The US administration is preparing to announce this week the negotiated new prices for 15 of the most expensive drugs under Medicare. This step is seen as a significant indicator of the extent to which the Trump administration’s promise to reduce healthcare spending will be fulfilled.
In recent weeks, the government announced an agreement to reduce Medicare and Medicaid prices for Novo Nordisk’s popular GLP-1 drugs Wegovy for weight loss and Ozempic for diabetes treatment to $245 per month for next year. Experts say that further reductions from this level are not expected after negotiations.
According to the latest data, Medicare’s net price for Ozempic was $428 per month.Other drugs to be discussed this year include GSK’s Trelegy Ellipta asthma and COPD inhaler and AbbVie’s irritable bowel syndrome drug Linzess. The new prices will take effect in 2027.
Analysts will compare the figures to be released with current net Medicare prices and negotiated levels reached in other high-income countries. The US administration has long debated this “most-favored-nation pricing” approach. Medicare covers more than 67 million people, including those over 65 and those with disabilities. Sean Sullivan of the University of Washington noted that the prices to be announced to the public would “fall below current levels” and provide real savings, pointing out that other insurers might also demand similar prices.
22% savings in the first round of negotiations
Last year, Medicare announced cap prices for the top 10 high-cost drugs under the Inflation Reduction Act. In this group, which includes drugs like Eliquis and Enbrel, the new prices still remained between two and five times higher than in some countries. According to Goldman Sachs’ analysis, these initial negotiations resulted in an average reduction of 22% compared to Medicare’s net prices at the time. The IRA Act mandates that criteria such as manufacturer data and alternative treatment options be considered when setting prices. International price comparisons are not included in the process. Until 2022, Medicare was legally prohibited from negotiating drug prices in the US. The Trump administration also defined a “most-favored-nation” (MFN) pricing model within the OECD, stipulating the “lowest price” criterion among countries with per capita income at least 60% of that of the US. A separate pilot program will use a narrower “basket of countries” including G7 countries, Denmark, and Switzerland. The MFN price will be calculated based on the second lowest price in this basket.
Pharmaceutical companies have sued the government over Medicare negotiations, warning that this could restrict some R&D activities.
Medicare’s next round of price talks is expected to cover 15 additional drugs administered by prescription and in a hospital setting, and is expected to begin in February.
