POLITICS: Prescription Price War – Threatened Rx Giants Lash Out

The Biden Administration’s latest move to curb prescription drug costs is poised to shake up the pharmaceutical industry and impact millions of Medicare beneficiaries.

At a Glance

• Ozempic among 15 drugs slated for Medicare price negotiations starting in 2025.
• Medicare spent over $2 billion on Ozempic alone in 2021.
• Novo Nordisk opposes government-mandated price settings, citing patient impact concerns.
• Potential for $1.3 billion in Medicare savings with Ozempic price cuts.

Overview of the Initiative

The Biden administration’s Inflation Reduction Act identifies 15 crucial drugs, including the much-discussed Ozempic, for Medicare price negotiations. The goal is comprehensive — reduce drug costs and, by extension, Medicare’s substantial financial burden. This year’s list is broader, comprising additional costly medications such as Rybelsus and Wegovy. While the plan envisions significant savings beginning in 2027, its longevity might depend on future political developments and administrative changes.

Data indicates Medicare Part D spent over $2 billion on Ozempic in 2021, pushing it to the forefront of negotiation priorities. Ozempic, a diabetes treatment by Novo Nordisk, has been dubbed a ‘blockbuster drug.’ Amid great demand, particularly for weight loss, its inclusion in the price negotiations is significant. Analysts speculate substantial Medicare savings if reductions are enacted, potentially saving $1.3 billion with a 40% cut.

Industry Reactions

Novo Nordisk is vocal in its criticism, arguing the imposed negotiations and pricing could adversely affect patients with chronic diseases and disrupt the broader healthcare system. “Unfortunately, we have seen CMS take aggressive steps to carry out unilateral price setting without consideration for the impact on patients living with chronic disease or the overall healthcare system,” stated a spokesperson for Novo Nordisk.

Additionally, other pharmaceutical entities signal unrest, with several challenging the legality of the Act through Congress and courtrooms, asserting it undermines innovation and investment. PhRMA CEO Stephen Ubl labeled the announcement as politically motivated, stating it favors “short-term political gain over what is best for patients.”

Future Implications

This negotiation initiative stems from the Inflation Reduction Act, mandating price discussions over two years with the expected pricing adjustments taking effect starting in 2027. While these efforts promise potential savings for Medicare beneficiaries, the ongoing legislative battles could alter or delay these benefits. Whether these changes genuinely translate into long-term cost containment is yet to be seen.

The possibility of lowering costs of essential, but often expensive, medicines could dramatically assist the 28% of Medicare beneficiaries with diabetes who require affordable access to these treatments. However, the likelihood of further negotiations riding on upcoming administrative actions injects uncertainty into these projections.

Novo Nordisk emphasized its objections to this government-controlled pricing model, filing legal challenges. CEO Lars Fruergaard Jørgensen stated, “The federal government is the largest single purchaser of prescription drugs in the world, and those negotiations will likely exert a substantial effect on prices in the commercial insurance market as well.”