The head of Ozempic manufacturer Novo Nordisk on Tuesday defended the high price of the company’s highly sought-after obesity and Type 2 diabetes drugs, blaming pharma middlemen and insurers for the price.
Testifying before the Senate Committee on Health, Education, Labor and Pensions, Novo Nordisk CEO Lars Fruergaard Jørgensen argued that it’s not actually Novo Nordisk that decides how much people pay for Ozempic and Wegovy. But Jørgensen also said he’s concerned that lowering the cost of the medications could lead pharmacy benefit managers, the entities that negotiate drugs on behalf of insurers, to stop covering the drugs.
“We don’t decide the price for patients,” Jørgensen said. “That’s set by insurance companies.”
Committee Chairman Bernie Sanders, I-Vt., cited data showing that while the list price of Ozempic is close to $1,000 per month in the United States, the drug costs just $59 per month in Germany, $122 per month in Denmark and $155 per month in Canada.
Sanders said during the hearing that he had received confirmation from “all of the major PBMs” that they wouldn’t reduce coverage if Novo Nordisk lowered their prices. In a report published Tuesday morning, Cigna/Express Scripts, UnitedHealth Group/Optum Rx and CVS Health/Caremark said lowering the price of the drugs to below the net cost wouldn’t prohibit them from coverage.
“That’s new information for me,” Jørgensen said. “Anything that will help patients get access to affordable medicine we’ll be happy to look into.”
But ranking member Bill Cassidy, R-La., acknowledged that if the company didn’t profit on their products, there wouldn’t be incentive to further innovate.
“There is a tension,” he said. “A tension between the need to incentivize innovation and the ability to afford that innovation. And we are here struggling with that balance.”
Jørgensen said most Americans who are prescribed the medicines have insurance coverage for it and 80 percent of Americans pay $25 or less. But Sanders said his statement doesn’t take into account the high price of health insurance in the United States.
“What you’re forgetting to mention is that many of those people are paying outrageously high prices for the insurance that covers Ozempic and other drugs,” he said. “So simply, this is a pass-through to the insurance companies.”
Health economists and industry watchers have said the market for obesity drugs is already trending downward, which will be the driving force to lower prices over policy changes.
The hearing came after Rep. Lloyd Doggett, D-Texas, and Sen. Elizabeth Warren, D-Mass., penned a letter to the Department of Health and Human Services urging the agency to use its “existing legal authority” to issue generic licenses for semaglutide. Democrats also raised the issue of whether the drug might be subject to price negotiation under the 2022 reconciliation law.
Responding to a question from Sen. Ben Ray Luján, D-N.M., Jørgensen said he would commit to not taking legal action to stop Medicare from including Ozempic in future drug pricing negotiations, but only if it’s a “real negotiation.”
“I have nothing against negotiating pricing with the objective of improving affordability for patients,” Jørgensen said. “But if it’s not a fair negotiation but actually price-setting, I think it would have negative consequences on the innovation being brought to Americans.”
Several senators raised the need to reform pharmacy benefit managers’ practices, pointing to legislation moving through the House and the Senate.
Speaking to CQ Roll Call after the hearing, Cassidy said getting PBM changes across the finish line is a main priority.
“The main thing we’re working on right now that directly relates to this is the PBM reform, which was passed but we’d like to get through,” he said.
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