The U.S. government has selected the second batch of drugs up for Medicare price negotiations under the Inflation Reduction Act.
The list of 15 medicines includes blockbuster drugs from Novo Nordisk, Pfizer, Bristol Myers Squibb, AstraZeneca, GSK and other companies. Novo’s booming semaglutide franchise for diabetes and obesity is the standout inclusion in this year’s list.
The U.S. Department of Health and Human Services unveiled the list of 15 drugs Friday. Negotiations are slated to start this year, with the updated prices going into effect in 2027.
According to the CMS, the selected meds together accounted for about $41 billion in Medicare Part D gross spending between November 2023 and October 2024, or about 14% of the insurance plan’s total costs for covered prescription drugs. The U.S. government’s actual spend was lower after rebates provided by the manufacturers.
In its first year, IRA price talks involved 10 meds which accounted for more than $45 billion in Part D spending from June 2022 to May 2023. Combined, the 25 drugs covered by the two rounds represent over a third of total Part D gross costs between November 2023 and October 2024, according to the CMS.
As expected per the CMS’ guidance, the agency is grouping drugs with the same active ingredient together for negotiation regardless of their dosage forms or indications. This practice is now reflected in the inclusion of Novo’s entire semaglutide franchise—Type 2 diabetes injection Ozempic and oral tablet Rybelsus, plus weight-loss injection Wegovy. Combined, semaglutide sold under these three brands is expected to become the world’s top-selling medicine in 2024.
Novo Nordisk “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,” a Novo spokesperson said in a statement to Fierce Pharma.
Novo is among several pharma companies and other business entities challenging the IRA in court although largely in vain so far.
Despite concerns about the process’s potential impact on patients’ ability to access their medicines and on future scientific development, the Novo spokesperson said the Danish company will “work with the incoming administration to deliver meaningful solutions for patients.”
Drug companies with selected offerings will have until February 28, 2025 to decide whether they’ll participate in negotiations. During the first cycle, the 10 selected drugs ended up with 38% to 79% discounts off of their list prices.
The biopharma industry has been objecting to the term “negotiation” because the consequences for not participating can be quite harsh. If the company opts out of the negotiation program, they can either withdraw all their drugs from Medicare and Medicaid or pay an excise tax on the selected drug to Medicare.
In a statement Monday, Stephen Ubl, CEO of the industry group PhRMA, again called the IRA process “price setting” that’s “dangerous for millions of Americans who rely on innovative treatments.”
“In rushing out this list in their final days, the Biden administration once again fails to address the true challenges facing seniors and Medicare,” Ubl said.
Ubl took the chance to highlight what’s known as the “pill penalty.” Per the IRA, small molecule drugs—which often come in oral forms—are eligible for price negotiations nine years from their FDA-approval date, versus 13 years for biological products.
This design is dissuading companies from developing small-molecule medicines and, in turn, may eventually lead to higher costs for Medicare, Ubl noted. Because they’re often more difficult to make, biologics are typically more expensive than small molecules.
“We are eager to work with the new administration and Congress to fix the pill penalty and ensure Americans are not harmed by other flaws in the IRA,” Ubl said.
Editor's Note: The story has been updated with a statement from Novo Nordisk.