Ozempic and other drugs selected for Medicare price negotiations

The weight loss drug could be covered by Medicare after the price negotiations wrap up.

The Biden administration has added popular weight loss and diabetes drugs, including Ozempic and Wegovy, to Medicare’s list of medications for direct price negotiations with drug manufacturers. 

This move is expected to yield substantial savings for taxpayers if deals are successfully reached between the government and the drug manufacturers.

The big picture: The negotiated prices for these 15 drugs – including Trelegy Ellipta for asthma, Otezla for psoriatic arthritis, and various cancer treatments – will be determined by the incoming Trump administration. 

  • The total number of drugs for which lower prices will be negotiated for Medicare enrollees now stands at 25. These 25 drugs reportedly account for one-third of Medicare spending on prescriptions, signifying significant potential savings.

Driving the news: Ozempic and Wegovy have been under scrutiny due to their high out-of-pocket costs. 

  • While these drugs are being negotiated for lower pricing, Medicare still cannot cover them for obesity treatment due to federal law restrictions. However, a proposed rule by the Democratic Biden administration, pending approval by the incoming Republican Trump administration, aims to extend Medicare coverage to include popular anti-obesity medications for weight loss.

State of play: Despite the potential benefits for taxpayers and Medicare enrollees, pharmaceutical companies have filed lawsuits against the negotiations and remain opposed to the program. The top pharmaceutical lobby has called for the incoming administration and Congress to “fix” the law.

Flashback: Late last year, the Centers for Medicare & Medicaid Services announced pricing deals with companies for 10 drugs in the inaugural round of negotiations. These deals resulted in significant reductions in list prices for popular drugs used by millions of Medicare beneficiaries, including blood thinners and diabetes drugs.

What we’re watching: The negotiated prices for the first 10 drugs will not come into effect until 2026, while the prices for the 15 additional drugs announced recently will be implemented in 2027. 

  • Additionally, a new rule in effect this year caps annual out-of-pocket costs on prescription drugs at $2,000 for Medicare enrollees.
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