Well-known medications for diabetes, such as Ozempic and Trulicity, rank among the top 25 drugs for which Medicare has spent the most, without having yet chosen them for price negotiations, as noted in a report released on Thursday.

The analysis from the AARP Public Policy Institute revealed that the average list prices for these 25 medications have nearly doubled since their introduction, costing Medicare – and, in turn, American taxpayers – around $50 billion in 2022.

Approximately 7 million seniors enrolled in Medicare relied on these drugs, contributing a portion of the costs through pharmacy or mail order purchases.

The report highlighted that about 20% of older adults either skip filling prescriptions or neglect their doses to save money.

In 2024, around 53 million people were signed up for Medicare’s prescription drug plan. Those on the most expensive medications will benefit from a $2,000 cap on drug expenses this year.

However, officials from AARP emphasized the necessity of enabling Medicare to negotiate prices on behalf of its members and taxpayers.

“We are witnessing these astonishing price hikes consistently,” stated Leigh Purvis, who is the principal for prescription drug policy at AARP’s public policy institute. “It’s crucial to deter pharmaceutical companies from implementing such regular price increases.”

Medicare Negotiates with Pharmaceutical Companies

With the passage of the Inflation Reduction Act in 2022, Medicare gained the ability to negotiate prices with pharmaceutical companies for a select number of medications.

During the initial round of negotiations, Medicare successfully reached price cuts ranging from 38% to 79%, set to take effect in 2026 for specific drugs including Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, and the insulins Fiasp and NovoLog.

On February 1, Medicare will reveal the next 15 medications chosen for negotiation, with pricing changes slated for January 1, 2027. Another group of 15 drugs will be selected in 2026, with new prices rolling out in 2028.

Purvis mentioned that it is highly likely that some of the 25 drugs highlighted in AARP’s report will be included in the upcoming negotiations. Drugs without generic alternatives that have been available for at least seven years may qualify for negotiation. Biologic medications, derived from living organisms, can only be negotiated for after 11 years on the market.

AARP indicated that the five drugs with the highest expenditures in Medicare included the diabetes medications Trulicity and Ozempic, the asthma treatment Trelegy Ellipta, the HIV drug Biktarvy, and the cancer medication Xtandi.

The list price for Merck’s diabetes medication Janumet surged by 293% since its launch in 2007, marking the most significant increase among the 25 drugs reviewed in the report. Conversely, the list price for the hepatitis C treatment Epclusa has remained unchanged since its approval in 2016.

The Pharmaceutical Research and Manufacturers of America, an industry association representing drug manufacturers, argued that reports that use list prices are misleading, as they don’t reflect actual costs after accounting for rebates and discounts from insurers. They maintain that when these factors are considered, the net prices of drugs have actually dropped over the last six years.

Drug Manufacturers Subject to Penalties for Price Increases

Prices for 20 of the medications surged faster than inflation. The 2022 federal law mandates that pharmaceutical companies must provide rebates to Medicare if list prices exceed the inflation rate.

Negotiating medication prices and mandating rebates on drugs with prices rising faster than inflation are both essential strategies to aid taxpayers and consumers in managing drug costs, according to Juliette Cubanski, the deputy director of Medicare policy at KFF, a health policy nonprofit.

“While it does not solve the problem of manufacturers introducing high-cost drugs, it addresses the price hikes that occur from year to year, which exceed inflation,” Cubanski explained.

Will Ozempic Be Included in Medicare Discount Negotiations?

Novo Nordisk, the Danish pharmaceutical company, has faced intense scrutiny over the pricing of its well-known diabetes medication Ozempic and its weight-loss counterpart Wegovy. The company’s CEO was invited to testify before the Senate Committee on Health, Education, Labor, and Pensions last September regarding pricing concerns.

Novo Nordisk anticipates that Ozempic, available since 2017, will be part of Medicare’s next round of price negotiations, according to a report by Bloomberg. The company has refrained from commenting on the upcoming negotiations as the list of drugs up for discussion has not been disclosed.

A spokesperson for Novo Nordisk, Jamie Bennett, stated that drug pricing is influenced by various factors, including inflation, market dynamics, and actions by government and private insurers.

Pharmacy benefit managers, who act as intermediaries in drug pricing, frequently request rebates from pharmaceutical companies to secure a spot for their products on health insurance formularies—essentially a list of medications that the insurer will reimburse.

Bennett noted that a significant majority of insured patients, about 80%, spend $25 or less each month for Ozempic, with 90% of patients paying $50 or less.

“The list price established by Novo Nordisk can be somewhat misleading if viewed in isolation,” Bennett explained. “This list price doesn’t account for the various rebates, discounts, and fees that Novo Nordisk offers to reduce the actual cost, nor does it consider other expenses within the system that ultimately affect what pharmacy benefit managers, health insurers, or government entities ultimately pay.”