In a significant development, the Biden administration announced on Friday that Medicare will now be able to negotiate prices for 15 additional drugs, including the popular weight loss medications Ozempic and Wegovy. This expansion builds upon a previous list of 10 drugs already subject to negotiation under the Medicare Part D program. The negotiations, set to occur this year, aim to reduce out-of-pocket expenses for Medicare recipients by a projected $1.5 billion when new prices take effect in 2027.
The Inflation Reduction Act, passed by President Joe Biden in 2022, empowers the Centers for Medicare & Medicaid Services (CMS) to engage in direct price negotiations with drug manufacturers. This legislative move marks a shift from past administrations, as any alterations would require Congressional approval. CMS will consider various factors during negotiations, including clinical benefits and the extent to which these drugs address unmet medical needs.
"In negotiating with participating manufacturers, CMS will consider the selected drug's clinical benefit, the extent to which it addresses unmet medical needs, and its impact on specific populations, including people who rely on Medicare, among other considerations, such as costs associated with research and development as well as production and distribution for selected drugs," – CMS fact sheet
The newly announced list of 15 drugs represents about one-third of Medicare Part D spending on prescription drugs. During the selection process for this second cycle of negotiations, approximately 5.3 million people with Medicare Part D coverage used the selected medications to treat conditions such as cancer, type 2 diabetes, and asthma.
"For the time period between November 1, 2023, and October 31, 2024, which is the time period used to determine which drugs were eligible for negotiation for this second cycle, about 5.3 million people with Medicare Part D coverage used these drugs to treat a variety of conditions, such as cancer, type 2 diabetes, and asthma," – CMS fact sheet
Ozempic, primarily approved by the U.S. Food and Drug Administration to treat Type 2 diabetes, sees off-label use for weight loss. Its counterpart, Wegovy, contains the same main ingredient, semaglutide, and holds FDA approval for weight loss in individuals with obesity or those overweight with additional cardiovascular risks. These medications can cost over $1,000 monthly without insurance coverage, underscoring the importance of negotiated pricing for beneficiaries.
"As a general matter of policy, the law directs CMS to use data that is aggregated across different dosage, forms and strengths of a drug in the negotiation process. And so practically, that means that when a drug is selected for negotiation, all dosage forms and strengths of that drug are included in the negotiation, even if they are sold in different formulations or under different brand name," – officials
The law requires that all dosage forms and strengths of a drug be included in negotiations, ensuring comprehensive coverage across different formulations or brand names. Drug companies selected for negotiations have until February 28 to decide on their participation. The statute mandates that negotiated prices must be announced by next fall.
"For the most part, all of the key milestones are statutory deadlines. So the statute requires, among other things, that the negotiated prices be announced by a specific date next fall," – officials
