Novo Nordisk CEO testifies at Senate over weight reduction drug prices

Novo Nordisk‘s top executive faced a Senate grilling on Tuesday over the high prices of the corporate’s weight reduction drug Wegovy and diabetes treatment Ozempic, as demand for each injections soars within the U.S. 

Novo Nordisk CEO Lars Fruergaard Jørgensen didn’t explicitly promise lawmakers at a Senate Health, Education, Labor and Pensions Committee hearing in Washington, D.C., that he would slash prices for the 2 drugs.

But Jørgensen said he desires to work with them on policy solutions that can address the “structural issues” that drive up prescription drug costs. He also committed to sitting down with pharmacy profit managers – middlemen who negotiate drug rebates with manufacturers on behalf of insurers – to “collaborate on anything that helps patients get access and affordability.”

That pledge got here after Sen. Bernie Sanders, the Vermont independent who chairs the Senate panel, said he received commitments in writing from all of the foremost PBMs that they might not limit coverage of Wegovy and Ozempic if Novo Nordisk reduced their list prices. The hearing comes roughly five months after Sanders opened an investigation into the Danish drugmaker’s pricing practices. 

“All we’re saying, Mr. Jørgensen, is treat the American people the identical way that you just treat people all around the world,” Sanders said through the hearing Tuesday. “Stop ripping us off.”

He noted that Novo Nordisk has raked in nearly $50 billion in sales from Wegovy and Ozempic, with most of that revenue coming from the U.S. Sanders contends that Novo Nordisk charges Americans substantially higher prices for its blockbuster drugs than it does for patients in other countries. Before insurance, Ozempic costs nearly $969 per thirty days and Wegovy costs almost $1,350 per thirty days within the U.S. 

Meanwhile, each treatments can cost as little as under $100 for a month’s supply in some European countries, based on a release from the committee. Ozempic costs just $59 in Germany, while Wegovy costs $92 within the U.K.

Sanders also said last week that the CEOs of major generic pharmaceutical firms have told him that they might sell a version of Ozempic for lower than $100 a month at a profit. There are currently no generic alternatives to Ozempic available within the U.S. 

Major PBMs, including UnitedHealth Group‘s Optum Rx and CVS‘ Caremark, and a few health plans said $100 monthly list prices for Wegovy and Ozempic would help make those drugs more widely available to patients, based on a release from Sanders.

That would undercut Jørgensen’s claim in his written testimony that PBMs are in charge for the high list prices of Novo Nordisk’s drugs and “exercise near-total control over the flexibility of tons of of hundreds of thousands of Americans to get the medicines they need at inexpensive prices.” The corporate has argued that it must have the ability to pay rebates to those middlemen to get their drugs on formularies, or lists of medicines covered by insurance.

Jørgensen noted that the written guarantees that Sanders received from PBMs are “recent information to me,” but said he understands “that perhaps the PBMs have modified their minds.”

Novo Nordisk has argued that it has spent billions to research, develop and expand manufacturing for the treatments and is funneling more cash into researching their potential to treat other obesity-related health conditions. That investment has prolonged and improved the lives of hundreds of thousands of Americans, which helps reduce the health-care costs related to obesity and diabetes, based on written testimony from Jørgensen.

In the course of the hearing, Jørgensen said the corporate has fought to secure private and non-private insurance coverage for the medications.

He also partially blamed the “complex U.S. healthcare system” for making it difficult for patients to access inexpensive pharmaceuticals, noting that “no single company alone can solve such vast and sophisticated policy challenges.”

Jørgensen promised that Novo Nordisk will “remain engaged and work with this committee on policy solutions to handle the structural issues that drive up costs.”

But Jørgensen contended that lowering prices could have consequences, saying it may lead to less insurance coverage.

In his written testimony, Jørgensen said Novo Nordisk’s insulin product Levemir was previously available to 90% of U.S. patients through formularies. But insurers began to drop coverage of the insulin after Novo Nordisk cut its list price, resulting in only 36% of patients having access.

That eventually drove the corporate to discontinue the insulin, Jørgensen said in his written testimony.

Sanders and other lawmakers, health experts and insurers have warned that the insatiable demand for Novo Nordisk’s drugs and similar weight reduction and diabetes treatments from rival Eli Lilly could potentially bankrupt the U.S. health-care system unless prices drop.

Each drugmakers make GLP-1s, which mimic hormones produced within the gut to tamp down an individual’s appetite and regulate their blood sugar. Eli Lilly’s weight reduction injection Zepbound and diabetes drug Mounjaro similarly cost around $1,000 per thirty days before insurance and other rebates.

In a release, the Senate Health Committee said it will cost the U.S. $411 billion per yr if half of all Americans took weight reduction drugs from Novo Nordisk and Eli Lilly. That is $5 billion greater than what Americans spent on all pharmaceuticals in 2022. 

Medicare spent $4.6 billion on Ozempic in 2022 alone, based on health policy research organization KFF. 

Other insurers and employers have implemented strict requirements to regulate weight reduction drug costs, or have dropped coverage of those treatments altogether. Many health plans cover GLP-1s for diabetes, but not for weight reduction. The federal Medicare program doesn’t pay for weight reduction treatments unless they’re approved and prescribed for an additional health condition. 

The hearing comes because the Biden administration and lawmakers on each side of the aisle attempt to rein in health-care costs within the U.S., partially by pressuring the pharmaceutical industry and drug supply chain middlemen. On average, Americans pay two to 3 times greater than patients in other developed nations for pharmaceuticals, based on a fact sheet from the White House.

Notably, Ozempic will likely be subject to the following round of price negotiations between manufacturers and Medicare — a key provision of President Joe Biden’s Inflation Reduction Act that goals to lower costs for seniors. Wall Street analysts say Ozempic will likely be eligible for negotiations by the point the following round of medicine is chosen in 2025, for price changes that can go into effect in 2027.

Lawmakers asked Novo Nordisk to commit to not suing the federal government if Ozempic and Wegovy are chosen for the following round of negotiations.

Jørgensen didn’t explicitly make that commitment, noting that the corporate believes the talks are “not a good negotiation, but actually price-setting” that may have negative consequences for drug innovation.