The news: The Trump administration announced lower prices for 15 prescription drugs via the Medicare drug price negotiation program. The new prices will take effect starting January 1, 2027.

Unpacking the news: The 15 drugs include Novo Nordisk’s three GLP-1 products, cancer therapies, COPD medications, and inhalers.

• The new Medicare price for Ozempic, Wegovy, and Rybelsus drops from a list price of $959 to $277 per month. The price of higher-dose Wegovy is $386 per month.
• Another widely used drug—GSK’s Trelegy Ellipta inhaler for asthma and COPD—will see its monthly list price cut from $654 to $175.
• Some cancer drugs, including those from AstraZeneca and Pfizer, will have their list prices slashed nearly in half.
• Final prices were determined following talks between the government and drugmakers.

For context, these prices aren’t what Medicare members pay out-of-pocket (their costs will typically be far lower), but instead what the government pays drugmakers. And it’s worth noting that Medicare had already been paying below list prices due to rebates and discounts, though still above the new negotiated levels.

Why it matters: Drug price negotiations were introduced in the 2022 Inflation Reduction Act. Before that, the US government was not permitted to negotiate prescription drug prices with manufacturers.

The Biden administration completed round 1 of price negotiations for 10 drugs, with reductions taking effect in January 2026. The lower prices on the first 10 drugs are projected to save Medicare about $6 billion per year, based on 2023 prices, and reduce out-of-pocket costs for beneficiaries by about $1.5 billion annually once the prices go into effect in 2026.

The lower prices of the latest 15 drugs would have saved Medicare about $12 billion last year—roughly 44% of its spending on those medicines, according to the Centers for Medicare & Medicaid Services (CMS).

• These price cuts will save patients about $685 million in out-of-pocket costs in 2027.
• 5.3 million people (out of 53 million with Medicare Part D coverage) used these 15 drugs last year, per the CMS.
• For instance, nearly 2.3 million Medicare beneficiaries took one of Novo’s three GLP-1 drugs, and close to 1.3 million took Trelegy Ellipta.
• These 15 drugs account for 15% of total Part D gross covered prescription drug costs during 2024.
• For context, Medicare spent about $377 billion on prescription drugs across all programs last year, per our estimates.

Implications for pharma: The biggest hit will fall on pharma companies with drugs selected in both rounds of Medicare negotiations. Impacts on revenue will vary, depending on each product’s time on the market and how far the negotiated price falls below prior net sales after rebates and discounts. For the government, savings on these drugs will be significant, but broader program savings won’t materialize until far more than 25 drugs see price cuts.

Going forward, we expect to see more policies and deals aimed at lowering drug prices, given bipartisan support. Drugmakers have continuously tried, but failed, to sue the US government over the Medicare drug price negotiation program. But both Republican and Democratic administrations prioritize lower drug costs, so pharma companies can expect more policies aimed at reducing prescription spending for the government and patients. We also expect to see Trump make more direct deals with drugmakers to cut cash-pay prices of some medicines, and potentially require more companies to adopt his “most favored nation” pricing.