The U.S. government said Tuesday it negotiated a 71% discount off of the list price of Novo Nordisk A/S’s blockbuster drugs Ozempic and Wegovy for patients in Medicare, the federal health insurance program for the elderly.

Medicare plans already get significant rebates and discounts off of drug company’s list prices, but the government doesn’t normally disclose those deals. These newly announced rates are the result of a Biden-era law and will be effective in 2027. Other blockbuster medications like Pfizer Inc.’s breast cancer drug Ibrance will see a 50% price cut when compared with its 2024 list price, the Centers for Medicaid and Medicare Services said in a statement Tuesday.

“This is what serious, fair, and disciplined negotiation looks like,” CMS Deputy Administrator Chris Klomp said in a news release.

Stocks were not moving much on the news: Pfizer’s shares and Novo’s American Depositary Receipts were both little changed in after-hours trading.

BMO analyst Evan Seigerman said he wasn’t surprised by the government’s new prices. “Ozempic at $274 is close to where we assume the broader net price to be,” he said, referring to the price that the drugmaker negotiates with health plans.

Still, Novo said it has “serious concerns about the Inflation Reduction Act’s impact on patients and remain opposed to government price setting,” a spokesperson said after the prices were released.

The deal is one element of the complex, interconnected drug pricing negotiations the White House is imposing on the pharmaceutical industry, amid concerns about the cost of health care and lack of local manufacturing in the U.S. Trump has used tariffs, regulatory threats and legal processes to cajole drugmakers into lowering what they charge government programs for medicines. Ozempic has become a poster child for the president’s argument that pharmaceutical companies are ripping off Americans by charging lower prices abroad.

The latest round of Medicare price cuts affect 15 drugs, including Xtandi, an older prostate cancer drug from Pfizer and Astellas Pharma Inc. that will face a 48% discount off its 2024 list price. GSK Plc’s asthma drug Trelegy Ellipta will face a 73% drop.

The reductions off list prices range from 38% to 85%.

The Trump administration said the new prices would represent $12 billion in savings compared with what Medicare spent on those drugs last year. About 5.3 million people with Medicare prescription drug plans used the medications in 2024, the agency said.

The cuts are separate from voluntary deals that drugmakers are striking with Trump officials to lower costs for the Medicaid program, to launch new medicines at the same price in the U.S. as in peer countries and to offer discounts on treatments sold directly to patients.

With its obesity and diabetes drugs in the spotlight, Novo has faced headwinds on all fronts. Its bestselling medicines were chosen for negotiation in Medicare — the largest purchaser of drugs in the U.S. — and its decision to cut a broader pricing deal led to a ceremony alongside Eli Lilly & Co. in the Oval Office with Trump.

It’s not all bad news for Novo, however. Trump administration officials announced earlier in November that Medicare would pay $245 per month for Wegovy as part of a drug pricing pilot, dramatically increasing the number of people eligible for it. Patients who are obese and have certain chronic conditions will get insurance coverage for the medicine.

Pricing strategy

Novo seems to have embraced price cuts as a strategy to gain market share. The company announced this month it will offer Ozempic and Wegovy directly to consumers for $349 per month for ongoing use, undercutting Lilly’s price. In May, it struck a deal with CVS Health Corp.’s drug-benefits unit to make Wegovy more widely available, a blow to Lilly’s Zepbound.

Novo has drawn ire from both Democrats and Republicans for charging more in the U.S. than in foreign countries. When Ozempic and Wegovy were selected for negotiation, a spokesperson said the company remains opposed to government “price setting” and has “significant concerns about how the law is being implemented by this administration.”

The company also sued the federal government over the Medicare drug price negotiation program, alleging it is unconstitutional. It argued that Ozempic and Wegovy should be considered separate drugs, not taken together because they have the same active ingredient. An appeals court in October affirmed a lower court decision that the program is constitutional.

Lilly, its rival in the GLP-1 space for treating obesity and diabetes, has newer drugs that aren’t likely to be eligible for negotiation until 2029 at the earliest.

In its announcement Tuesday, the Trump administration boasted of savings from the negotiation process created by former President Joe Biden’s signature law, the Inflation Reduction Act, which passed in 2022 over Republican opposition.

The drug industry trade group decried the process. “Government price setting for medicines is the wrong policy,” Alex Schriver, spokesperson for the Pharmaceutical Research and Manufacturers of America, said in a statement.

The 15 medications targeted this year are part of the second round of review, with new prices set to go into effect in 2027. Before, individual insurance plans had to strike their own price deals. Now, Medicare officials negotiate on behalf of the entire program, and minimum discounts are guaranteed depending on how long a drug has been on the market.

A study by researchers at several universities found the first round of negotiations last year produced estimated discounts that ranged from 8% to 42% off of the prices Medicare was paying for the 10 selected drugs. One of the study’s authors, Inmaculada Hernandez, now works at the Centers for Medicare and Medicaid Services as part of its drug price negotiating team.

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With assistance from Robert Langreth.

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