‘Stop ripping us off,’ says Sen. Sanders, but Novo CEO blames PBMs for high Wegovy prices

Ozempic and Wegovy have high prices in the United States because U.S. pharmacy benefit managers like high-cost drugs, according to Lars Fruergaard Jørgensen, the chief executive officer of Novo Nordisk.

Jørgensen talked about how PBMs have affected his company’s U.S. pricing strategy Tuesday at a hearing in Washington that was organized by the Senate Health, Education, Labor and Pensions Committee and streamed live on the web.

Jørgensen said Novo Nordisk set the U.S. list prices for Ozempic and Wegovy high because the big PBMs tend to favor drugs with high list prices.

In most cases, the PBMs earn fees tied to the amount of drug savings they generate for insurers, employer-sponsored health plans or other payers, Jørgensen said.

“The higher the list price, the more fees they get for the same job,” he said. “That means that, in our experience, products that come with a low list price get less coverage.”

The solution may be to encourage PBMs to charge a flat fee for each prescription filled rather than basing their fees on the total value of discounts negotiated, Jørgensen said.

The backdrop

Ozempic and Wegovy are two forms of semaglutide, a GLP-1 agonist medicine that can control diabetes and help people lose weight.

Sen. Bernie Sanders, the Senate HELP chair, has been attacking Ozempic and Wegovy prices since April.

Related: Sen. Sanders calls for Novo Nordisk subpoena over Wegovy and Ozempic pricing

Sanders, an independent from Vermont who has allied himself with the Democrats, reported at the hearing that Ozempic costs $122 for a 30-day supply in Denmark and $969 per month in the United States.

Wegovy costs $186 per month in Denmark and $1,349 per month in the United States.

“Stop ripping us off,” Sanders said.

A researcher has estimated that providing the drugs for all Americans who have diabetes or are obese could save 40,000 lives per year, but, if even half of the Americans who need the drugs took them at current prices, the total cost would be $411 billion per year, Sanders said.

Novo Nordisk has already generated more than $50 billion in GLP-1 agonist revenue, with more than $35 billion of the revenue coming from U.S. patients, he said.

One of Sanders’ colleagues, Sen. Elizabeth Warren, D-Mass., says the situation is so dire that the U.S. Department of Health and Human Services should take the Novo Nordisk patent and let rivals make alternative semaglutide drugs for the common good.

Novo Nordisk

Jørgensen testified that Novo Nordisk is more than 100 years old and is controlled by a nonprofit foundation.

A company researcher began to develop semaglutide in the early 1990s, when she began looking for a way to make a fragile natural hormone last long enough to fight diabetes.

The company synthesized the first 12 milligrams of semaglutide in 2004, then took almost 14 years to launch the Ozempic version of semaglutide and almost 18 years to launch Wegovy.

Novo Nordisk has committed to spending about $30 billion to expand Ozempic and Wegovy manufacturing capacity, Jørgensen said.

The United States

Because of the nature of the U.S. PBM negotiation process, Novo Nordisk keeps only about 24% of its U.S. revenue.

The company has to send 74% of the revenue to the PBMs and their payer clients in the form of rebates and similar types of payments, Jørgensen said.

In 2023, he said, Novo Nordisk responded to calls for lower insulin prices by cutting the list price for a 30-supply of a popular insulin drug, Lemira, by 65%.

PBMs responded by dropping the less-expensive drug from their “formularies,” or lists of covered drugs. The percentage of patients with access to Lemira dropped to 35%, from 90%. Performance was so poor that Novo Nordisk ended up suspending production of the drug.

“We have a 100-year history in diabetes,” Jørgensen said. “We are as committed as ever to diabetes. We are one of the very few companies that are still doing research on insulin. We actually have what I would say is a breakthrough insulin being reviewed by the FDA, and we hope to launch that in the U.S. market in a couple of years.”

But competing in the insulin market is difficult, and falling prices make it even more difficult for new players to get into it, Jørgensen said.

Novo Nordisk is shutting down Lemira production partly because no other company seems to be making the product.

“If there is a company interested in manufacturing it or the government wants to manufacture it, we will be happy to collaborate,” Jørgensen said. “The reality is that the market is disappearing.”

One problem with the U.S. system is that pricing is so complex that comparisons of U.S. prices and European prices make no sense, he said.

When Novo Nordisk sells insulin, for example, a patient might pay more in the United States than a patient in Europe pays, but Novo Nordisk ends up with less revenue from a U.S. patient than from a European patient, he added.

The high list price problem

Sanders said he believes that the net price of Ozempic and Wegovy for health plans and other payers is still about $600 per month, even after rebates, and that a high list price is hard on the payers, on uninsured patients and on patients trying to use a combination of a high-deductible health plan and a health savings account to pay for care.

A plan for government workers in North Carolina wanted to cover Wegovy but could not, because covering Wegovy would have doubled the cost of premiums for all 20,000 plan members, Sanders said.

Roughly 80% of the U.S. patients with coverage for Ozempic and Wegovy pay less than $25 per month for a prescription, Jørgensen said.

Novo Nordisk has set up a program that can provide free or deeply discounted supplies of Ozempic for low-income, uninsured people with diabetes.

The company has not yet set up a similar program for people fighting obesity who want to take Wegovy.

Jørgensen told Sen. Bill Cassidy, R-La., that the company does not have a good solution for HSA holders because the issuers of the high-deductible health plans want to make sure that patients have to pay the deductible before the high-deductible insurance begins to pay claims.

In effect, that means Novo Nordisk would have to pay any extra support for the patient to the company that provided the high-deductible health plan, not the patient, he said.

The PBMs’ perspective

The pharmacy benefit managers themselves have argued that they are being pilloried unfairly, and that drug makers and traditional pharmacies with conflicts of interest are attacking them because of their success at holding down prescription drug spending.