Ozempic’s Selection for Medicare Drug Price Negotiation Could Raise the Stakes for the Negotiation Program

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As expected, semaglutide, a drug known by the brand names Ozempic and Wegovy, has been selected for the second round of Medicare drug price negotiation, one of 15 drugs covered by Medicare with the highest total drug spending and lacking generic competition in 2024. Semaglutide belongs to a class of drugs known as GLP-1s, which Medicare covers for diabetes and cardiovascular disease risk reduction, but they are also used to treat obesity. Many people are familiar with Ozempic and other drugs like it, use of these drugs has expanded rapidly in recent years, and the list price is high. All of that could focus more attention on this year’s drug price negotiation process and raise the stakes for the outcome.

Medicare drug price negotiation is a flagship provision of the Inflation Reduction Act signed into law by President Biden in 2022. Republican lawmakers and allied groups have proposed to repeal the law and the drug negotiation program, but President-elect Trump has neither publicly endorsed nor disavowed these proposals. While the President-elect has criticized high drug prices, it’s also not unreasonable to think that the incoming administration might seek to scale back or change course on the legislative accomplishments and regulatory actions of the previous administration.

Medicare is projected to achieve significant savings in the coming years from drug price negotiation. Abandoning this effort or taking steps to diminish its impact would mean forgoing some or all of those savings at a time when the incoming administration and Republicans in Congress are exploring several ways to cut government spending in order to help pay for their priorities, chief of which is extending the tax cuts enacted in President Trump’s first term.

Will the new Trump administration seek to notch a victory for patients over the high price of these drugs by driving a hard bargain and negotiating a steep discount for Ozempic and Wegovy (albeit from already steeply-discounted prices), or might it adopt a more industry-friendly posture by, for example, negotiating a price no lower than the ceiling called for under the law? The answer won’t be clear until later in 2025 when Medicare’s negotiated prices are announced – assuming the incoming administration proceeds with the second round of negotiation as planned. The outcome has implications for Medicare beneficiaries who currently use this drug to treat diabetes and heart disease risk – and perhaps millions more if the incoming administration decides to finalize a Biden administration proposal to allow Medicare to cover anti-obesity medications. This decision will rest with President Trump’s new leaders at the Department of Health and Human Services, but the White House might also have a say. Expanded coverage would likely increase Medicare spending and beneficiary premiums, but price negotiation could help to keep these increases in check.