Recent drug price negotiations have selected 15 high-cost medications, including Ibrance and Xtandi, under the Inflation Reduction Act signed by President Biden in 2022. This initiative aims to reduce costs for Medicare beneficiaries. The pharmaceutical industry opposes these negotiations, arguing they threaten innovation. As political dynamics shift, potential changes to the program under a Trump administration remain uncertain, as the current law defines drug selection criteria. The industry’s response includes calls for delays in negotiations for certain drugs.
Overview of Drug Price Negotiations
Included in the list of drugs selected for price negotiations are notable medications such as Ibrance and Xtandi, cancer treatments developed by Pfizer, Trelegy Ellipta for asthma and chronic obstructive pulmonary disease (COPD) from GSK, Austedo aimed at treating Huntington’s disease from Teva, and Linzess for irritable bowel syndrome from AbbVie.
The price negotiation initiative was established through the Inflation Reduction Act, which President Biden signed into law in 2022. The latest selection of 15 drugs marks the second phase of this process, targeting some of the most costly medications covered by Medicare for seniors aged 65 and older, as well as for individuals with disabilities.
Future Implications and Industry Reactions
As the political landscape shifts, it remains uncertain whether President Donald Trump will attempt to alter this program. Officials from the Biden administration have indicated that he may face challenges in doing so, as the law outlines specific criteria for drug selection.
President Biden noted, “These 15 drugs, combined with the 10 already negotiated by Medicare, represent about one-third of the spending on prescription drugs in Medicare Part D.”
In the previous year, the U.S. government successfully negotiated price reductions ranging from 38% to 79% for ten widely used prescription medications, set to take effect in 2026.
Ge Bai, a health policy and management professor at Johns Hopkins University and advisor to the Paragon Health Institute, believes the Trump administration could modify the list of negotiable drugs. She stated, “The IRA grants the power of drug selection to the current administration, not the previous one.” Bai also emphasized the ongoing scrutiny of the negotiation process and suggested that early evidence does not strongly support its effectiveness, potentially giving the Trump administration a reason to seek changes through executive actions.
Additionally, approximately 2.3 million Medicare patients utilized Novo drugs based on semaglutide, including Ozempic, Wegovy, and Rybelsus, within the year ending October 2024, resulting in total gross expenditures exceeding $14 billion.
Following the announcement, shares of Novo Nordisk declined further after an initial drop due to new obesity data, trading down 3.8%. The Danish pharmaceutical company did not immediately provide a comment on the situation.
Since March, Medicare has covered Wegovy for patients using it for purposes other than weight loss, such as reducing heart attack or stroke risks. However, government analysts predict that the current prices of Ozempic and Wegovy may contribute to an increase in the U.S. deficit over the next decade, with Novo’s list price at approximately $935 per month and Wegovy’s around $1,350 per month, despite the company’s claim of offering discounts.
The pharmaceutical sector has expressed strong opposition to the negotiation program, arguing that it poses a threat to innovation. The industry has urged the Trump administration to modify new regulations, including requesting a delay for small molecule drugs to become eligible for negotiation.
Stephen J. Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), criticized the initiative, stating, “The IRA pricing process is dangerous for millions of Americans relying on innovative treatments and has created unnecessary bureaucracy.” He further accused the Biden administration of not addressing the real challenges faced by seniors and Medicare by hastily publishing the drug list.
The announcement of the selected drugs came just one day after the initial deadline, with February 1 being the cutoff for selection. Manufacturers of the chosen drugs have until February 28 to decide on their participation in the negotiations.
It remains to be seen whether the pharmaceutical industry can sway Trump regarding changes to the program. An official from the administration remarked, “CMS followed the established process and selected the 15 drugs accordingly; any subsequent team would likely arrive at the same list if they adhered to the required legal process.”