Millions of Americans Could Soon Get Free Ozempic

Medicare’s plan to negotiate drug prices could soon impact popular medications like Ozempic, potentially saving billions for beneficiaries and taxpayers.

But is it safe?

At a Glance

  • Medicare will negotiate prices for 15 prescription drugs, including Ozempic, under the Inflation Reduction Act
  • Negotiations for Ozempic are expected to begin in 2025, with new prices effective in 2027
  • Medicare spent over $2 billion on Ozempic in 2021, making it a prime candidate for negotiation
  • Drug companies are challenging the measure, claiming it could harm innovation and investment
  • The Biden administration sees this as a key effort to reduce costs for Americans

Medicare’s New Negotiation Powers

The Biden administration is expanding Medicare’s authority to negotiate drug prices, targeting 15 prescription medications, including the popular diabetes drug Ozempic. This initiative, part of the Inflation Reduction Act of 2022, aims to combat high drug prices and potentially reduce costs significantly by 2027. Medicare Part D spent over $2 billion on Ozempic in 2021, making it a prime candidate for future price negotiations.

And yes, he did this knowing full well that he would be out of office very shortly afterwards.

The negotiation process is set to begin in 2025 for Ozempic, with new prices taking effect in 2027. Analysts predict that if Ozempic’s price is reduced by 40%, it could lead to savings of $1.3 billion for Medicare. This could significantly benefit the 28% of Medicare beneficiaries who have diabetes.

While the Biden administration touts these negotiations as a win for Americans, pharmaceutical companies are pushing back. Novo Nordisk, the maker of Ozempic, has criticized the negotiation process, arguing it could negatively impact patients with chronic diseases.

“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,” a spokesperson for Novo Nordisk said.

The Pharmaceutical Research and Manufacturers of America (PhRMA) has also voiced concerns, suggesting that the change could harm innovation and investment in new drug development. Several drug companies are challenging the measure in Congress and the courts, claiming it is unconstitutional.

Broader Implications for Medicare and Drug Pricing

The negotiation power granted by the Inflation Reduction Act extends beyond Ozempic. The Biden administration has already announced the first 10 drugs targeted for Medicare price cuts through negotiations with drugmakers. In 2022, Medicare beneficiaries paid $3.4 billion out-of-pocket for these drugs, while Medicare’s total cost was about $50 billion.

“We’re going to see this through. We’re going to keep standing up to Big Pharma and we’re not going to back down,” Biden said.

The implications of these negotiations could be far-reaching. U.S. prescription drug prices are notably higher than in other countries, and this initiative represents a significant step towards addressing this disparity. The law allows for additional drug price negotiations in 2027 and beyond, potentially reshaping the landscape of drug pricing in the United States.

As the negotiations progress, all eyes will be on Ozempic and other high-profile drugs. Analysts and policymakers alike are keenly interested in the outcomes of these negotiations and their potential to transform the pharmaceutical industry and healthcare costs in America.

But will Trump allow the discussions to continue? Only time will tell.