WASHINGTON — The Biden administration has recently announced that popular medications for weight loss and diabetes, such as Ozempic and Wegovy, will be included in Medicare’s list of drugs subject to direct negotiations with manufacturers. This decision is anticipated to yield substantial savings for taxpayers. The negotiations for these 15 newly selected drugs will occur under the forthcoming Trump administration, with an expectation of billions saved if agreements are successfully established.
In addition to Ozempic and Wegovy, other significant drugs on the list include Trelegy Ellipta for asthma treatment, Otezla for psoriatic arthritis, along with various cancer treatments. This development marks the beginning of the negotiations, and due to the timing, the specifics and final pricing will be determined by the incoming administration.
According to U.S. Health and Human Services Secretary Xavier Becerra, for many individuals, this is a crucial development. He noted that some patients have to minimize their medication usage to make their supplies last longer. As a result, the total number of drugs benefiting from reduced pricing for Medicare recipients will rise to 25. Collectively, these medications are responsible for roughly one-third of Medicare’s prescription drug expenditure.
Despite the advancements, Medicare recipients will still be unable to receive obesity drugs under current federal regulations, which exclude coverage for weight loss treatments. Currently, Medicare only approves Ozempic and Wegovy for diabetes management or blood sugar reduction. The Biden administration proposed a new regulation aimed at allowing coverage for these anti-obesity medications, but whether such a measure will be adopted remains to be seen as the Trump administration takes office.
The potential financial benefits from these drugs are derived from recent legislation allowing Medicare to negotiate prices for its most utilized and costly prescriptions for seniors, a privilege previously restricted by law. This legislation, supported by Democrats and enacted by President Biden, faced Republican opposition, but its future remains uncertain regarding possible repeals or adjustments under the incoming administration.
Pharmaceutical companies have voiced their objections to the negotiation process, and on Friday, the leading pharmaceutical lobby urged legislative changes to the law. Stephen Ubl, the president and CEO of Pharmaceutical Research and Manufacturers of America, criticized the administration’s approach as inadequate in addressing the real issues faced by seniors and Medicare.
Late last year, the Centers for Medicare & Medicaid Services reached agreements for price reductions on ten other drugs in the initial phase of negotiations. These reductions resulted in prices slashed by hundreds of dollars for 30-day supplies of widely used medications, including well-known blood thinners and diabetes treatments. Executives from drug companies reassured investors that these negotiations would have minimal impact on their financial performance.
AARP, a prominent organization representing healthcare interests, cautioned against any attempts to weaken the negotiation law as Congress shifts to a Republican majority. They highlighted the longstanding issue of pharmaceutical companies inflating prices, which forces seniors to forgo necessary medications due to cost.
It is anticipated that savings garnered from the new pricing for these drugs could generate approximately $6 billion for taxpayers and $1.5 billion for Medicare participants. However, the negotiated prices for the initial ten drugs won’t be effective until 2026, while the newly announced 15 drugs will take effect in 2027. Nevertheless, some Medicare recipients may experience relief this year through a new rule limiting annual out-of-pocket prescription costs to $2,000.
Under the new law, the inclusion of additional medications in the negotiation process is expected to occur in subsequent years. The Centers for Medicare & Medicaid Services has identified the 15 drugs as follows: Ozempic, Rybelsus, Wegovy, Trelegy Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo, Austedo XR, Breo Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet, and Janumet XR, including Otezla. Notably, Ozempic and Wegovy are manufactured by Novo Nordisk, a company headquartered in Denmark with operations in Plainsboro, New Jersey.
