Why Medicare price cuts matter for Novo Nordisk, European pharma

Drug pricing has emerged as a key topic to watch for pharmaceutical companies and investors in 2025. As President Donald Trump pushes for lower medicine prices for Americans, the sector is facing additional pricing pressure from a Biden-era law called the Inflation Reduction Act.

The IRA, voted into law in 2022, allows the Centers for Medicare & Medicaid Services (CMS) to negotiate prices for a number of drugs each year for patients in Medicare, the federal health insurance program for seniors. It’s now making waves also across the Atlantic.

While these changes are taking place firmly in the U.S., pharmaceutical companies across the globe are finding themselves increasingly exposed to the American market.

A number of European companies have announced sizeable U.S. investments to placate Trump and his aggressive tariff agenda, while AstraZeneca is moving toward another direct listing on the NYSE to tap into the deeper pockets of U.S. capital markets. Meanwhile, Novo Nordisk has cited a failure to deal with changes in the U.S. market as part of the reason for recent leadership changes.

Late Tuesday, the CMS announced newly negotiated prices for 15 blockbuster drugs from 2027, including Novo Nordisk’s mega bestseller Ozempic which will see a 71% discount to its list price.

Among other European pharma giants, AstraZeneca’s cancer drug Calquence will face a 40% discount, while GSK‘s lung disease medicines Trelegy and Breo with 73% and 83% discount, respectively.

Overall, discounts ranged between 38% and 85%, with estimated savings of about $8.5 billion, 36% lower than recent annual spending.

“Whether through the Inflation Reduction Act or President Trump’s Most Favored Nation policy, this is what serious, fair, and disciplined negotiation looks like,” said CMS Deputy Administrator Chris Klomp in a statement.

A GSK spokesperson said they were pleased with the agreement. “We strongly believe in the value of both Trelegy and Breo and remain committed to working with CMS.”

Novo, on the other hand, was critical. “We continue to have serious concerns about the Inflation Reduction Act’s impact on patients and remain opposed to government price setting,” a spokesperson told CNBC in emailed comments. “We have seen that government price setting has not translated to lower out-of-pocket costs for patients and can lead to a loss of coverage for medications and higher insurance premiums,” they added.