On Tuesday, congressional leaders spent two hours taking to task Novo Nordisk Chief Executive Officer Lars Fruergaard Jørgensen over the high price of the company’s diabetes and obesity drugs, Ozempic and Wegovy. Now the question is whether those prices will change.
Vermont Sen. Bernie Sanders, chair of the Senate health committee, focused his sights not only on Novo Nordisk, but on the broader forces that drive up U.S. health care costs. Even so, it’s hard to imagine any quick way to improve access and affordability for these drugs.
The hearings come amid new data from the Centers for Disease Control and Prevention illustrating the intractability of the obesity epidemic in the U.S. Despite widespread attention to the problem, rates of obesity haven’t significantly budged in the last several years, with over 40 percent of the population considered obese.
Novo’s Wegovy carries a list price of $1,349 per month. The volume of demand is weighing on insurers, even with discounts — and even amid shortages that mean not every patient can fill his or her prescription. It has pushed desperate patients into the gray market for compounded versions of obesity drugs, which are cheaper and more plentiful, but lack any assurances of safety or efficacy.
That situation is what brought Jørgensen before the Senate committee last week. Yet Senate hearings on drug pricing haven’t always offered much relief for American health care consumers. Rather, they often serve to illuminate the convoluted nature of drug pricing.
That opacity has been a useful shield for drug manufacturers (and for other players in the system, such as insurers and pharmacies). When cornered over the high cost of essential treatments, all a CEO in congressional crosshairs needs to do is deflect the blame toward someone else.
And that was exactly what Jørgensen did. When repeatedly pressed by Sanders to explain why the cost of Novo’s GLP-1 therapies is orders of magnitude higher in the U.S. than in several European countries, Jørgensen kept pivoting the conversation to pharmacy benefit managers, or PBMs. They’re the middlemen between drug manufacturers, insurers and pharmacies.
PBMs have become the favorite punching bag over high drug prices for good reason. In theory, their job is to haggle with drug companies to save insurers money. In practice, they exploit a murky, convoluted system to maximize profits while adding to the rising costs of health care in the U.S.
Novo certainly has developed a groundbreaking product (and to be fair, has put significant resources into developing and manufacturing it). But it also isn’t innocent in this mess. One need only look at its recent astronomical revenue and profit growth to see that Ozempic and Wegovy have been very good to the Danish company. The majority of the returns have come from the U.S. market, where both prices and demand are high.
Access could ease when Medicare is able to negotiate the price of these drugs. Ozempic and Wegovy are likely to be targeted in the next round of the government agency’s program. But the bargaining process is slow — lowered costs wouldn’t kick in until 2027.
That’s a shame. “It is a profound moral issue,” Sanders said, pointing to a recent study that suggests Ozempic and Wegovy could save more than 43,000 lives each year, while improving the lives of many more people.
That statement underscored one positive outcome of the hearings: the open acknowledgement that obesity drugs can help Americans live healthier lives. It wasn’t that long ago that many were questioning the purpose of these drugs. The perception that they are cosmetic drugs finally has shifted thanks to study after study showing the central role they might play in mitigating diseases like Type 2 diabetes, heart disease, kidney disease and potentially even Alzheimer’s and addiction.
Unfortunately, without fixing the broken system of drug pricing in the country — not one kink in the chain, but all of them — the potentially profound long-term impact on our nation’s health will remain out of reach.
Lisa Jarvis is a Bloomberg Opinion columnist covering biotech, health care and the pharmaceutical industry.
