A Heated Senate Hearing on the Super Star Weight Loss Drugs' Price, Big Pharma and PBM's Finger-Pointing Game
Key Takeaways:
The Senate hearing emphasized the need for transparency and reform in drug pricing, particularly in relation to PBMs' role in inflating costs.
Novo Nordisk’s justification for high prices in the U.S. was met with skepticism, with senators calling for greater accountability.
This hearing could mark a turning point in the ongoing debate over drug pricing in the U.S., setting the tone for potential changes in how pharmaceutical companies and PBMs operate in the future.
Washington, D.C. — If you buy Ozempic in Germany, you pay $59; however, if you buy the same drug in U.S., you get a hefty price of $969. In a heated U.S. Senate hearing on Tuesday, September 24th, 2024, lawmakers took Novo Nordisk to task over the exorbitant prices Americans pay for the company’s popular diabetes and obesity medications, Ozempic and Wegovy. The hearing, held by the Senate Committee on Health, Education, Labor, and Pensions (HELP), brought to light the stark contrast between U.S. drug prices and those in other countries, prompting urgent calls for accountability and reform.
Numbers Presented in the Hearing
Ozempic & Wegovy Prices Around the World
The two charts below shows the vast price difference of the Ozempic and Wegovy prices in some countries.
Manufacturing Cost vs. List price
Ozempic and Wegovy are using same active ingredients—semaglutide but under different brand name.
Manufacturing cost is $5 per Sen. Bernie Sanders.
Ozempic & Wegovy health insurance coverage (source: Lars Fruergaard Jørgensen, CEO of Novo Nordisk)
Over 80% of U.S. patients with insurance coverage for Ozempic or Wegovy are paying $25 or less for each prescription.
90% of U.S. patients pay $50 or less.
Profit Split between Novo Nordisk and PBMs
Per Mr. Jørgensen, for every $1 Novo makes from Ozempic or Wegovy, 74 cents goes to PBM, and Novo only takes 26 cents.
Profits Over Patients? The Ethics of Drug Pricing
Sen. Bernie Sanders (I-Vt.), a vocal critic of Big Pharma, opened the hearing by highlighting the massive profits Novo Nordisk garners from the U.S. market. He pointed out that 72% of Novo Nordisk’s profits come from American sales, despite the fact that these same drugs are sold at a fraction of the cost abroad. Sanders questioned the ethics of such pricing strategies, arguing that while the pricing may be lawful, it is far from ethical.
"Novo Nordisk is charging American patients up to nine times more for Ozempic than patients in Germany," Sanders stated. "This isn’t just a problem with weight loss drugs; it’s a broader issue of how pharmaceutical companies are exploiting the American market."
Lars Fruergaard Jørgensen, the CEO of Novo Nordisk, in his defense, stressed the extensive research and development (R&D) efforts that go into bringing these drugs to market. He cited Novo Nordisk’s $30 billion investment in manufacturing capacity last year, including a $4 billion expansion in North Carolina, as evidence of the company’s commitment to innovation and job creation in the U.S.
However, Sanders and other senators were not convinced, arguing that such investments do not justify the staggering price differences.
The Role of PBMs: Middlemen or Manipulators?
A significant portion of the hearing focused on the role of pharmacy benefit managers (PBMs) in the pricing equation. Senators from both parties expressed concerns that PBMs, who manage drug benefits for insurance companies, are driving up costs by demanding higher list prices to increase their own profits.
Senator Bill Cassidy (R-LA.), who has long advocated for balancing innovation with affordability, asked Jørgensen to clarify the true cost to U.S. patients versus those in other countries. Cassidy suggested that while innovation is critical, it should not come at the expense of accessibility.
"PBMs are manipulating the system," Cassidy said. "We need to ensure that the incentives for innovation do not override the need for affordable access to life-saving medications."
Jørgensen attempted to shift the blame onto PBMs, claiming that Novo Nordisk only receives 26% of the list price, with the majority going to these middlemen. Yet, this argument did little to sway the committee, with Sanders and others insisting that Novo Nordisk still bears responsibility for the prices they set.
“I will coordinate Novo with PBMs to negotiate, are you prepared?” facing Sent. Sanders’ challenge, we didn’t hear clear answer from Jorgensen.
International Price Disparities and the American Burden
Senators also pressed Jørgensen on why Ozempic and Wegovy are significantly cheaper in other countries. Senator Mitt Romney (R-UT.) challenged Jørgensen on the justification for such price discrepancies, noting that while these drugs are available in both the U.S. and Europe, American consumers are paying vastly more.
Jørgensen’s response was evasive, citing differences in healthcare systems and market dynamics, but he failed to provide a direct answer, leading to frustration among the senators.
"Your prices are not apples to apples," Jørgensen said, referring to international comparisons. However, this explanation did not satisfy the committee, with Senator Sanders pointing out that the net price for Ozempic in the U.S. is still around $600 after all sorts of rebate and discounts, far higher than in other developed nations.
Calls for Reform: The Path Forward
The hearing concluded with a call for greater transparency and reform in the pharmaceutical industry. Several senators suggested that if Novo Nordisk and PBMs do not voluntarily lower prices, legislative action might be necessary to enforce change.
Senator Tammy Baldwin of Wisconsin (D-WI.) raised concerns about the potential discontinuation of insulin production by Novo Nordisk, given their focus on GLP-1 drugs like Ozempic. She urged the company to maintain its commitment to essential medications while also making new innovations affordable.
"Pharmaceutical companies like Novo Nordisk must not put profits over patients," Baldwin said. "We need solutions that ensure all Americans have access to affordable medications, not just those who can afford the highest premiums."
The hearing highlighted the complex interplay between pharmaceutical companies, PBMs, and insurers, with each pointing fingers at the other for the high costs borne by patients. While no immediate solutions were proposed, the hearing set the stage for potential future legislation aimed at curbing the power of PBMs and holding pharmaceutical companies accountable for their pricing strategies.
This hearing could mark a turning point in the ongoing debate over drug pricing in the U.S., with the potential for significant changes in how pharmaceutical companies and PBMs operate in the future.
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