Novo Nordisk CEO spars with lawmakers over Ozempic, Wegovy prices

By Eleanor Laise

Drugmaker is pressed to cut prices for its blockbuster diabetes and obesity drugs

The CEO of Novo Nordisk faced pointed questions about the cost of Ozempic and Wegovy on Capitol Hill Tuesday, as lawmakers pressed the Danish pharmaceutical giant to cut the prices of its blockbuster diabetes and obesity medications.

The U.S. is "Novo Nordisk's cash cow for Ozempic and Wegovy," accounting for the bulk of sales of those drugs, Sen. Bernie Sanders, chair of the Senate Committee on Health, Education, Labor and Pensions, said at Tuesday's hearing. "Now why does Novo Nordisk charge the American people such outrageously high prices for Ozempic and Wegovy?" he asked.

Sanders, a Vermont independent, has pointed to yawning gaps between the U.S. list prices of Ozempic and Wegovy and the prices for those drugs in Canada, Denmark, Germany and other countries, saying, "The American people are sick and tired of paying, by far, the highest prices in the world for prescription drugs."

Sanders has highlighted the U.S. list prices for Ozempic and Wegovy - about $969 and $1,349, respectively. A drug's sticker price, however, is often far higher than the amount the drugmaker is paid for the medication. Brand-name drug list prices can be substantially reduced by rebates and other price concessions that drugmakers give to pharmacy benefit managers, wholesalers and other payers - all part of a convoluted system that often fails to make medicines affordable for patients, experts say.

The net prices of Ozempic and Wegovy, or the amount that Novo Nordisk is actually paid for the drugs, have dropped substantially since their launch and are expected to fall even further, said Lars Jorgensen, the company's president and CEO, in written testimony prepared for Tuesday's hearing.

Ozempic's net price has plunged about 40% in the U.S. since it was introduced in 2018, Jorgensen told the committee.

While the rebates that Novo Nordisk pays to pharmacy benefit managers and insurers, as a share of each dollar it earns, have climbed over the past decade, that hasn't translated into proportionate savings for patients at the pharmacy counter, Jorgensen said in his testimony, because industry middlemen can steer patients toward higher-priced drugs with bigger markups.

With obesity affecting more than 100 million U.S. adults, many patients, employers, insurers and the federal and state governments are wrestling with the cost of new weight-loss drugs.

The average cost of U.S. employer-sponsored health coverage is expected to jump 9% in 2025, to more than $16,000 per employee, according to consulting firm Aon - in part due to increased use of GLP-1 drugs for diabetes and obesity.

Tuesday's hearing comes just days after Novo Nordisk fielded drug-pricing criticism on another front, as the Federal Trade Commission said last week that the company and other major insulin drug makers have sharply inflated the list prices of their insulin products in response to pharmacy benefit managers' demands for higher rebates. Novo said that it offers a range of programs to help ensure that patients have affordable access to insulin and that it does not control the prices patients pay at the pharmacy.

President Joe Biden and Sanders also singled out Novo Nordisk as well as Eli Lilly & Co. (LLY) for those companies' obesity- and diabetes-drug prices in a July opinion piece in USA Today, saying that if drugmakers "refuse to substantially lower prescription drug prices in our country and end their greed, we will do everything within our power to end it for them."

At Tuesday's hearing, Sanders sought to dismantle the concern raised by Novo Nordisk that cutting its list prices could actually reduce patients' access to the drugs. With pharmacy benefit managers asking for more money in the form of rebates off of list price, drugmakers' list-price reductions could result in PBMs dropping the medications from their formularies, or lists of covered drugs, Jorgensen said in his written testimony. Sanders said at the start of the hearing that he had written commitments from the major PBMs that they would not limit coverage of Ozempic and Wegovy if Novo Nordisk were to cut its prices.

Asked at the hearing whether he would commit to cutting the drugs' prices, given the PBMs' statements, Jorgensen said he would have to see the details of those commitments and would hope that the savings would make their way back to patients. "The experience we have is one of losing access when we lower price," Jorgensen said. "I understand that perhaps the PBMs have changed their mind, and I'd be happy to collaborate with them on this because anything that helps patients to get access and affordability, we are supportive of," he said.

Many other factors could also help drag down the prices of weight-loss drugs in the years ahead, analysts say, including increased competition from the dozens of new drugs in development, the potential introduction of medications in lower-cost pill form as alternatives to the existing injections, and the likely inclusion of Ozempic in the next round of Medicare drug-price negotiations.

For many U.S. patients who have insurance coverage for Ozempic or Wegovy, the medicines already have more reasonable price tags, Jorgensen noted in his written testimony: More than 80% of those patients are paying $25 or less for each prescription, he said.

While some criticism of Ozempic and Wegovy prices has revolved around what it might cost to produce generic versions of GLP-1 drugs, Jorgensen in his written testimony emphasized the research-and-development and manufacturing expenses that go into producing the medications.

Using "an extraordinarily conservative approximation," Novo Nordisk has invested well over $10 billion to develop its GLP-1 drugs, Jorgensen said in the testimony. And since the beginning of last year, he said, the company has committed to spending over $30 billion on expanding manufacturing capacity, with most of that investment directed toward GLP-1 production.

Novo Nordisk's American depositary receipts (NVO) gained 2.1% Tuesday and have climbed 22% in the year to date, while the S&P 500 SPX has gained 20%.

-Eleanor Laise

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09-24-24 1318ET

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