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Ozempic is also on the price negotiation list for Medicare drugs

Ozempic is also on the price negotiation list for Medicare drugs

A box of Ozempic and its contents sit on a table in Dudley, North Tyneside, Britain, October 31, 2023.

George Frey | Reuters

The Biden administration on Friday unveiled the next 15 prescription drugs that will be subject to price negotiations between manufacturers and Medicare, kicking off the second phase of a groundbreaking process aimed at making expensive drugs more affordable for seniors.

At the top of the list are: Novo NordiskThe blockbuster diabetes injection Ozempic, the weight loss shot Wegovy and the diabetes pill Rybelsus are considered one product in discussions because they all have the same active ingredient: semaglutide. These treatments have driven the rise of the red-hot obesity market and have been difficult to access for patients due to cost, insurance coverage and supply shortages.

The agreed prices for the second wave of medicines are scheduled to come into force in 2027. But it is unclear whether President-elect Donald Trump might seek to change or roll back some provisions of the law when he takes office next week.

Here are the 15 drugs that are the subject of early discussions this year:

  • Ozempic, Wegovy, Rybelsus, (Semaglutide) manufactured by Novo Nordisk, is used for type 2 diabetes, weight management and cardiovascular health
  • Trelegy Ellipta, made by GSKis an inhaler used to treat chronic obstructive pulmonary disease and asthma
  • Xtandi made by Pfizeris used to treat prostate cancer in men
  • slow made by Bristol Myers Squibbis used to treat a blood cancer called multiple myeloma and a cancer that occurs in people with HIV
  • Ibrance, manufactured by Pfizer, is used to treat certain types of breast cancer
  • Ofev, manufactured by Boehringer Ingelheim, is used to treat chronic lung diseases in adults.
  • Linzess, made by AbbVie And Ironwood Pharmaceuticalsis used to treat irritable bowel syndrome and chronic constipation
  • Calquence, made by AstraZenecais used to treat certain types of blood cancer
  • Austedo, Austedo XR, made by Teva Pharmaceuticalsis used to treat involuntary movements caused by tardive dyskinesia or Huntington's disease
  • Breo Ellipta, Manufactured by GSK and The advanceis an inhaler for the treatment of chronic obstructive pulmonary diseases
  • Tradition, Manufactured by Boehringer Ingelheim and Eli Lillyis used to treat type 2 diabetes
  • Xifaxan, manufactured by Salix Pharmaceuticals, is used to treat travel-related diarrhea or irritable bowel syndrome
  • Vrays, The drug, manufactured by AbbVie, is used to treat schizophrenia, bipolar I disorder and major depression
  • Janumet, Janumet XR, made by Merckis used to treat type 2 diabetes
  • Otezla, made by Amgenis used to treat plaque psoriasis, psoriatic arthritis, and mouth ulcers

President Joe Biden's Inflation Reduction Act gave Medicare the power to coordinate drug prices directly with manufacturers for the first time in the federal program's nearly 60-year history. Some Democrats in Congress and consumer advocates have long pushed for the change as many seniors across the country struggle to afford care.

About 5.3 million people with Medicare Part D coverage used the 15 drugs in the second round of discussions between Nov. 1, 2023 and Oct. 31, 2024 to treat various conditions such as asthma, cancer and type 2 diabetes, according to a news release from the Department of Health and Human Services on Friday. This drug group also accounted for approximately $41 billion, or 14%, of total Part D prescription drug costs during that period, the release continued.

Combined with the 10 drugs selected for the first cycle of negotiations, the 25 products accounted for 36% of all Medicare Part D prescription drug costs during that period, the release said.

The drugs have been on the market without generic competitors for at least seven years, and for biological products such as vaccines for eleven years.

Medicare has already completed negotiations for the first ten drugs selected in the program. The new prices are expected to come into effect next year. In August, the Biden administration said it expected these negotiated prices to save Medicare enrollees about $1.5 billion in out-of-pocket costs in 2026 alone. The government also expects the prices to result in net savings of approximately $6 billion for the Medicare program in 2026, for a total of 22% net savings.

