Novo Nordisk (NVO) stock fell as its blockbuster diabetes drug Ozempic and weight-loss treatment Wegovy are lined up for Medicare price negotiations in 2027, the U.S. government announced today.
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The outgoing Biden administration unveiled the next 15 prescription drugs that will be subject to price negotiations between the manufacturers and Medicare.
NVO shares fell over 4% in pre-market trading as investors priced in lower selling prices for its blockbuster drugs, which have helped propel the company to a market capitalization of $285 billion.
It makes for another headache for NVO after shares in the company plunged last month in the wake of a failed weight-loss drug trial, although trial data released today is much more promising.
Indeed, investors may expect NVO to take a hit if the last round of Medicare price negotiations are anything to go by.
“Last year we proved that negotiating for lower drug prices works. Now we plan to build on that record by negotiating for lower prices for 15 additional important drugs for seniors,” said Health and Human Services (HHS) Secretary Xavier Becerra. “Today’s announcement is pivotal.”
NVO Could See Prices Lowered
The first cycle of drug price negotiations, announced in August 2023, resulted in lower prices for all 10 drugs. Those prices will become effective starting January 1st, 2026.
According to the HHS, ff the new prices had been in effect in 2023, they would have saved an estimated $6 billion in net covered prescription drug costs, or approximately 22%, across the 10 selected drugs.
The new, lower prices range from 38% to 79% discounts off the list prices.
NVO Not the Only Stock in Medicare Sights
NVO’s Ozempic, Rybelsus and Wegovy drugs were top of the list of 15 slated for a long process of negotiations.
Pfizer’s (PFE) prostate cancer treatment Xtandi and breast cancer treatment Ibrance are among the other treatments on the list.
Other drugs in the round of price talks include GSK’s (GSK) Trelegy Ellipta and Breo Ellipta products, inhalers used for chronic obstructive pulmonary disease and asthma, and AstraZeneca’s (AZN) Calquence, used to treat some types of blood cancer.
Multiple myeloma drug Pomalyst, which is made by Bristol Myers Squibb (BMY) was included, too.
AbbVie (ABBV) had Linzess, which is used to treat irritable bowel syndrome and chronic constipation, and schizophrenia treatment Vraylar, on the Medicare negotiations list.
Tradjenta, a type 2 diabetes treatment made by Boehringer Ingelheim and Eli Lilly (LLY), is another. Merck’s (MRK) type 2 diabetes treatment Janumet and Amgen’s (AMGN) oral ulcer treatment Otezla were also on the list.
Is NVO a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy rating on NVO stock. The average NVO price target of $113.93 implies 37% of upside potential from the current level after a 21% decline in the last year.
