The Biden administration announced that Medicare will begin paying lower negotiated prices for 15 prescription drugs starting in 2027. The cuts are substantial for several high-cost treatments: Medicare will pay roughly 71% less for Novo Nordisk’s Ozempic, Wegovy and the oral diabetes drug Rybelsus, which have carried list prices near $1,000 a month.
Discounts across the 15 drugs vary widely. CMS cited reductions from about 38% for Austedo, a Huntington’s disease medicine, up to roughly 85% for Janumet, used to treat type 2 diabetes. Officials estimate that if these negotiated prices had been in effect in 2024, Medicare would have saved about $12 billion.
HHS Secretary Robert F. Kennedy Jr. described the move as part of a directive to lower health care costs. Analysts say this second round of negotiations produced larger estimated savings than the first round partly because of the particular mix of drugs selected and lessons learned from the initial negotiations. The drugs were chosen under the Inflation Reduction Act’s criteria: no generic or biosimilar competition, high Medicare spending, and several years on the market.
The new prices for Ozempic and Wegovy come after a separate November 6 agreement announced under the previous administration asking manufacturers to voluntarily align U.S. prices with those abroad. That earlier deal set a voluntary price of about $245 a month for Ozempic and Wegovy, while CMS’s negotiated price is $274 a month for Ozempic, Wegovy and Rybelsus. Observers noted the discrepancy between the voluntary deal and the negotiated figure as puzzling; Novo Nordisk said it is waiting for CMS guidance on how pricing and coverage will be implemented and reiterated support for broader access while expressing reservations about government price setting.
Advocacy groups welcomed the announcement. AARP called the decision a meaningful step toward lowering prescription costs and said the negotiated prices should provide relief for many Medicare beneficiaries. They also noted that patients may still face copays and coinsurance even as the program and taxpayers realize savings.