• Posted September 25, 2024

Novo Nordisk CEO Grilled by Congress Over Price of Ozempic

During a tense hearing before a Senate committee on Tuesday, Novo Nordisk CEO Lars Fruergaard Jørgensen faced tough questions over the company's high prices for its blockbuster drugs Ozempic and Wegovy.

While testifying before the Senate Committee on Health, Education, Labor and Pensions, Jørgensen shifted the blame for those prices to pharmacy benefits managers (PBMs), explaining that Ozempic and Wegovy would likely no longer be offered by PBMs if they had a lower list price, NBC News reported.

A “high list price,” he explained, “is more likely to lead to more access to patients,” because PBMs can get larger rebates with higher-priced drugs. 

Still, Committee Chair Sen. Bernie Sanders did get Jørgensen to agree to meet with PBMs to discuss lowering the cost of Ozempic and Wegovy, NBC News reported. 

Sanders noted that he had received commitments in writing from “all the major PBMs" -- UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts -- that if Novo Nordisk substantially reduced the list price, they wouldn’t take Ozempic and Wegovy off their formulary lists. PBMs work with insurance companies to negotiate discounts or rebates on drugs in return for coverage. PBMs have been criticized for pushing patients to higher-priced drugs, NBC News reported.

For months, Sanders has railed against how much Novo Nordisk charges Americans for both Ozempic (used to treat type 2 diabetes) and Wegovy (approved for weight loss).

“The result of these astronomically high prices is that Ozempic and Wegovy are out of reach for millions of Americans who need them,” Sanders said in April when the committee announced its investigation into Novo Nordisk's pricing practices. “Unfortunately, Novo Nordisk’s pricing has turned drugs that could improve people’s lives into luxury goods, all while Novo Nordisk made over $12 billion in profits last year — up 76 percent from 2021. That is unacceptable.”

That committee report showed the cost of Wegovy is significantly less in European countries — from $140 a month in Germany to $92 a month in the United Kingdom. Americans pay about $1,349 a month for the exact same drug.

But during his opening statement on Tuesday, Jørgensen defended the drugmaker’s pricing structure. 

“Type 2 diabetes costs the U.S. approximately $413 billion every year and obesity costs the U.S. $1.7 trillion, and we all know the physical and emotional toll these diseases have,” he said in his statement, NBC News reported. “That’s why we effort to secure public and private insurance coverage for patients with Type 2 diabetes and obesity.”

Jørgensen claimed that for every dollar Novo Nordisk makes, it gives 74 cents to PBMs and insurance companies.

“When we set a list price, we have to take into consideration what are the rebates we have to pay because, unless we pay big rebates into the system, when we negotiate rebates with PBMs, we are not getting access to the formulary,” Jørgensen said. 

That’s why, he argued, higher prices ensure that a PBM will cover Novo Nordisk’s drugs.

Jørgensen wasn’t alone in voicing his ire for pharmacy benefit managers.

Sen. Tim Kaine said while he supported the focus on the pharmaceutical industry during the hearing, “we’re letting PBMs get away scot-free.”

Larry Levitt, executive vice president of health policy at KFF, a nonprofit group that researches health policy issues, told NBC News there's an “arms race" in drug pricing: Higher list prices lead to larger rebates for PBMs, which in turn encourage higher list prices. In other words, drugmakers may be pressured to increase list prices to satisfy PBMs' demands for higher rebates.

In the end, Levitt said, the uninsured and patients with so-called high deductible plans end up paying more.

More information

The U.S. Department of Health and Human Services has more on drug pricing.

SOURCE: NBC News