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Federal health officials on Tuesday announced that Medicare will sharply cut prices on some of its most expensive medicines, claiming billions of dollars in savings for older Americans and taxpayers.

The Centers for Medicare & Medicaid Services (CMS) said the move is part of a broader push to bring down the cost of drugs that treat cancer, diabetes, asthma, and other serious conditions. The new prices will take effect in 2027.

In a <a href="https://www.cms.gov/newsroom/press-releases/cms-delivers-savings-seniors-15-major-drugs-cancer-chronic-disease">statement</a>, CMS announced an estimated net savings of 44 percent, or $12 billion, from last year’s negotiated Medicare spending on 15 drugs used widely to treat cancer and other serious chronic conditions. According to a <a href="https://www.cms.gov/files/document/fact-sheet-negotiated-prices-ipay-2027.pdf">CMS fact sheet</a>, these estimated figures don’t account for Coverage Gap Discount Program (CGDP) spending. If CGDP spending were included, the estimated savings would be about $8.5 billion, resulting in about 36 percent lower net aggregate spending.

One of the most closely watched changes involves semaglutide, a popular GLP‑1 drug made by Novo Nordisk and sold as Wegovy for weight loss and Ozempic for diabetes. Medicare's new negotiated monthly price for the drug will be $274 starting in 2027, far below Medicare's recent net monthly price of $428 for Ozempic, according to an analysis published in the Journal of Managed Care and Specialty Pharmacy. The list price before rebates and discounts was $959 a month.

Across all 15 drugs, savings based on list prices range from 38 percent to 85 percent. AstraZeneca's leukemia drug Calquence, Boehringer Ingelheim's lung treatment Ofev, and Pfizer's breast cancer drug Ibrance each will see more than $4,000 cut from their estimated net prices.

CMS said the new "Maximum Fair Prices" for the 15 drugs will take effect Jan. 1, 2027, and that when added to 10 drugs already negotiated last year, there will be 25 drugs with negotiated prices by 2027.

"President Trump directed us to stop at nothing to lower health care costs for the American people," Health and Human Services Secretary Robert F. Kennedy Jr. said in the agency’s announcement. "As we work to Make America Healthy Again, we will use every tool at our disposal to deliver affordable health care to seniors."

"This year's results stand in stark contrast to last year's," CMS Administrator Mehmet Oz, MD, said in the press release. "Using the same process with a bolder direction, we have achieved substantially better outcomes for taxpayers and seniors."

Between Jan. 1 and Dec. 31 of 2024, about 5.3 million people with Medicare Part D used these 15 medicines. Those drugs accounted for about $42.5 billion in gross covered prescription drug costs, or roughly 15 percent of total Part D spending during that period.

The government's latest round of negotiations appears to have delivered deeper cuts than the first batch of drugs targeted under the Medicare Drug Price Negotiation Program.

Additional products in this second round include GSK's asthma and COPD inhaler Trelegy Ellipta at a new price of $175 versus its $654 list price, and AbbVie's irritable bowel syndrome medicine Linzess at $136, down from $539.

Even as U.S. officials promote the new prices, pressure remains to see how they compare with what other wealthy nations pay.

Analysts plan to compare the new U.S. prices with those in other high-income countries, which typically show that Americans pay substantially more. Many other countries have long had universal prescription drug coverage that relies on centralized price negotiations with manufacturers.

The pharmaceutical industry has pushed back against both the Inflation Reduction Act (IRA) and "most-favored-nation" (MFN) pricing.

"Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America," said Alex Schriver, a spokesperson for industry group PhRMA.

The changes are expected to ripple beyond the federal program itself. Health policy experts say lowering Medicare's prices could influence what private insurers pay.

"These prices are going to come down below the existing net prices. There will be some real savings," said Sean Sullivan, a professor of pharmacy at the University of Washington. "All of the other payers can see them. What is going to stop them from asking manufacturers for that same price?"

Medicare's next cycle of drug price talks is expected to start in February and include 15 more prescription and hospital-administered medicines.

<em>Reuters contributed to this report.</em>

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