Pre-market down nearly 5%! Novo Nordisk's "weight loss miracle drug" enters price negotiation for U.S. Medicare
Novo Nordisk's diabetes drug Ozempic and weight loss drug Wegovy, among 15 other medications, have been included in the U.S. government's plan for Medicare price negotiations scheduled for 2027. Following the announcement, Novo Nordisk's stock price was surpassed by LVMH, making it the second-largest publicly traded company in Europe
The U.S. government announced on Friday that Novo Nordisk's weight loss drug Wegovy and diabetes medication Ozempic are among 15 drugs included in the Medicare price negotiation plan set to take place in 2027. This initiative stems from the Inflation Reduction Act signed by the Biden administration in 2022, aimed at reducing Medicare's spending on high-priced medications.
Among these 15 drugs are also Pfizer's cancer medications Ibrance and Xtandi, GlaxoSmithKline's asthma and chronic obstructive pulmonary disease treatment Trelegy Ellipta, Teva's Huntington's disease drug Austedo, and AbbVie’s irritable bowel syndrome medication Linzess.
These drugs are among the highest expenditures for Medicare for individuals over 65 or those with disabilities. Biden noted in a statement that these 15 drugs, combined with the 10 drugs negotiated last year, account for one-third of Medicare Part D prescription drug spending.
Pharmaceutical manufacturers must decide whether to participate in the negotiations by February 28. If they refuse to participate, they will face fines of up to 95% of their drug sales or must withdraw their products from the Medicare and Medicaid markets. Based on past negotiation results, the price reductions to be implemented in 2026 are expected to range from 38% to 79%, significantly lowering Medicare's drug spending.
For example, Wegovy has a monthly price of about $1,350, while Ozempic is priced at approximately $935. Although Novo Nordisk has indicated discounts, Medicare's spending on these drugs exceeded $4.6 billion in 2022.
Government researchers predict that if Ozempic and Wegovy continue to be used at their current prices, it will lead to an increase in the U.S. budget deficit over the next decade. In the year ending October 2024, approximately 2.3 million Medicare Part D patients used Novo Nordisk's semaglutide drugs, with total spending by Medicare Part D on these drugs exceeding $14 billion.
Analysts believe it is unclear whether the Trump administration would make any changes to the negotiations, but Biden administration officials have stated that successors may not be able to alter the negotiation process, as the law specifies detailed selection criteria.
Following the announcement, Novo Nordisk's stock fell nearly 5% in pre-market trading, with its market value surpassed by LVMH, making it the second-largest publicly traded company in Europe.
