The U.S. plans to slash the price it pays for the Novo Nordisk A/S blockbusters Ozempic and Wegovy, the latest drugs to be targeted under legislation that’s expected to save the government more than $200 billion over a decade.

Novo’s treatments for obesity and diabetes headline the government’s list of medicines that will be subject to price negotiations over the next year as part of a Biden administration effort to reduce drug costs for the Medicare health program for older adults.

It’s the latest in a string of setbacks for Novo this morning. Results from a study of a higher dose of Wegovy disappointed investors and European drug regulators said they were investigating cases of a rare eye condition after concerns it could be linked to Ozempic.

With list prices of about $1,000 a month, Novo’s treatments are among the biggest products in pharmaceutical history, bringing in nearly $30 billion a year. Their prices have brought congressional scrutiny. Sales to Medicare, the U.S. health program for older adults, account for about 10% of Novo’s annual revenue, according to an analysis by Leerink Partners.

The negotiated price, set to take effect in 2027, could have a marked impact on Novo’s business. The last round of IRA negotiations gave Medicare an average 22% price reduction for affected drugs. Novo’s diabetes drug Rybelsus, which has the same main ingredient as Ozempic, is also on the government’s list.

A spokesperson for Novo said the company “remains opposed to governments price setting through the IRA and has significant concerns about how the law is being implemented by this administration,” such as how three of its drugs were included at the same time because they all have the same main ingredient.

Eli Lilly & Co.’s competing Mounjaro and Zepbound won’t be eligible for negotiation until 2029 at the earliest. However, price changes for Novo’s drugs could affect others in the same class.

Negotiations fought

Drugmakers have fought the negotiations with suits and claims that the lower prices deplete them of incentives to develop new drugs. Bloomberg News reported earlier this week that a group of companies, including Lilly, are asking for a pause in the negotiations.

On Friday after the list of drugs was released, the drug industry lobbying group PhRMA called the negotiation process “dangerous” and said it discourages companies from making pills, like many of the drugs on the new list. Pills are subject to negotiation sooner than complex injectable drugs under the law, a point the industry has fought unsuccessfully to change.

The announcement was released weeks ahead of a Feb. 1 deadline as President Joe Biden looks to claim a parting political victory before President-elect Donald Trump’s inauguration.

The news Friday “puts the onus on the incoming Trump administration” to decide if the list should continue through the implementation process, Bloomberg Intelligence analyst Duane Wright said in a note.

Other drugs up for 2027 price decreases include cancer drugs Ibrance, made by Pfizer Inc., Xtandi, made by Pfizer and Astellas, Pomalyst, made by Bristol Myers Squibb Co., and Amgen Inc.’s psoriasis drug Otezla.

The newly added drugs made up 14% of Medicare Part D drug spending, or $41 billion, between November 2023 and October 2024, according to the government.