The recent move by the U.S. government to negotiate Medicare drug prices has triggered speculation about which drugs could be targeted in the next round of negotiations, which is set for 2027.
Last week, the Biden administration announced that Medicare's newly negotiated prescription drug prices are expected to save the U.S. government $6 billion in the first year alone.
According to some analysts, Novo Nordisk A/S' (NYSE:NVO) blockbuster diabetes drug Ozempic might be included, along with several other well-known medications.
Also Read: Doctors Struggle to Secure Medicare Coverage for Heart Patients on Novo Nordisk's Wegovy.
These could include Pfizer Inc.'s (NYSE:PFE) cancer drugs Ibrance and Xtandi, GSK Plc's (NYSE:GSK) asthma treatment Trelegy Ellipta, Teva Pharmaceutical Industries Ltd.'s (NYSE:TEVA) Huntington's disease drug Austedo, and Abbvie Inc.'s (NYSE:ABBV) irritable bowel syndrome treatment Linzess.
The list would focus on drugs available since at least 2017, primarily those on which Medicare spends heavily.
Under President Joe Biden's Inflation Reduction Act (IRA), the prices of 10 popular Medicare drugs will be reduced by up to 79% in 2026.
This move has faced resistance from the pharmaceutical industry, which argues that such measures could stifle innovation. Government officials, however, maintain their commitment to reducing healthcare costs.
Despite concerns about the impact on pharmaceutical companies, a Reuters report suggests the financial blow might be less severe than anticipated.
Company executives appear to be cautiously optimistic. Pfizer's Chief U.S. Commercial Officer, Aamir Malik, stated that the timing of patent expirations for Ibrance and Xtandi could allow the company to manage the price negotiations effectively.
Similarly, Teva CEO Richard Francis acknowledged the potential impact of price cuts but remained confident in Austedo's growth prospects, forecasting $2.5 billion in earnings by 2027.
Abbvie's CEO expressed a similar sentiment, indicating that their long-term outlook remains intact, even considering future negotiations.
Regulators will announce up to 15 more drugs for negotiation in 2028, potentially expanding the scope to include medications covered under Medicare's Part B program.
As drug negotiations progress, the Congressional Budget Office estimates that savings from the IRA will rise to $9.4 billion by 2027, marking a significant step in the government's effort to reduce healthcare costs.
Price Action: NVO stock is down 0.64% at $136 at last check Friday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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