Plain Language Summary

What is it about?

Semaglutide is a medication used to treat multiple conditions including type 2 diabetes, heart disease risk, kidney disease, weight loss, sleep apnea, and liver disease. Medicare spending on this type of medication is expected to exceed $65 billion by 2035, creating a significant financial burden. In late 2025, the White House announced new Most Favored Nation pricing agreements for semaglutide products at substantially lower prices, followed by the Centers for Medicare and Medicaid Services releasing Maximum Fair Prices that differed from the Most Favored Nation prices. Previous research had not accounted for these newly announced prices, leaving uncertainty about the actual financial impact. This study provides updated estimates by incorporating the new prices, patient cost-sharing requirements, and potential future generic versions to show the first comprehensive comparison of how these pricing structures will affect Medicare spending over 10 years.

How was the research conducted?

The researchers used forecasting methods to estimate future healthcare spending based on different pricing scenarios. They updated their existing economic model with newly announced prices: $276.78 per month for Ozempic and Rybelsus, $385.63 per month for Wegovy under Maximum Fair Price negotiations, and $245 per month for all products under Most Favored Nation pricing. The researchers analyzed data for over 51 million Medicare beneficiaries eligible for semaglutide treatment, with approximately 1.5 million actually receiving the medication. This method allowed comprehensive assessment of how different pricing agreements would affect total Medicare spending while accounting for reduced costs from preventing disease complications.

What were the results?

Under Maximum Fair Price conditions, Medicare is estimated to save $463 million over 10 years, with savings ranging from $328 million to $1.78 billion depending on usage patterns and generic entry. Under Most Favored Nation pricing, Medicare savings increase substantially to $1.76 billion, ranging from $1.03 billion to $2.63 billion across different scenarios. Patients will bear increased cost-sharing burdens, estimated at $211 million under Maximum Fair Price and $446 million under Most Favored Nation pricing. The actual negotiated prices varied from earlier assumptions, with Maximum Fair Prices being higher than expected for Wegovy but lower for Ozempic and Rybelsus.

Why are the results important?

These findings demonstrate that negotiated drug pricing can produce substantial Medicare savings while improving medication access for patients with multiple chronic conditions. The results may enable broader access to semaglutide for patients with obesity, potentially preventing complications from diabetes and heart disease. Medicare beneficiaries, healthcare providers, and policy makers benefit from understanding these financial implications when making decisions about medication coverage. Long-term implications include establishing precedents for future drug price negotiations and affecting how pharmaceutical companies price new medications.

What are the strengths and weaknesses of this study?

The main strength is providing the first comprehensive comparison of Maximum Fair Price and Most Favored Nation pricing impacts using actual negotiated prices rather than estimates. A significant limitation is uncertainty surrounding Most Favored Nation pricing durability, as these arrangements lack legal codification and specified timeframes for renegotiation. Future research should examine the long-term sustainability of these pricing agreements and assess actual impacts on patient access and health outcomes once implemented. 

^{Note: This content was created with assistance from artificial intelligence (AI) and has been reviewed and edited by ISPOR staff. For more information or for inquiries on ISPOR’s AI policy, click here or contact us at info@ispor.org.}