Novo Nordisk (NVO) CEO Lars Jørgensen isn't too worried about the upcoming Medicare price negotiations over blockbuster GLP-1 drugs, even though the company still stands with the industry against the new practice because he says the prices are comparable to those in Europe.

The negotiations by the federal government, now in their second year, were implemented by the Inflation Reduction Act during the Biden administration, and their future is uncertain.  

"We don't have a lot of insight to what is going to happen under the Trump administration and the impact on the IRA, our base case is that it will continue," Jørgensen said on a call with reporters early Wednesday.

The company is no stranger to the process, having just had prices set for some of its insulin products in the past year. 

And the inclusion of the semaglutide drugs — Wegovy for weight loss and Ozempic for diabetes, as well as an older semaglutide drug, Rybelsus for diabetes — came as no surprise to the Danish drugmaker.

"I would say, as expected, because of its success in the market, Wegovy and Ozempic and Rybelsus were included in the next round of IRA negotiations. We have some experience in the first round of negotiations where some of our insulins were included and we feel comfortable in our ability to manage this," Jørgensen said on the call.

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But the biggest reason Novo isn't overly concerned is because Medicare is not its largest market in the US. 

Until the start of 2025, only Ozempic and Rybelsus for diabetes were covered by Medicare Part D. The government is not allowed to cover the drugs for weight loss, which kept the cost to Medicare down. However, with the FDA approvals of Wegovy for cardiovascular benefits, plus Ozempic for kidney disease benefits, the number of potential patients has significantly increased for this and future years.

Dave Moore, president of Novo Nordisk, Inc., in the US, told investors on an earnings call Wednesday that it's too early to gauge the impact of the negotiations on future revenues. However, he emphasized that the commercial market, through employers and cash payments, was its biggest combined revenue driver for GLP-1s.

"It's too early to speculate on potential impact [of drug price negotiations]. As we've stated in the past, we oppose government price setting, like we have from the beginning. US channel mix across the portfolio is 50% commercial, 30% Medicare and 10% Medicaid and 10% other," Moore said.

The commercial market has not changed much for 2025, he said.

"We have maintained our broad access for Wegovy, covering 55 million people with obesity. There were no major changes with opt-ins and opt-outs [by employers]," Moore said, adding that "more than 80% are paying less than $25 for a prescription."

PBM rebates

The two longer-term headwinds facing GLP-1 drugs — Medicare negotiations going into effect in 2027 and the patent cliff for semaglutide in 2032 — are why the company has already started focusing on its pipeline and next-generation drugs. That includes CagriSema and amycretin, which are in mid- to late-stage trials and could be on the market in the next few years.

In addition, profits from the GLP-1s continue to decrease, and the delta between gross and net sales has grown — shedding light on rebates provided to pharmacy benefit managers (PBMs).

"We've seen some sizeable gross-to-net adjustments in the US over the past few years reflecting a 69% spread between gross and net sales," CFO Karsten Munk Knudsen said on an earnings call.

Jørgensen told Yahoo Finance in an interview Wednesday that pricing is not too different from Europe, despite the list prices being used to depict a more expensive product in the US.

"On average we give around 70% of rebates, and it's often the price before the rebates that are compared to Europe," he said.

So for a list price of $1,349 for Wegovy, Novo Nordisk only receives $404.70.

Still, roughly 60% of last year's revenues of $40.5 billion came from the blockbuster GLP-1 products, according to the company's earnings report Wednesday. Of that, Wegovy grew by 150% compared to 2023.

Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on social media platforms X, LinkedIn, and Bluesky @AnjKhem.

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