegovy and Ozempic sparked a gold rush in the weight-loss industry last year, with celebrities including billionaire tech moguls. Elon Musk among recent users. However, injections are costly, ranging from about $900 to over $1,300 per month.

Medicare and private insurers typically secure discounts or rebates on covered drugs, but it’s unclear how much.

Medicare program spending $2.6 billion At the 2021 Ozempic, according to AARP research. Based on this number, AARP said Ozempic was the 10th most expensive drug covered by Medicare Part D.

However, due to federal selection guidelines, Ozenpitch was excluded from the first round of negotiations.

The guidelines require that drugs have been on the market for at least seven years since their initial approval or licensing in the United States as of the date the Biden administration released the list of selected products.

The Food and Drug Administration approved Ozempic for the treatment of diabetes in December 2017, thus removing it from a series of drugs announced this week. However, Evercore ISI analyst Umar Rafat said in a research note that Ozempic is likely to be on the next list of drugs to be released in February 2025.

“This means Novo’s Ozempic could be on next year’s list (along with Libersus),” he wrote.

Multiple analysts agreed, stating: amount Medicare spent money on Ozempic in 2021. That puts the drug at the top of the forecast list for the second round of negotiations.

Lowering the price of Ozempic through negotiation could result in significant savings for the Medicare program.

A 40% price cut for Ozempic could save Medicare an estimated $1.3 billion, according to a study by Leelink Partners analyst David Raisinger. On the other hand, even if Rybelsus were cut by the same amount, the program would only save about $342 million.

It’s unclear how much patients will pay out-of-pocket for Ozempic, which has a list price of $936 a month in the U.S., but about 28% of Medicare beneficiaries with diabetes are likely to benefit from Ozempic’s lower bargaining price.

Negotiations could still affect Wegoby, especially if Medicare decides to start covering injections and other weight-loss treatments before the second round.

Analysts at Citigroup said in a note last week that it’s likely because a recent study demonstrated wegobee’s heart-health benefits.

Earlier this month, Novo Nordisk announced late-stage data showing that Wegobee reduced the risk of serious heart-related problems, such as heart attacks and strokes, by 20%.

In addition to helping patients lose weight, the results suggest that Wegovy has significant health benefits, which could lead to increased use of the drug and increased coverage by insurance companies. There is

Other analysts say the savings from the first round of drugs could help pave the way for Medicare coverage of Wegoby.

Four of the 10 drugs selected for negotiation cost Medicare more than $17 billion a year, excluding discounts and rebates. According to a note by Wells Fargo analyst Mohit Bansal, lowering the prices of these drugs would “free up” Medicare’s budget, making it easier for the program to cover popular GLP-1s like Wegobee. It is said that there is a possibility.