Ozempic on Wall Street's list for 2027 Medicare drug negotiations
Novo Nordisk, Pfizer, GSK drugs likely to be in 2027 Medicare negotiations
Most drugs already discounted, limited impact seen on Big Pharma
Analysts expect price cuts to have bigger bite starting in 2028
By Michael Erman
NEW YORK, Aug 23 (Reuters) -Now that the U.S. government has negotiated prices for some Medicare program drugs effective in 2026, Wall Street analysts are betting on a 2027 list that will include Novo Nordisk's blockbuster NOVOb.CO Ozempic for diabetesand have a limited impact on Big Pharma.
Other possible 2027 candidates include Pfizer's PFE.N cancer drugs Ibrance and Xtandi, GSK's GSK.L asthma and chronic obstructive pulmonary disease (COPD) treatment Trelegy Ellipta, Teva's TEVA.TA Huntington's disease treatment Austedo and Abbvie's ABBV.N irritable bowel syndrome drug Linzess, according to five analysts as well as researchers and company executives.
The drugs, which have been on the market since at least 2017, are among those that the Medicare health program spends the most on for people aged 65 and older or with disabilities. Regulators are due to announce the list of 15 more drugs by February of 2025.
Under President Joe Biden's signature Inflation Reduction Act (IRA), prices for 10 highly popular prescription drugs used by Medicare will be cut by 38% to 79% in 2026. The industry has fought the negotiation program, saying it will stifle innovation.
Government researchers predict that the use of diabetes drug Ozempic for weight loss would raise the U.S. deficit over the next 10 years at its current price. Medicare spent over $4.6 billion on the drug in 2022.
Bristol Myers' Pomalyst and two other Abbvie drugs, Vraylar and Venclexta, may also be up for negotiation in 2027, analysts said.
"We are proud of the 10 agreements reached to bring new, lower prices to people with Medicare," a U.S. Department of Health and Human Services spokesperson said in an email. "The Biden-Harris Administration will continue using every lever at our disposal to bring down costs for the American people."
MANAGING THE FINANCIAL IMPACT
Analysts, investors and some executives said many of the 2027 candidates are already heavily discounted or set to lose their patent protection soon after the new prices take effect.
"The headline number for percentage discount initially may be fairly high," said Dan Lyons, portfolio manager for health care and biotech at Janus Henderson Investors.
However, the actual impact on the companies' bottom lines may be more manageable than expected, he said, noting that the market has already priced that into the drugmakers' stocks.
The law appears to have "more bark than bite," at least for the first few years, said BMO Capital Markets analyst Evan Seigerman.
He noted that the negotiated cuts are based on the gross price and do not reflect after-market rebates or discounts the drugmakers had already been giving.
"You won't see much of an impact, especially for these highly rebated products - and most of them are," said Seigerman, who includes Ozempic in the list of highly discounted products facing price negotiation.
Novo has said it retains around 60% of Ozempic's list price.
Novo executives said on the company's conference call earlier this month it was too soon to know the impact on Ozempic.
At least two Pfizer drugs, Ibrance and Xtandi, could be on the 2027 list. U.S. patents for both cancer drugs expire that year and Pfizer executives have estimated a muted financial impact, while disagreeing with the government's broad price setting.
"The timing of patent exclusivity on those medicines leads us to believe that we will find a way to manage this," Pfizer Chief U.S. Commercial Officer Aamir Malik said in an interview.
Teva CEO Richard Francis said his company's forecasts for Austedo include a potential price cut under the Inflation Reduction Act and that the company is nonetheless projecting growth for the Huntington's disease treatment.
It has forecast full-year earnings of $2.5 billion for Austedo in 2027, up around 25% from what analysts forecast for the drug in 2026 according to LSEG data.
Abbvie CEO Robert Michael said last month that even modeling in the long-term impact of drug price negotiations, the company expects to deliver on its long-term outlook. GSK declined to comment.
2028 CUTS
In 2026, regulators will announce up to 15 more drugs to be negotiated for 2028, including those covered by Medicare's hospital program known as Part B and up to 20 more drugs for each year after that.
The Congressional Budget Office, which does nonpartisan research for U.S. Congress, has forecast that the government will save $9.4 billion the following year from the price negotiations, up from $6 billion this year.
Future negotiations may not include such heavily discounted drugs as for 2026, particularly after Part B drugs are selected in 2028, said Inmaculada Hernandez, a professor at University of California San Diego, in an email. "Traditionally, provider-administered products have less discounts than drugs dispensed by pharmacies."
Reporting by Michael Erman; Additional reporting by Deena Beasley and Bhanvi Satija; Editing by Caroline Humer and Richard Chang
Relaterade tillgångar
Senaste nytt
Ansvarsfriskrivning: XM Group-enheter tillhandahåller sin tjänst enbart för exekvering och tillgången till vår onlinehandelsplattform, som innebär att en person kan se och/eller använda tillgängligt innehåll på eller via webbplatsen, påverkar eller utökar inte detta, vilket inte heller varit avsikten. Denna tillgång och användning omfattas alltid av i) villkor, ii) riskvarningar och iii) fullständig ansvarsfriskrivning. Detta innehåll tillhandahålls därför uteslutande som allmän information. Var framför allt medveten om att innehållet på vår onlinehandelsplattform varken utgör en uppmaning eller ett erbjudande om att ingå några transaktioner på de finansiella marknaderna. Handel på alla finansiella marknader involverar en betydande risk för ditt kapital.
Allt material som publiceras på denna sida är enbart avsett för utbildnings- eller informationssyften och innehåller inte – och ska inte heller anses innehålla – rådgivning och rekommendationer om finansiella frågor, investeringsskatt eller handel, dokumentation av våra handelskurser eller ett erbjudande om, eller en uppmaning till, en transaktion i finansiella instrument eller oönskade finansiella erbjudanden som är riktade till dig.
Tredjepartsinnehåll, liksom innehåll framtaget av XM såsom synpunkter, nyheter, forskningsrön, analyser, kurser, andra uppgifter eller länkar till tredjepartssajter som återfinns på denna webbplats, tillhandahålls i befintligt skick, som allmän marknadskommentar, och utgör ingen investeringsrådgivning. I den mån som något innehåll tolkas som investeringsforskning måste det noteras och accepteras att innehållet varken har varit avsett som oberoende investeringsforskning eller har utarbetats i enlighet med de rättsliga kraven för att främja ett sådant syfte, och därför är att betrakta som marknadskommunikation enligt tillämpliga lagar och föreskrifter. Se till så att du har läst och förstått vårt meddelande om icke-oberoende investeringsforskning och riskvarning om ovannämnda information, som finns här.
