Novo Nordisk Shares Under Pressure After Steep Medicare Price Cut for Ozempic
Deal secures access for its blockbuster weight-loss drugs but forces a 70% price reduction, fueling concerns over future profitability.
Novo Nordisk A/S (NYSE: NVO), the Danish drugmaker behind the blockbuster weight-loss and diabetes drugs Ozempic and Wegovy, has finalized a major pricing agreement with the U.S. government that will slash the cost for Medicare recipients by over 70%.
The deal, a landmark result of negotiations under the Inflation Reduction Act, secures broad access for millions of American seniors but comes at a steep cost. The agreement forces a significant price concession on Novo's most profitable products, sending a ripple of concern through the market about the long-term earnings power of the GLP-1 drug class.
While the company has projected a “low-single-digit negative impact” on global sales, the sheer scale of the discount has investors recalibrating their growth expectations. Following the initial announcement, Novo Nordisk's stock fell more than 3% as the market digested the financial trade-off between higher volume and sharply lower revenue per prescription.
Shares of the company currently trade near their 52-week low, a stark contrast to the highs reached when the phenomenal success of its obesity treatments briefly made it Europe's most valuable company. The stock's recent performance reflects the sustained pressure from the looming threat of government-negotiated prices.
The Double-Edged Sword of Access
Under the terms of the agreement, the monthly price for Novo's semaglutide products (marketed as Ozempic and Wegovy) for Medicare patients will fall to approximately $274, effective in early 2027. This is a dramatic reduction from the previous list prices which often exceeded $1,000 per month.
For Novo Nordisk, securing a spot on Medicare’s formulary was strategically critical. It prevents the brands from being excluded in favor of competitor Eli Lilly’s Mounjaro and Zepbound and guarantees access to a vast and growing market of older Americans. However, the price precedent set by the negotiation is a significant headwind.
In a related move to remain competitive, the company also voluntarily reduced the self-pay price for Wegovy and Ozempic to $349 per month. This suggests a broader strategy shift towards defending market share through volume, even at the expense of the premium pricing that drove its explosive growth.
A New Era for Pharma Pricing
The Novo Nordisk agreement is one of the first major outcomes of the drug price negotiation powers granted to the U.S. government through the Inflation Reduction Act. It serves as a potent indicator of the changing landscape for the pharmaceutical industry, which has long benefited from its pricing power in the American market.
Analysts are now closely watching how these dynamics will affect Eli Lilly, which is expected to undergo similar negotiations for its own blockbuster GLP-1 drugs. The outcome signals a new era where high-volume drugs with significant government spending will face intense pricing scrutiny.
Despite the immediate margin pressure, some on Wall Street maintain a cautiously optimistic long-term view. The current analyst consensus for Novo Nordisk remains a “Moderate Buy,” suggesting a belief that increased volume and the sheer size of the obesity market could still provide a path for growth, albeit a more moderate one than previously anticipated.
The key challenge for Novo Nordisk moving forward will be to scale manufacturing to meet the anticipated surge in demand at these lower price points while also advancing its pipeline to develop new products that can command higher prices. The era of blockbuster profits from Ozempic and Wegovy in the U.S. market has now been permanently reshaped.