The news: Novo Nordisk lost its federal appeals court challenge of the prescription drug price negotiation program in the Biden-era Inflation Reduction Act (IRA), which could open the door for even more price talks with the government.

Novo is the latest drugmaker to dispute the authority of the IRA law to negotiate Medicare and Medicaid drug prices. The drugmaker could still appeal the decision to the Supreme Court.

How we got here: The IRA, enacted in 2023, allows Medicare and Medicaid to negotiate lower prices for a specific number of high-cost brand-name drugs every year—10 in 2023, 15 currently in negotiations, 15 next year, and then 20 in every round after that.

• AstraZeneca, Bristol Myers Squibb, and Novartis are among the other drugmakers that filed and lost lawsuits against the price negotiation law, arguing they had protected constitutional rights.
• Novo brought its case after six of its insulin products were lumped together to be evaluated as one on the original list of 10 negotiated drugs.

Yes, and: Novo’s expensive blockbuster diabetes and weight loss drugs—Ozempic, Rybelsus, and Wegovy, which have the same active ingredient semaglutide—are included as one in the current list of 15 drug negotiations.

Why it matters: With a string of pharma losses, it’s clear that IRA drug price negotiations can legally continue. The Novo loss confirms that different drugs with the same base ingredient can also be negotiated as one for government and consumer savings.

• It could affect other medicines. For example, some biologic drugmakers add one ingredient to the base formula so they can be given as injections, instead of infused as intravenous (IV) drugs, per STAT.
• Savings could be immense. The Centers for Medicare & Medicaid Services (CMS) estimated it would have saved $6 billion last year with discounts ranging from 38% to 79%, though the first 10 negotiated drug prices don’t take effect until January 2026. Consumers’ out-of-pocket costs are also expected to drop by about $1.5 billion.

Medicare drug spending totaled almost $145 billion for the 55.5 million people enrolled in Rx coverage under Medicare Part D in 2023.

Our take: While the Trump administration has distanced itself from many Biden-era policies, the IRA drug price negotiations fit its goals of cutting drug prices for government and consumer savings. We see a path where the current administration revamps, or simply rebrands, IRA price negotiations as CMS negotiations.

Brands under pressure to drop prices through the IRA and President Donald Trump’s executive orders should continue those good faith efforts but also encourage the administration to put the same pressure on insurance companies and pharmaceutical benefit managers to lower healthcare costs.

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