The negotiation program has also faced a series of so-far unsuccessful legal challenges from the pharmaceutical industry, which sees the process as a threat to its sales growth, profits and drug innovation.

Stephen Ubl, CEO of the industry's largest lobbying group, PhRMA, said in a statement Friday that the negotiations are “dangerous for millions of Americans who rely on innovative treatments and have created unnecessary, costly bureaucracy.”

“By rushing out this list in its final days, the Biden administration is once again failing to address the real challenges facing seniors and Medicare,” he added, charging that price negotiations are unfairly targeting drugs, which are available in pill form, much earlier than other forms of medicine. PhRMA is committed to working with the Trump administration and Congress to “fix” this “pill punishment,” Ubl said.

In a statement Friday, Novo Nordisk said it opposed negotiations and had “significant concerns” about the Biden administration’s implementation of the law. The Danish drugmaker particularly criticized the decision to combine several products that “individually would not comply with the requirements of the law,” pointing out that Ozempic, Rybelsus and Wegovy were listed as a single product.

Novo Nordisk said its lawsuit against the program was still pending and that it would work with the Trump administration to deliver “meaningful solutions for patients.”

Medicare covers about 66 million people in the U.S., and 50.5 million patients are currently enrolled in Part D plans, according to health policy research organization KFF.

Nearly 10% of Medicare enrollees age 65 and older and 20% of those under 65 report difficulty financing medications, a senior administration official told reporters last year.

“Last year we proved that negotiating lower drug prices works. Now we plan to build on this record by negotiating lower prices for 15 additional essential medications for seniors,” HHS Secretary Xavier Becerra said in a news release. “Today’s announcement is critically important – the Inflation Reduction Act lowers prices for Medicare recipients. HHS will continue to negotiate in the best interests of Medicare recipients to gain access to innovative, life-saving treatments at lower costs.”

Patient advocacy groups such as the nonprofit AARP welcomed the announcement Friday.

“For too long, big pharmaceutical companies have padded their profits by setting outrageous prices at the expense of American lives and forcing seniors to forgo prescriptions they couldn’t afford,” said Nancy LeaMond, AARP’s chief advocacy and engagement officer , in a statement. “The first round of Medicare drug pricing negotiations made it clear that this process will reduce the prices of these important products and provide billions of dollars in savings to Medicare and its beneficiaries.”

How much Medicare spent on the drugs

Medicare Part D spent the most on Ozempic, Rybelsus and Wegovy at $14.43 billion, according to a CMS data sheet Friday. Nearly 2.3 million participants used these medications during the period CMS was in place.

The plan also spent approximately $5.14 billion on Trelegy Ellipta, which was used by 1.3 million participants. Xtandi cost Medicare Part D $3.16 billion even though only 35,000 enrollees took the drug, the fact sheet said.

Spending on Pomalyst was $2.07 billion, and only 14,000 participants used this drug. All other drugs listed cost the program less than $2 billion.

According to the fact sheet, Medicare Part D spent the least on Otezla at $995 million, with 31,000 enrollees taking the drug.

What's next for the Medicare price negotiations?

Drugmakers have until February 28 to decide whether they want to participate in the program. If a drugmaker refuses to negotiate, it must either pay an excise tax of up to 95% of U.S. sales of its drugs or withdraw all of its products from the Medicare and Medicaid markets.

Those who participate must engage in a lengthy negotiation process that includes months of back-and-forth price offers with Medicare. The federal program determines its initial offering for each drug based on, among other things, data on sales volume, the amount of federal financial support for the development of the drug, and data on pending or approved patent applications and exclusivities.

After the second round is completed, Medicare will be able to negotiate prices for an additional 15 drugs, effective in 2028. From 2029 the number will increase to 20 negotiated medications per year.

The government will select only Medicare Part D drugs for the first two rounds of negotiations. In 2028, additional specialty medications will be added that are covered by Medicare Part B and are typically administered by physicians.

However, based on final projections released last year for the second round of price negotiations, drugmakers will have more opportunities to negotiate with Medicare. The first optional bargaining meetings will take place after Medicare submits its initial price offers for the 15 drugs, which must be submitted by June 1.

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