Novo Nordisk faces US Senate committee grilling over price of weight loss drugs

Novo Nordisk’s chief executive is preparing for a showdown this week with progressive firebrand Senator Bernie Sanders over the high price of blockbuster diabetes and weight loss drugs, as Ozempic falls into the scope of US government price controls.

Sanders, who chairs the Senate committee on health, education, labour and pensions, told the Financial Times that he would tell Lars Fruergaard Jørgensen that the Danish drugmaker must “stop ripping off the American people”.

He said the monthly wholesale price of Ozempic and Wegovy in the US is up to 15 times higher than in some European countries.

“We’re talking about the possibility of saving tens of thousands of lives by pricing this product at a cost that people and state and federal government can afford,” said Sanders.

“No one is questioning their right to make a profit but what we are questioning is excessive greed that has the potential of bankrupting Medicare,” he said, referring to the state-backed healthcare programme for over-65s.

Jørgensen’s appearance in front of the Senate committee on Tuesday to discuss the cost of weight loss drugs, known as GLP-1s, is the latest front in Washington’s efforts to rein in the pharmaceutical industry.

The Biden administration has capped costs of insulin and asthma inhalers, and put pricing controls on some drugs.

Ulrich Otte, a Novo Nordisk senior vice-president, told an investor conference recently that it was “very likely” that Ozempic would be targeted by the second round of price negotiations with the Medicare programme from next year, part of reforms introduced by President Joe Biden’s Inflation Reduction Act.

Wegovy, the weight loss version of Ozempic, could also therefore be subject to price controls.

Benedic Ippolito, a senior fellow at the American Enterprise Institute, said Sanders’s ambitions were to “create a cacophony of noise around the price of this drug” so that if it were selected for Medicare price negotiations under a future Harris administration, the government would “have to be especially aggressive when it sets that price”.

A similar drug made by Eli Lilly was approved later and therefore is unlikely to be subject to Medicare price controls for several years more.

But Sanders said: “I have the feeling if we can be successful in getting Novo Nordisk to substantially reduce its prices, Eli Lilly will not be far behind.”

Medicare spent $4.6bn on Ozempic in 2022 for 780,000 beneficiaries.

But that pales in comparison with the estimated $268bn annual cost of covering Wegovy if all 19.7mn Medicare patients with obesity had access to it, according to research published in the New England Journal of Medicine.

Jørgensen is expected to defend the respective $969 and $1,349 list prices of Ozempic and Wegovy, pointing to how insurance covers the cost for most patients and how industry middlemen, known as pharmacy benefit managers, turn a large profit from a rebate on the wholesale price.

On Friday, the Federal Trade Commission sued three of the largest PBMs for keeping insulin prices “artificially” high.

Jørgensen’s appearance on Tuesday will be his first in-person in front of US senators. When a similar hearing was held over insulin last year, he appeared through a video call.

Sanders said “it was not an easy task” to convince Jørgensen to appear at the committee. “They resisted but I think we finally made the case that it was the right thing for them to show up,” he said.

Sanders had previously threatened to subpoena Doug Langa, the director of Novo Nordisk’s US operations, to appear before the committee. As Jørgensen is not a US citizen, he could not be subpoenaed.

In his previous appearance before the Senate, Jørgensen stressed his personal understanding of diabetes, saying that his father suffered from the condition.

Appearing alongside Sanofi chief executive Paul Hudson and Eli Lilly chief executive, David Ricks, the Novo Nordisk head pointed the finger at pharmacy benefit managers.

Jørgensen is expected to make a similar case that the company does not entirely control prices paid for its drugs, while also stressing the costs involved in drug development, said people familiar with the company. Drugs can take 10 to 15 years on average from discovery to development.

“The PBMs are taking 90 per cent of the money, but basically Bernie Sanders and other socialist lawmakers haven’t figured out what a PBM is and they blame the drug companies,” said an industry observer who closely follows Novo Nordisk.

“They are spending billions and billions not just on manufacturing but on the development of these medicines. This isn’t an overnight success,” another person familiar with the company said.

With the election contest between vice-president Kamala Harris and former president Donald Trump less than two months away, Sanders said he hoped the committee hearing would keep the high cost of drugs in focus for a future administration.

“I can’t speak for the vice-president, for Kamala, but I certainly hope that she will be as aggressive as President Biden in saying to pharma, whether it’s Novo Nordisk or other companies, that we are sick and tired of being ripped off,” he said.