Novo Nordisk anticipates that the next round of medications targeted for price setting negotiations with the federal government will include its wildly popular diabetes drug Ozempic.

During a global health care conference earlier this week in New York City, the company’s senior vice president of finance & operations, Ulrich Otte, said it is “very likely” the drug will be included and that they’re “ready for that,” Bloomberg reported.

Through the Medicare Drug Price Negotiation Program, the U.S. government aims to drive down the cost of prescription drugs for older Americans.

As part of the initiative, the Centers for Medicare and Medicaid Services (CMS) can directly negotiate with pharmaceutical companies over prices. Participation is voluntary, but companies who choose not to engage face the option of paying excise taxes or terminating their relationship with Medicaid.

Designed to address rising health care costs, the program is part of President Joe Biden’s signature Inflation Reduction Act. By allowing Medicare to have a say in setting drug prices for the first time in its six-decade history, the White House believes it will provide relief to the 9 million seniors who are currently paying up to $6,497 in out-of-pocket costs per year.

Starting lineup

In August 2023, the U.S. Department of Health and Human Services announced the first 10 drugs covered under Medicare Part D for the first cycle of negotiations.

After months of talks, the Biden administration reached a deal to lower the cost for some of the most popular and expensive drugs under Medicare. As a result, officials said they secured discounts ranging from 38% to 79% off list prices. Included medications treat conditions such as heart disease, diabetes and cancer.

The prices go into effect in 2026. After, the changes expect to save seniors and other Medicare Part D enrollees $1.5 billion in out-of-pocket costs in the first year. Projections also say the change will save Medicare $6 billion in year one.

CMS will release its next group of drugs designated for price talks by February 2025. The agency will announce the maximum fair prices for them by Nov. 30, 2025, and negotiated prices will roll out Jan. 1, 2027.

Offering help

Authorized by the U.S. Food and Drug Administration in 2017, Ozempic is a self-injectable treatment made using semaglutide for adults with Type 2 diabetes. It works by mimicking a natural hormone the body releases when a person eats, potentially causing weight loss as a secondary effect.

Ozempic has a list price of $968.52 per month in the U.S. Most Medicare plans for patients with type 2 diabetes cover it to manage blood-sugar levels.

The FDA has formally approved Ozempic as a diabetes treatment. It is also one of a handful of medicines widely used for weight loss. Novo Nordisk also sells Wegovy, a semaglutide approved in 2021 specifically for chronic weight management. The company has its U.S. headquarters in Plainsboro.

A month’s supply of Wegovy lists for $1,348.02.

Both drugs’ cost are the subject of a Senate committee investigation led by U.S. Sen. Bernie Sanders, an independent from Vermont, who is pushing for a price reduction. Novo Nordisk CEO Lars Fruergaard Jørgensen will testify next week.

In a statement to NJBIZ, a Novo Nordisk spokesperson said, “We can’t speculate on which Novo Nordisk medicines will be selected for future negotiations with CMS.”

They went on to note, “We have opposed government price setting through the IRA and have serious concerns about how the law is being implemented.”

Fighting back

Novo Nordisk was among the several pharmaceutical companies that sued the administration over the program. However, it still opted to take part in the inaugural discussions.

As a result, the cost of Novo Nordisk’s diabetes drugs Fiasp and NovoLog will go from $495 to $119.

Other New Jersey pharma giants have also taken legal action over the drug pricing requirements, including Merck & Co. in Rahway, Novartis Pharmaceuticals in East Hanover, Johnson & Johnson in New Brunswick and Bristol Myers Squibb in Princeton.

Lawsuits to block the law have been unsuccessful so far.

While the cases vary in detail, each allege that the government is overreaching in its authority. They mostly hinge on whether the program is constitutional under the First and Fifth amendments. They also say allowing Medicare to negotiate prices would lead to lower profits, causing reduced spending in research and development.