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New year, new president, new round of Medicare drug pricing negotiations to parse through.

In one of the Biden administration’s final acts, the Centers for Medicare and Medicaid Services (CMS) released the next 15 prescription drugs subject to Medicare negotiations late last week. The announcement came just days before President Donald Trump took office, amid ongoing questions around how he’ll manage the program going forward.

Brand names topping the list included Novo Nordisk’s Ozempic and Wegovy, Astellas Pharma’s Xtandi, and AstraZeneca’s Calquence.

Negotiations are slated to begin this year, but plenty of uncertainty remains regarding how the new administration will approach the program — and whether Trump will seek to weaken it or repeal it entirely in favor of the pharma industry.

“There is concern, especially with the composition of Congress and the Republicans who have voiced dismay around Medicare negotiations, that there could be changes [to the program],” said Reshma Ramachandran, a physician and assistant professor of medicine at Yale School of Medicine.

Experts noted that the amount of Medicare spending on the latest list of 15 drugs is slightly lower than the first list of 10 drugs, but several expensive and commonly used medications for diabetes, cancer and other chronic conditions made it on the list.

The choice to include popular GLP-1s was particularly striking, according to Juliette Cubanski, deputy director of the program on Medicare policy at Kaiser Family Foundation (KFF).

Not only are several million people on Medicare taking the drugs – which are notoriously expensive – but they have become household names in the last few years.

“It raises the stakes for the outcome this year,” Cubanski noted. “It draws more attention to the negotiation program and whether or not Medicare is able to reach a substantial discount on the current price of these drugs.”

Program’s impact on pharma

The first round of Medicare negotiations took place last year, so how’d it go?

CMS published the new fair maximum prices in August, with discounts ranging from 38% for Amgen’s blood cancer drug Imbruvica to 79% for Merck’s diabetes medication Januvia.

It’s difficult to determine the exact impact of those new prices on the pharma industry – and on patients – because they don’t go into effect until January 2026. The new prices of the second round, meanwhile, will go into effect in 2027.

But experts noted that the impact on pharma might be more muted than initially feared. That’s because many of the drugs chosen for negotiations are heavily rebated – meaning the pharma companies are already paying pharmacy benefit managers (PBM) and insurers rebates to get the drugs on formularies, which results in a lower net price from the original list price.

“Products that are heavily rebated end up having less of a revenue impact to the companies,” said Evan Seigerman, a biopharma analyst at BMO Capital Markets. “Ozempic is heavily rebated, for example, so I think the ultimate impact for Novo Nordisk is going to be small.”

A recent report from Janus Henderson Investors concluded that most of the drugs in the first round – being heavily rebated or set to lose patent protection soon anyway – would lead to only “incremental” losses for the pharma companies.

CMS estimated that it would have saved about $6 billion, or spent 22% less, on those drugs if the program had been in place in 2023.

“While 22% may sound like a lot, the net effect is likely to be much lower for many companies,” the report’s author, research analyst Luyi Guo, wrote.

Still, the pharma industry has been vocal in its opposition to Medicare negotiations. In response to the unveiling of the next 15 drugs, lobbying group PhRMA claimed in a statement that negotiations were “dangerous for Americans who rely on innovative treatments.”

Plus, several major drugmakers whose drugs are included in negotiations have launched lawsuits against the federal government, claiming the program is unconstitutional. Teva Pharmaceuticals was the most recent to sue CMS, arguing the program upsets the “delicate balance between innovation and affordability.”

While the lawsuits have been unsuccessful so far, that could change under a Trump administration.

What will Trump do?

According to KFF, there are three main routes the Trump administration could take when it comes to Medicare negotiations. The administration could either choose to leave the program as is and let it run its course, seek to water it down or repeal the IRA.

Repealing the IRA or making any substantial modifications to the negotiations provision would pose a more difficult path, as any changes to the law would have to pass Congress first. But experts agreed they wouldn’t be surprised if the White House sought to weaken the program in other ways.

One of the paths of least resistance would be for a Trump-influenced CMS to choose the negotiated price ceiling as the final price, limiting the size of the discount. The Trump administration could also reinterpret the guidance for the negotiations or even reissue new guidance entirely.

Finally, the Trump administration could choose to back out of defending the Medicare negotiations provision in court amid the myriad of lawsuits launched by industry.

Seigerman expects Trump to keep Medicare negotiations moving – just with his own spin. It’s no secret that drug pricing reform is popular, with 65% of Democrats and 48% of Republicans believing it should be a top priority for the Trump administration, according to a KFF poll.

“The optics for negotiating against Big Pharma are good for him,” Seigerman pointed out. “It’s hard for the Trump administration to be super supportive of a Biden administration [accomplishment] – so he’s got to find his angle and to make it his own.”

Still, while Trump has bashed Big Pharma and PBMs in the past — operating on populist messaging — he’s also well-known for cozying up to industry. According to Reuters, several major drugmakers, including Eli Lilly, are already planning to ask the Trump administration to pause the negotiations process.

As a result, the Medicare negotiations’ future “feels like an open question,” Cubanski noted.

Patients, doctors and a bipartisan cause

Until the first round of prices go into effect, the real impact of Medicare negotiations on patient savings remains unclear. Patients on Medicare who are more likely to see direct out-of-pocket savings due to the program are those with a coinsurance, which requires patients to pay a certain percentage of a drug’s cost based on the list price.

Ramachandran treats patients who take some of the drugs included in the second round list – like Ozempic, Janumet and Tragenta – noting that many of her patients have difficulty accessing diabetes drugs due to high co-pays or insurance denials linked to high cost.

“They often either skip doses or don’t even pick the medication up at the pharmacy counter,” she said. For prostate cancer patients who need Xtandi, being able to pay for the drug is “the difference between folks being able to survive their cancer versus not.”

Regardless of how the Medicare cost savings trickle down to patients, Ramachandran believes drug pricing reform should continue to be a priority for policymakers going forward.

“It’s not a Democrat or Republican issue,” Ramachandran emphasized. “It’s a patient issue. Regardless of political affiliation, we want to see lower prices.”