Medicare Price Negotiations To Continue Under the Trump Administration

Weight-loss drug shots

(Image credit: Getty Images)

The Centers for Medicare and Medicaid Services is moving forward with Medicare drug price negotiations under the Trump administration, although it said it is seeking to bring "greater transparency" to the negotiating table.

In a statement, CMS said lowering drug prices for Americans is a top priority of the Trump administration but that as CMS begins the next round, which includes popular, but expensive weight-loss drugs, Ozempic and Wegovy, it will give "stakeholders" a chance to provide ways to improve the negotiation process.

"As the second cycle begins under the Trump Administration, CMS is committed to incorporating lessons learned to date from the program and to considering opportunities to bring greater transparency in the Negotiation Program," wrote CMS. "CMS intends to provide opportunities for stakeholders to provide specific ideas to improve the Negotiation Program, consistent with the goals of achieving greater value for beneficiaries and taxpayers and continuing to foster innovation." The program has faced criticism from some of the pharmaceutical companies which argue pharmacy benefit managers drive the prices of prescription medicine up.

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Earlier in January, CMS announced the 15 drugs they are targeting. Ozempic and Wegovy were notable drugs added to the second round of price talks, given that while they have been effective in helping people lose weight, they have faced a lot of backlash because of the high costs associated with them. The list price for Wegovy is $1,349.02 per injection while Ozempic’s list price is $997.58 per injection, which is cost prohibitive for many people who can benefit from these drugs. Insurance, if it's covered, can lower the cost, but it is still too pricey for many.

Medicare’s list includes drugs that cost taxpayers billions

The list includes 15 drugs the White House plans to negotiate, an increase from 10 in the last round. The negotiations between Medicare and the drugmakers tend to take place over several months and the new negotiated prices don’t kick in until 2027. Prior to the White House's statement under President Trump, it was not clear how negotiations would be impacted by Trump and a new Secretary of Health and Human Services.

The drug negotiations are part of the Inflation Reduction Act, put on the books in 2022. The Act allows Medicare, for the first time, to negotiate drug prices directly with the pharmaceutical companies.

When announcing the latest round, CMS said in a press release that between November 2023 and October 2024, roughly 5.3 million people with Medicare Part D coverage used these drugs for several conditions ranging from cancer to type 2 diabetes. The drugs on the list accounted for about $41 billion in total gross covered prescription drug costs under Medicare Part D, or about 14%.

“Last year we proved that negotiating for lower drug prices works. Now we plan to build on that record by negotiating for lower prices for 15 additional important drugs for seniors,” said HHS Secretary Xavier Becerra. “Today’s announcement is pivotal – the Inflation Reduction Act is lowering prices for people on Medicare. HHS will continue negotiating in the best interest of people with Medicare to have access to innovative, life-saving treatments at lower costs.”

The drugs identified for negotiation in the second round include:

Ozempic; Rybelsus; Wegovy
Trelegy Ellipta
Xtandi
Pomalyst
Ibrance
Ofev
Linzess
Calquence
Austedo; Austedo XR
Breo Ellipta
Tradjenta
Xifaxan
Vraylar
Janumet; Janumet XR
Otezla

Ozempic, Wegovy and other GPL-inhibitors are in high demand in the U.S. Due to that demand, Medicare covering them for diabetes and potentially other FDA-approved uses could increase the cost to taxpayers. Lowering the cost of the drugs would also make the medications accessible to more individuals. If negotiations are successful, Medicare will have lowered the prices on 25 drugs that are commonly used in America. CMS said in the coming years it will identify up to 15 more drugs, including drugs covered under Part B and Part D, to negotiate lower costs. It will also identify up to 20 more drugs for each cycle after that as per the plan laid out in the Inflation Reduction Act.

What are GLP-1 drugs?

Ozempic and Wegovy fall in the GLP-1 agonists class. They were originally prescribed to treat diabetes under the generic name semaglutide but have proven to be effective in reducing weight. Ozempic is FDA-approved for the treatment of diabetes and Wegovy is FDA-approved for treating obesity. The drugs mimic a gut hormone that decreases hunger and delays stomach emptying, so people eat less and don’t face severe cravings. They come in an injectable form, which patients administer once a week. Other GLP-1 drugs are available to make it easier, including Rybelsus, which is a daily pill that has the same effects as Ozempic.

Donna Fuscaldo is the retirement writer at Kiplinger.com. A writer and editor focused on retirement savings, planning, travel and lifestyle, Donna brings over two decades of experience working with publications including AARP, The Wall Street Journal, Forbes, Investopedia and HerMoney.