Novo Nordisk's blockbuster diabetes and weight-loss drugs Ozempic and Wegovy could face steep price cuts in the United States after the government included them in the next round of Medicare negotiations.
Joe Biden's administration on Friday made semaglutide a key ingredient in two blockbuster drugs from Novo Nordisk, one of 15 drugs whose prices will be negotiated directly between the manufacturers and the government.
Investors are worried that the price of Novo Nordisk's best-selling drug could be slashed, knocking the Danish drugmaker out of its position as Europe's most valuable company. Its shares fell 4.3% to 575.6 Danish kroner ($79.33).
The group of drugs accounts for about $41 billion in annual spending by Medicare, the U.S. government-backed insurance program for people over 65, and another round of negotiations could save billions of dollars.
In the first round of negotiations last year, Medicare reduced U.S. list prices by 38% to 79%. Drug pricing controls are a centerpiece of Biden's flagship Inflation Cutting Act, and his administration welcomed the $7.5 billion in savings from the end of the first round of the bill.
Overall, about 1 in 10 of the 53 million patients enrolled in Medicare Part D prescription drug plans have used at least one of the 15 drugs on the new list. Price negotiations affecting such medicines will begin later this year, with price controls due to come into effect in 2027.
Between November 2023 and October 2024, approximately 2.3 million Medicare enrollees received one of the semaglutide-based drugs, mostly Ozempic, at a cost of $14.4 billion.
Novo Nordisk's Rybelsus, also based on semaglutide, will be affected by the price cap.
Semaglutide is sold under the Ozempic brand for $997 per month and under the Wegovy brand for $1,349 per month. Analysts noted that Ozempic's cuts could have spillover effects on Eli Lilly's rival drugs, Mounjaro and Zepbound.
Others in the 15-drug list include GSK's COPD treatment Trelegy Ellipta and Pfizer's breast cancer drug Ibrance.
U.S. Health Secretary Xavier Becerra said last year's efforts proved that negotiations to lower drug prices were effective. "Now we plan to build on that record by negotiating price reductions on an additional 15 important medicines for seniors," he added.
The latest announcement on price talks comes in the final days of the Biden administration, as President-elect Donald Trump prepares for his second inauguration. Trump, who has previously criticized high drug prices, is not expected to repeal the law entirely, but industry body Pharmaceutical Research and Manufacturers of America is pushing for some changes.
PhRMA President Stephen Ubl described the IRA pricing process as "dangerous for millions of Americans" and said the organization is eager to work with the incoming administration and Congress to address the "pharmaceutical penalty," which means small-molecule drugs Qualifying drug price negotiations preceded complex biologic drugs by four years.
Novo Nordisk said it remained opposed to the government setting prices through the IRA and "has serious concerns about how this government will enforce the law".