There's a piece of bad news for Novo Nordisk's massively popular diabetes drug Ozempic in Medicare's list of drugs subject to price negotiations, an analyst said Tuesday. But pharmaceutical stocks, overall, were little impacted.
On Tuesday, the Biden administration unveiled 10 drugs subject to price negotiations in 2026. It includes blockbusters from AbbVie, Bristol Myers Squibb and Merck. These are among the costliest drugs facing the Centers for Medicare and Medicaid Services.
When the Inflation Reduction Act passed, it noted drugs are subject to price negotiations nine years after their approvals. But since the negotiations kick off two years before that, drugs can be added to the list as early as seven years after their approvals. Novartis blood thinner Entresto landed on the negotiations list eight years after its approval date.
"This means Novo's Ozempic (along with Rybelsus) could be on next year's list," Evercore ISI analyst Umer Raffat said in a note to clients. Ozempic was approved in December 2017, meaning it could be up for negotiations and a price change in 2025 and 2027, respectively. Rybelsus is an oral diabetes drug from Novo that uses the same active ingredient as the injection Ozempic.
But on today's stock market, none of the pharmaceutical stocks took big hits. Instead, Bristol stock jumped 2% to 62.85. Merck gained 1%, closing at 109.99. Amgen shares rose 1.2% and ended the day at 259.64. Novo stock popped 1.5% to 190.37.
Pharmaceutical Stocks: 10 Drugs Up For Negotiation
A number of pharmaceutical companies have filed lawsuits in an effort to stop the negotiations. The first list includes 10 Medicare Part D drugs. Next year, it will expand to 15. Eventually, Medicare will loop in drugs covered by Part B, which are administered by doctors.
The first list includes:
- Eliquis, a blood thinner from Bristol Myers Squibb and Pfizer.
- Jardiance, a type 2 diabetes medicine from Eli Lilly and Boehringer Ingelheim.
- Xarelto, a blood thinner from Johnson & Johnson.
- Januvia, a type 2 diabetes medicine from Merck.
- Farxiga, a type 2 diabetes medicine from AstraZeneca.
- Entresto, a heart failure medicine from Novartis.
- Enbrel, an arthritis and psoriasis treatment from Amgen and Pfizer.
- Imbruvica, a cancer drug from AbbVie and J&J's Janssen.
- Stelara, which treats a number of immunological diseases, from J&J's Janssen.
- Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen and NovoLog PenPill, a series of insulins from Novo Nordisk.
Big Pharma Has A Big Cushion
Each of the pharmaceutical stocks has ties to numerous products that will insulate it from a massive impact in the first round of negotiations, analysts said.
Further, some of these products are already at the end of their patent-protected lives and are soon to face generic or biosimilar competition. Take Merck's Januvia. It will lose patent protection this year. Court rulings could extend that to 2026 — the year price cuts come into effect. Raffat, the Evercore analyst, expects 25 generics to hit the market in May 2026.
Similarly, J&J already has a settlement with Teva Pharmaceutical and Alvotech to launch a Stelara biosimilar version in February 2025, he said.
Meanwhile, Amgen and Pfizer's Enbrel is already subject to a Medicare discount. Medicare accounts for less than a quarter of Enbrel sales. Mizuho Securities analyst Salim Syed estimates less than a 1% impact to Amgen's 2026 sales.
The eventual impact for Bristol Myers Squibb, though, will come from the addition of Part B drugs, William Blair analyst Matt Phipps said in a note. He expects cancer drug Opdivo and autoimmune conditions medications Orencia to join the list for 2028.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
