CEO Acknowledges Price Negotiation Possibility
Novo Nordisk’s CEO, Lars Fruergaard Jørgensen, faced tough questions from US lawmakers over the high prices of its weight-loss and diabetes drugs, Wegovy and Ozempic. During a Senate hearing, Jørgensen expressed willingness to negotiate prices, provided the medications remain covered by insurers.
Senate Calls for Lower Prices
Led by Senator Bernie Sanders, the Senate panel urged Novo Nordisk to lower prices, citing the need for affordable access for American patients. The US market accounts for the majority of the company’s profits, according to its 2024 earnings report.
Stark Price Discrepancies Highlighted
The Senate Committee revealed sharp price differences, with Ozempic costing $969 per month in the US, compared to just $59 in Germany. Wegovy costs $1,350 in the US but only $92 in the UK. Novo Nordisk has made nearly $50 billion from these two products alone.
CEO Attributes Costs to US System
Jørgensen defended the high prices, pointing to “structural issues” in the US healthcare system, including middlemen and insurers who control pricing. He emphasized Novo Nordisk’s willingness to work with lawmakers to address these challenges and improve affordability.
Insulin Price Cuts Led to Access Issues
In his testimony, Jørgensen mentioned how a previous price cut on the company’s insulin product Levemir resulted in it being dropped by insurers, reducing patient access from 90% to 36%. This example underscored the complexities of the US market.
Pharmacy Benefit Managers Agree to Expand Coverage
Senator Sanders announced that major Pharmacy Benefit Managers (PBMs) had committed to expanding coverage for Wegovy and Ozempic if prices are reduced. PBMs negotiate prices with drugmakers and play a key role in determining patient access to medications.
Long-Term Price Negotiations Expected
Analysts predict that Novo Nordisk’s drugs will likely be part of formal price negotiations by 2027, with the next round of selections taking place in 2025. This suggests a potential price reduction in about two years.
US Market Drives Novo Nordisk’s Growth
According to its recent earnings report, the US remains Novo Nordisk’s biggest market, with a 41% sales increase in the second quarter. The company is expanding production to meet demand for Wegovy and Ozempic, further solidifying its market position.
SOURCE: Ref Image from Reuters
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