(Reuters) - The U.S. government on Friday announced a list of 15 prescription medicines targeted for Medicare price negotiations for 2027, which includes Novo Nordisk (NYSE:NVO)'s blockbuster weight-loss drug Wegovy.Here's what Wall Street analysts say about the inclusion:
WHAT IT MEANS FOR PATIENTSThe potential for more aggressive price cuts would enable wider access to GLP-1 drugs - the same class of drugs as Ozempic and Wegovy - for people over the age of 65. Medicare prescription drug plans administered by private insurers, known as Part D, currently cannot cover drugs that are approved solely for obesity. Expanding coverage of anti-obesity drugs could enable more Americans to afford the new weight-loss medications. However, inclusion does not solve access or out-of-pocket costs issues for commercial and uninsured patients, BMO Capital Markets analysts said.
WHAT IT MEANS FOR SALES
Given that diabetes drugs, including Ozempic, are already heavily discounted and the negotiated cuts are based on the gross price rather than the discounted price, the impact of a negotiated price is expected to be small.
TD Cowen analysts estimate that about 45% of U.S. sales for Ozempic and Rybelsus each goes through Medicare Part D.
Wegovy, on the other hand, is eligible for coverage under Medicare only if the eligible overweight or obese patients have pre-existing heart conditions.This group constitutes around 3.6 million overweight or obese patients with heart conditions insured under the U.S. Medicare program, according to a study published last year by Kaiser Family Foundation. However, this was still a relatively small portion of obesity population in the U.S., according to TD Cowen analysts.
WHAT IT MEANS FOR PRICE
Ozempic has a list price of around $935 a month while Wegovy has a list price of around $1,350 a month, regardless of dosage, not taking any coupons and rebates into account.
The negotiated price cuts are based on the gross price and do not reflect after-market rebates or discounts the drugmakers had already been giving.
Novo has said it retains around 60% of Ozempic's list price.
TD Cowen expects the negotiations to result in about 30% discount relative to the current average net price in 2027, adding that there was a wide range of possibilities on what the negotiations would be like with the incoming Trump administration.