Why Medicare price cuts matter for Novo Nordisk, European pharma
Drug pricing has emerged as an important issue for pharmaceutical companies and investors to pay attention to in 2025. As President Donald Trump pushes for lower drug prices for Americans, the industry faces additional pricing pressure from Biden-era legislation called the Inflation Reduction Act.
The IRA, signed into law in 2022, allows the Centers for Medicare and Medicaid Services (CMS) to negotiate prices for a range of drugs each year for patients on Medicare, the federal health insurance program for seniors. Now it’s making waves across the Atlantic, too.
While these changes are taking place firmly in the United States, pharmaceutical companies around the world are finding themselves increasingly exposed to the American market.
A number of European companies have announced large US investments to appease Trump and his aggressive tariff agenda, while AstraZeneca to act right Another direct listing on the NYSE to reach deeper pockets of the US capital markets. Novo Nordisk, meanwhile, cited an inability to cope with changes in the US market as part of the reason for its recent leadership changes.
CMS late Tuesday announced Newly negotiated prices for 15 blockbuster drugs from 2027 Novo Nordisk mega bestseller Ozempic will see a 71% discount off its list price.
Among other European pharmaceutical giants, AstraZeneca’s Cancer drug Calquence will face a 40 percent discount. GSK‘s lung disease drugs Trelegy and Breo are 73% and 83% off, respectively.
Overall, discounts ranged from 38% to 85%; Estimated savings were approximately $8.5 billion, which was 36% lower than recent annual expenditures.
“This is what serious, fair and disciplined negotiation looks like, whether through the Inflation Reduction Act or President Trump’s Most Favored Nation policy,” CMS Deputy Administrator Chris Klomp said in a statement.
A GSK spokesman said they were pleased with the agreement. “We believe strongly in the value of both Trelegy and Breo and are committed to working with CMS.”
Novo, on the other hand, was critical. “We continue to have serious concerns about the impact of the Inflation Reduction Act on patients and oppose government price setting,” a spokesperson said in emailed comments to CNBC. “We find that government price setting does not reduce out-of-pocket expenses for patients and can lead to loss of drug coverage and higher insurance premiums,” they added.
An important market
The US is a key market for most large-scale pharmaceutical companies, mostly due to the significantly higher prices of branded drugs. In the first nine months of 2025, 56% of Novo’s total sales were in the US. Meanwhile, AstraZeneca had 42% of its product sales in the US during the same period, compared to GSK’s approximately 52%.
Prescription drug prices in the United States are nearly three times higher than in other wealthy countries, according to a 2024 report from RAND.
” [IRA price] I think the cuts are a little bit higher than last year, which I think people expected, Barclays analyst Emily Field told CNBC. “There don’t seem to be any surprises,” he added.
Silent stocks also showed that the outcome of the negotiations was largely expected. AstraZeneca and GSK were up less than 1% in afternoon trading.
However, Novo shares finished the day up 4.7%. Semaglutide, sold as Ozempic for diabetes and Wegovy for weight loss, will be priced at $274 for Medicare patients starting in 2027, down from the previous list price of $959. However, Medicare plans already provide large discounts on companies’ list prices, but these rates are often not disclosed.
CMS will publish the list of 15 drugs selected for negotiations for 2028 by February 1, 2026.
Trump’s priority
However, Field noted that IRA price negotiations are not the companies’ main concern, noting how it has become a better understood and predictable process. “What people are more worried about are other directions MFN could go if they decide to do something different,” he said.
Trump has made reining in US drug costs a priority and signed a deal in May. The executive order to implement Most Favored Nation pricing means that U.S. prices will be tied to the lower prices paid abroad.
Low prices in the U.S. can have a dramatic impact on companies’ tops and bottoms, but companies are finding ways to mitigate the impact by making deals with the Trump administration to voluntarily lower certain prices and pledging to invest in U.S. manufacturing to avoid tariffs.
Novo, AstraZeneca and GSK shares since the beginning of the year.
Earlier this month, Trump announced deals with Novo and rival Eli Lilly to lower prices on weight-loss drugs for Medicare and Medicaid beneficiaries in 2026 and offer them at a discount directly to consumers through the website TrumpRx.gov. Under the agreement, starting doses of Novo’s Wegovy and Lilly’s Zepbound will cost $350 per month, dropping to $245 per month within two years.
BMO analysts stated that declining prices would negatively impact sales, but volume gains from broad access to obesity medications could offset this headwind.
Last week, Novo also announced that it was dropping prices for Ozempic and Wegovy from $499 to $349 per month for patients paying out-of-pocket, following pressure from Trump.
AstraZeneca and other US-based companies Pfizer They also announced that they made agreements with the Trump administration to lower drug prices.
