Novo Nordisk Faces Scrutiny Over High Prices of Ozempic And Wegovy, Blames US Health System

Zinger Key Points
  • Senator Sanders has been urging Novo to reduce the prices of Wegovy, emphasizing the disparity between production costs and market prices.
  • The potential market for GLP-1 drugs could reach $150 billion by the early 2030s.
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Novo Nordisk A/S NVO has disclosed that it retains approximately 60% of the list price of its diabetes and obesity medications, Ozempic and Wegovy, in the U.S. after accounting for rebates and fees paid to intermediaries.

This revelation comes amid intensifying scrutiny over the cost of these blockbuster drugs.

In a recent letter to Senator Bernie Sanders, the European drug maker expressed willingness to collaborate with lawmakers to tackle systemic issues hindering patients’ access to medications.

The letter highlighted the company’s stance that focusing solely on the list price is misleading, given the significant portion paid to middlemen in the complex U.S. healthcare system.

Senator Sanders has been urging Novo to reduce the prices of Wegovy, emphasizing the disparity between production costs and market prices, Bloomberg highlighted.

Earlier this year, a study revealed that Ozempic could be produced for less than $5 a month, starkly contrasting its current monthly price of $968.52.

Similarly, Wegovy is priced at $1,349.02 per month. This pricing discrepancy has prompted the Senate Health, Education, Labor, and Pensions Committee, chaired by Sanders, to investigate Novo’s pricing strategies.

Novo Nordisk defended its pricing by noting the substantial investment required for drug development. The company stated it spent over $10 billion to develop GLP-1 medications, and the development process often spans over a decade.

With such pricing gaps and boosted supply, the potential market for GLP-1 drugs could reach $150 billion by the early 2030s as their applications extend beyond obesity and diabetes.

Bloomberg notes that analysts project that Ozempic will generate around $18 billion in sales this year. Wegovy is expected to bring in close to $9 billion, predominantly from the U.S. market, where approximately 40% of adults are obese.

Reuters noted that the potential market for GLP-1 drugs could reach $150 billion by the early 2030s as their applications extend beyond obesity and diabetes.

Global spending on obesity medications reached $24 billion last year, according to IQVIA. Their latest five-year outlook predicts this spending could soar to $131 billion by 2028, reflecting an estimated annual growth rate of 27%, up from the previous estimate of 13%.

Supplies of both Novo’s Wegovy and Eli Lilly And Co’s (NYSE: ) Zepbound remain constrained, but the companies have been increasing production.

Price Action: At the last check on Tuesday, NVO shares were trading lower by 1.29% at $134.29.

Image Via Shutterstock

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