Ozempic could face Medicare drug price negotiations next

Ozempic, the blockbuster diabetes treatment from Novo Nordisk, could possibly be next in line in the value negotiations between manufacturers and Medicare. 

The Biden administration this week released the primary 10 drugs that will probably be subject to those talks, a process that goals to lower the costs of medicines that Medicare Part D spends essentially the most on. The changes will take effect by 2026. 

Ozempic will likely be eligible for negotiations by the point the following round of medication is chosen in 2025, for price changes that can go into effect in 2027.

Several analysts expect the weekly injection to be a top selection because Medicare Part D already spent greater than $2 billion on the drug in 2021 — an amount near a number of the medicines chosen for price talks this week. Total Part D spending in 2021 was $98 billion.

They assume that Medicare will spend an important deal on Ozempic in the approaching years, given the fervent demand for the drug and similar treatments that may help patients shed unwanted kilos. 

“Ozempic goes to be the most important one that individuals are going to look at really closely within the second round of negotiations,” Cantor Fitzgerald analyst Louise Chen told CNBC. 

Novo Nordisk’s Rybelsus, a diabetes drug taken orally, may be on the list since it comprises the identical lively ingredient as Ozempic. Most Part D plans cover each for patients with Type 2 diabetes, but don’t cover the drugs for off-label uses similar to weight reduction.

Meanwhile, Novo Nordisk’s obesity injection Wegovy, which uses that very same ingredient, likely won’t be targeted for negotiations within the near term because Medicare doesn’t cover weight reduction drugs. 

A spokesperson for Novo Nordisk didn’t directly comment on the potential for Ozempic to be included in the following round of talks. The spokesperson said the corporate “supports policies to make sure patients can afford their medicines,” but criticized the negotiation process, which is conducted by the federal Centers for Medicare and Medicaid Services, or CMS.

“Unfortunately, we’ve seen CMS take aggressive steps to perform unilateral price setting without consideration for the impact on patients living with chronic disease or the general healthcare system,” the spokesperson said.

Ozempic, Wegovy and Rybelsus are a part of a category of medication called GLP-1s, which mimic a hormone produced within the gut to suppress an individual’s appetite. 

Wegovy and Ozempic sparked a weight reduction industry gold rush last yr, with high-profile names similar to billionaire tech mogul Elon Musk amongst recent users. However the injections are costly, as prices range from around $900 to greater than $1,300 monthly. 

Medicare and personal insurers typically secure discounts and rebates on the drugs they cover, however it’s unclear how large they’re.

The Medicare program spent $2.6 billion on Ozempic in 2021, based on AARP research. Based on that number, AARP said Ozempic was the tenth costliest drug covered by Medicare Part D. 

But Ozempic was excluded in the primary round of negotiations because of the federal government’s guidelines for selection. 

The rules require drugs to have been in the marketplace for a minimum of seven years after their initial approval or licensing within the U.S., as of the date that the Biden administration publishes the list of products chosen. 

The Food and Drug Administration approved Ozempic for diabetes in December 2017, making it ineligible for the initial round of medication unveiled this week. But Ozempic will likely be eligible for the following list of medicines, which will probably be published in February 2025, Evercore ISI analyst Umer Raffat said in a research note. 

“This implies Novo’s Ozempic (together with Rybelsus) could possibly be on next yr’s list,” he wrote. 

Several analysts agree, citing the amount Medicare spent on Ozempic in 2021. That places the drug on the very top of prediction lists for the second round of negotiations.

Slashing the value of Ozempic through negotiations may lead to significant savings for the Medicare program. 

Medicare would save an estimated $1.3 billion if the value of Ozempic was reduced by 40%, based on research from Leerink Partners analyst David Risinger. Meanwhile, this system would save only around $342 million if Rybelsus was cut by the identical amount. 

It’s unclear how much patients pay out of pocket for Ozempic, which has an inventory price of $936 monthly within the U.S. But a lower negotiated price of Ozempic will likely profit the roughly 28% of Medicare beneficiaries who’ve diabetes. 

There’s still a likelihood that negotiations could affect Wegovy, particularly if Medicare decides to begin covering the injection and other weight reduction treatments before the second round. 

Analysts from Citigroup, in a note last week, said that is likely because recent research demonstrated Wegovy’s heart health advantages. 

Earlier this month, Novo Nordisk released late-stage trial data showing that Wegovy slashed the danger of great heart-related problems similar to heart attacks or strokes by 20%.