Drug Manufacturers Commit to Medicare Drug Price Negotiation Round Two

Agreement Signals Progress in Lowering Prescription Costs / Reuters

All drug manufacturers, including industry giants like Novo Nordisk and Teva Pharmaceuticals, have agreed to participate in the second round of Medicare drug price negotiations, according to a recent announcement from the Centers for Medicare & Medicaid Services (CMS). This development marks a pivotal moment in the ongoing effort to reduce prescription drug costs for millions of Medicare beneficiaries under the Inflation Reduction Act of 2022, a landmark legislation initially signed into law by former President Joe Biden. Now unfolding under President Donald Trump’s administration, this round of negotiations targets 15 high-cost drugs, with negotiated prices set to take effect in 2027, promising significant savings for seniors and the federal government alike. The CMS has emphasized a commitment to transparency and robust engagement, responding to long-standing criticism from pharmaceutical companies about the negotiation process while aiming to balance affordability with innovation.

The decision by all selected drugmakers to join the Medicare drug price negotiation process reflects a shift in the healthcare landscape, where rising drug costs have long been a pain point for patients and policymakers. Novo Nordisk, known for its widely used diabetes medication Ozempic and weight-loss drug Wegovy, headlines the list of participants, alongside Teva Pharmaceuticals, which produces Austedo for Huntington’s disease. Other notable drugs include Pfizer’s cancer treatments Ibrance and Xtandi, as well as AbbVie’s Linzess for irritable bowel syndrome. These medications, identified for their high expenditure within Medicare Part D, represent a $40.7 billion spend between November 2023 and October 2024, impacting approximately 5.3 million beneficiaries. By negotiating maximum fair prices, the CMS aims to alleviate the financial burden on seniors, building on the first round’s success, which saved $1.5 billion in out-of-pocket costs for 2026.

The negotiation timeline, carefully structured to ensure thorough dialogue, begins with manufacturers having signed participation agreements by February 28, 2025, followed by data submissions due March 1, 2025. CMS will then deliver initial offers by June 1, 2025, giving drugmakers 30 days to accept or counter. If needed, up to two additional meetings per drugmaker will occur over the summer and fall, wrapping up by November 1, 2025. This extended process, paired with public engagement initiatives like patient-focused roundtables and a clinician town hall in spring 2025, underscores the government’s push for a transparent Medicare drug price negotiation framework. Registration for these events remains open until March 19, 2025, inviting stakeholders to contribute evidence and perspectives that could shape final pricing decisions.

What sets this round apart is the Trump administration’s pledge to enhance transparency in Medicare drug price negotiations, a response to pharmaceutical industry critiques of the Biden-era approach. While the core mechanism remains rooted in the Inflation Reduction Act, this focus could introduce procedural tweaks, potentially influencing how drugmakers and CMS interact. For instance, the inclusion of up to 15 patient roundtables and a clinician town hall signals a broader effort to incorporate real-world experiences into pricing models, a move that could resonate with patients seeking affordable prescription drugs. The drugs targeted span critical conditions, from diabetes and cancer to chronic lung diseases and mental health disorders, highlighting the negotiation’s wide-reaching implications.

Financially, the stakes are high. The 15 drugs selected for this Medicare drug price negotiation round two account for a substantial portion of Medicare spending, with Ozempic alone being a blockbuster drug driving Novo Nordisk’s market performance. Analysts estimate that negotiated prices could slash costs by millions, if not billions, annually, following the precedent set by the first cycle. For beneficiaries, this translates to lower co-pays and out-of-pocket expenses, a relief for those managing chronic conditions on fixed incomes. Drugmakers, however, face a delicate balance: participating ensures market access within Medicare, but lower prices could squeeze profit margins, a tension that has fueled industry pushback since the Act’s inception.

Beyond the immediate participants, the broader pharmaceutical ecosystem is watching closely. Companies like Pfizer, AstraZeneca, and GlaxoSmithKline, with drugs like Xtandi, Calquence, and Trelegy Ellipta on the list, are navigating a landscape where government intervention in pricing is becoming normalized. The CMS’s approach, blending data-driven offers with public input, aims to establish a “maximum fair price” that reflects both clinical value and market dynamics. For patients, this could mean greater access to life-changing treatments without the crippling costs that have historically defined the U.S. drug market.

This round’s success hinges on execution. With the negotiation period spanning most of 2025, CMS has ample time to refine its strategy, leveraging submitted data on drug economics, therapeutic alternatives, and patient outcomes. The inclusion of drugs like Wegovy, which addresses obesity—a growing public health concern—adds complexity, as CMS must weigh its long-term benefits against current costs. Similarly, cancer drugs like Ibrance and Pomalyst, critical for survival, test the balance between innovation funding and affordability. As the process unfolds, the interplay between government policy, industry response, and public advocacy will shape not just this round, but the future of Medicare drug price negotiations, potentially extending to Medicare Part B drugs by 2028.

For now, the commitment of all drug manufacturers to participate in the second round of Medicare drug price negotiations offers hope for a more affordable future. It’s a step toward addressing the perennial question of how to make essential medications accessible without stifling the research that brings them to market. As CMS and drugmakers engage over the coming months, the outcomes will reverberate across healthcare, influencing everything from patient wallets to corporate boardrooms, all while setting a precedent for transparency and fairness in drug pricing.