The Star Tribune
By Christopher Snowbeck
The federal government is adding costly blockbuster drugs that help patients lose weight to the list of medications for which Medicare plans on negotiating lower prices in the coming years.
The move announced Friday by the Biden administration marks the next phase in Medicare’s drug price negotiation program, which currently includes 10 medicines and could now add 15 more, including Ozempic and Wegovy — drugs that have driven billions in new spending and become household names amid social media testimonials and fanfare from celebrities.
The medications are in a class called GLP-1 that has stressed health care budgets due to their expense and popularity, while also giving new hope to millions of patients trying to get healthy and avoid other costly treatments.
Medicare Part D paid for nearly 2.3 million patients to use the selected GLP-1 medications during the 12-month period ending October 2024, making them by far the most popular of the 15 new drugs being added to the list. Precise figures weren’t available, but covering the tab for seniors using the drugs cost the government billions.
“Today, we take another historic step toward lowering the price of some of the most widely used, costly medications with the announcement of even more drugs that will be subject to Medicare negotiations,” U.S. Sen. Amy Klobuchar, D-Minn., said in a statement. “The incoming administration must continue these efforts to fully implement this law so millions of Americans can benefit from these life changing savings.”
Medicare enrollees, however, still won’t be able to access the drugs for obesity under a federal law that prohibits the program from paying for weight loss treatments. Right now, Medicare will only cover Ozempic and Wegovy when used to treat diabetes or lower blood sugar.
A rule the Democratic Biden administration proposed — and the administration of President-elect Donald Trump administration will decide whether to implement — would cover the popular anti-obesity medications for weight loss.
President Joe Biden signed the 2022 law that included provisions for Medicare to negotiate prices on a limited number of drugs, following years of legal prohibitions on such dealmaking. The law was opposed by Republicans at the time, but it’s unclear if they have an interest in trying to repeal or weaken the statute now. Trump takes office next week.
PhRMA, the trade group for drug companies, said in a statement Friday it hopes to work with the new administration on changes to the program, including what manufacturers call the “pill penalty.”
“Over half the medicines selected for price setting by the Biden administration are being targeted because ... [the 2022 law] lets the government set the price of medicines that often come in pill form much earlier than other types of medicines,” the trade group said in a statement.
Wegovy, which comes in pill form, is intended for patients with obesity and cardiovascular disease, the government says, while Ozempic is injectable and is labeled for patients with Type 2 diabetes. Medicare also hopes to negotiate prices for Rybelsus, which treats both diabetes and overweight/obesity and comes in pill form.
All three are manufactured by Denmark-based Novo Nordisk, which did not immediately respond to a request for comment.
The U.S. Department of Health and Human Services also plans to negotiate prices for Trelegy Ellipta, which treats asthma, the prostate cancer drug Xtandi and Ibrance for breast cancer.
Manufacturers have until the end of February to decide if they’ll participate in the program, or face steep tax penalties. Negotiations would occur this year, the government says, with discounts taking effect in 2027.
Overall, the 15 new drugs announced Friday accounted for $40.7 billion in gross covered prescription drug costs for the Medicare Part D program, according to HHS. That was about 14% of Part D gross covered prescription drug costs between November 2023 and October 2024, according to the government.
Gross costs don’t include discounts, rebates or other price concessions that insurers typically negotiate with drug companies.
Last year, HHS announced projections for the program’s first year in 2026, saying people on Medicare should save $1.5 billion in out-of-pocket costs for the first 10 prescription drugs in the program while Medicare itself can expect $6 billion in savings.
Manufacturers have filed a number of legal challenges to the statute, one of which prompted Klobuchar and fellow Democratic lawmakers to argue in a court filing last year that drug companies were wrongly trying to thwart through the courts a program they couldn’t defeat in Congress, as manufacturers keep pursuing litigation to stop the federal Medicare program from negotiating lower drug prices.
The high cost of GLP-1s as an example of rising medical cost trends has been a frequent talking point in recent years for health insurers, including executives at the parent company of Minnetonka-based UnitedHealthcare.
Just this week, Andrew Witty, the CEO of UnitedHealth Group, called out GLP-1s as a prime example of cost problems in the U.S. health care system. Witty did not mention Medicare drug price negotiations as a solution.
“Look at GLP-1 prices: One drug which costs $900 in the U.S. costs about a tenth of that in Europe,” he said. Discounts negotiated by pharmacy benefit managers (PBMs) like his company’s Optum Rx division reduce “the gap versus other countries, but even then, prices in the U.S. are still multiples of what the rest of the world pays for the same drugs.”