Novo will cut the price of Ozempic by 71% for older Americans. This will hinder revenue growth

The U.S. government has secured a 71% discount, starting in 2027, on the best-selling drugs of the Novo Nordisk pharmaceutical company - Ozempic and Wegovy - for the insurance program for the elderly Medicare. This was announced by the Centers for Medicare and Medicaid Services. In addition, the cost of Pfizer's cancer drug Ibrance will decrease by 50%.

The government will pay $274 each for 30-day batches of Ozempic and Wegovy instead of $959. Novo Nordisk said this would reduce global sales growth by "low single digits" (about 1-3%) in 2026, the Financial Times reported. Novo said it is "seriously concerned about the impact of the Inflation Reduction Act and remains opposed to government regulation of prices," Bloomberg reports a statement from a company spokesman.

Novo's American Depositary Receipts (ADRs) at the pre-market in the United States on November 26 cheapened by 0.4%, while the company's shares at the trading in Copenhagen, on the contrary, rose by 1.2%. Trading in the U.S. a day earlier ended up 4.7% thanks to optimism about a new diabetes drug. Pfizer shares were up 0.2% in morning trading in New York.

The agreement is part of a large and complex system of negotiations that the White House is building with the pharmaceutical industry amid concerns about rising healthcare costs and a lack of local production in the U.S., Bloomberg notes. Donald Trump's administration is aggressively using duty policy, regulatory leverage and legal tools to force pharma makers to lower prices for government programs. In November, Novo Nordisk and its U.S. rival Eli Lilly reached agreements with the Trump administration involving price cuts for their popular drugs, including Ozempic and Wegowy. The next round of negotiations on the topic will begin in February and will include 15 more prescription and hospital drugs, Reuters writes.

Novo drug discounts for Medicare patients are in line with what Wall Street expected and appear to be manageable, said Evan Saigerman, head of healthcare research at BMO, his memo quoted by the FT.

"We continue to view Novo and Eli Lilly's previous deal with the [Trump] administration as a significant positive for obesity drug makers and the broader sector as a whole. The volume benefit from opening up broad access to obesity drugs will likely more than cover the losses from reduced prices," said Seigerman.

Medicare plans have received significant rebates and rebate payments from pharma companies before, but authorities have generally not disclosed such details. The new prices - the result of a law from former President Joe Biden's era - will take effect in 2027, Bloomberg notes.

This article was AI-translated and verified by a human editor