Novo Nordisk’s Ozempic Expected to Face Medicare Price Negotiations in 2025

Ozempic's Inclusion Expected:
Analysts and academics predict that Novo Nordisk's Ozempic, a type 2 diabetes medication, will be included in the next round of Medicare price negotiations in 2025, with negotiated prices taking effect in 2027.

Limited Impact on Investors:
Despite the inclusion, analysts believe that the impact on Novo investors will be limited due to Ozempic's already discounted price, with a 67% gross-to-net ratio, indicating a low net price.

Patent Life:
Ozempic has a longer patent life remaining compared to the initial 10 drugs whose prices were negotiated, which are closer to their patent cliffs.

Other Novo Nordisk Drugs:
There is speculation that Novo's Rybelsus and Wegovy, which also contain semaglutide, may be targeted in future negotiations, although HSBC analysts suggest they won't be eligible until 2028 and 2030, respectively.

Novo Nordisk's Stance:
Novo Nordisk has expressed concerns about government price setting through the Inflation Reduction Act and has participated in legal actions against the program, but still expects Ozempic to be included in the next round of negotiations.

Medicare Drug Price Negotiation Program:
The program aims to reduce prescription drug costs for older Americans, with the first 10 drugs negotiated under the program expected to save seniors and Medicare Part D enrollees $1.5 billion and Medicare $6 billion in the first year.