The Danish pharmaceutical giant, Novo Nordisk, is under extensive scrutiny from United States politicians for the exorbitant pricing of two of their much sought-after weight-loss and diabetes medications. The drugs in question, Wegovy and Ozempic, have been identified as central to this tussle.
Lars Fruergaard Jørgensen, the CEO of Novo Nordisk, has staunchly defended the pricing structure of these drugs, attributing their lofty prices not to corporate greed, but to “structural issues” intrinsically linked with the US healthcare system. The CEO articulated an openness to discuss and renegotiate the prices of these drugs during a recent US Congressional hearing. However, such a negotiation would be subject to an assurance by the lawmakers that these popular drugs would continue to be covered by insurers.
The background to this issue can be traced back to a Senate panel led by Senator Bernie Sanders. The senate urged Novo Nordisk to review and significantly lower the prices of these obesity and diabetes medications, enabling them to become more affordable for American patients. As per the company’s reports, the majority of their profits are accrued from the United States.
The crux of this issue is the stark contrast in prices across different nations. For instance, the monthly cost of Ozempic is approximately $969 (€866), and Wegovy nearly $1,350 (€1,206) in the US; whereas Ozempic is priced at $59 (€53), and Wegovy at $92 (€82) per month in Germany and the UK, respectively. This discrepancy triggered widespread criticism, with the Senate Committee alleging that Novo Nordisk had generated nearly $50bn (€45bn) in sales from these two drugs alone.
During a hearing with the Senate Health, Education, Labor, and Pensions Committee in Washington, CEO Lars Fruergaard Jørgensen countered that this discrepancy was owed to vast and complicated structural issues in the US. He outlined how intermediaries and insurers in the United States exercised immense control over price regulation. Notwithstanding these challenges, Jørgensen expressed a willingness to collaborate with policymakers in search of solutions to make these medicines more accessible and affordable.
Jørgensen also pointed out a past incident where their insulin product Levemir’s price was reduced, but the action led to its exclusion from insurance coverage, having serious consequences for the access of American patients in need of the drug. The CEO referenced Pharmacy Benefit Managers (PBMs), key administrators who manage drug benefits on behalf of insurers and are responsible for negotiating prices with drug manufacturers and pharmacies. Jørgensen urged lawmakers to address these issues as part of the bigger picture.
Recent Wall Street analysis predicted that Novo Nordisk would feature in upcoming price negotiations scheduled for February 2025, potentially signaling a potential price reduction within more than two years.
The relevance of the United States market for Novo Nordisk’s business is irrefutable. As per their reports, American sales rose by 41% to 38.4bn Danish Kroner (€5.2bn), accounting for 56% of the company’s overall sales. The sales growth was boosted by gross-to-net sales adjustments related to previous years. Consequently, demand for Wegovy and Ozempic has been continuously exceeding supply, leading Novo Nordisk to expand its production capacity by acquiring US-based drug manufacturer Catalent for $16.5bn (€10bn). This is all in a bid to maintain their market share, despite rising operational costs due to promotional activities in North America and the marketing of their weight-loss drugs in international markets.
