Novo stock prices fell by more than 3% when the U.S. market opened approximately two hours after the announcement came from the Centers for Medicare and Medicaid Services.
Three of Novo's revolutionary GLP-1 drugs were selected for the government price-setting program: Ozempic injections for Type 2 diabetes, Wegovy shots for obesity, and Rybelsus pills for diabetes management. All three drugs were treated as one product because they each contain the same active ingredient, semaglutide.
President Joe Biden's landmark domestic policy legislation, the 2022 Inflation Reduction Act, gave the Centers for Medicare and Medicaid Services the authority to directly negotiate prescription drug prices with manufacturers for Medicare, which covers seniors and people with kidney failure. Semaglutide has been found to be a promising treatment for a multitude of disorders, including chronic kidney disease and alcohol and drug addiction.
Critics of the negotiation program, including the several pharmaceutical companies in litigation over the legislation, contend that it strong-arms businesses into accepting government-set prices because drugmakers face punitive taxation if they choose not to comply but still wish to sell to Medicare patients.
Novo Nordisk's position in the American market has been in a precarious place for several weeks, as Trump's fight with Denmark over the territory of Greenland has caused significant controversy between the United States and the Scandinavian country.
Trump has threatened to place "very high" tariffs on all Danish goods imported into the U.S. should he not be able to reach a deal for the Arctic island territory. Danish goods account for less than half of 1% of all U.S. imports, but the U.S. imported nearly $6 worth of pharmaceuticals from Denmark in 2023.
The American pharmaceutical company Eli Lilly makes competitor products to Novo's injectable GLP-1s: Mounjaro for Type 2 diabetes and Zepbound for obesity. Neither of these drugs was selected for the drug price negotiation program, likely because of the length of time they have been on the market.
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Another one of Lilly's diabetes products, Tradjenta for Type 2 diabetes, was selected for drug price negotiation, but it is not a GLP-1.