Novo Nordisk's CEO, Lars Fruergaard Jørgensen, faced tough questions on Capitol Hill Tuesday as lawmakers pressed the company on the soaring prices of its popular weight loss and diabetes drugs, Wegovy and Ozempic. Testifying before the Senate Health, Education, Labor, and Pensions (HELP) Committee, Jørgensen was grilled over why Americans are paying significantly higher prices for these drugs compared to patients in other countries, with Wegovy costing as much as $1,350 per month in the U.S., but as little as $92 in the U.K.
The hearing, spearheaded by Senator Bernie Sanders, I-Vt., was the latest move by Congress to scrutinize pharmaceutical pricing practices, which have led to outrage among consumers and healthcare experts. "In general, we pay by far the highest prices in the world for prescription drugs," Sanders said. "The result of that is that hundreds of thousands of people in this country who desperately need this product will not be able to afford it."
Novo Nordisk's blockbuster drugs, Ozempic, primarily used for type 2 diabetes, and Wegovy, approved for weight loss, have become increasingly popular in the U.S., where demand has surged. However, the steep price tags have drawn criticism, particularly as the same drugs are sold at a fraction of the cost in Europe and Canada. According to a report from the HELP committee, Ozempic costs nearly $969 per month in the U.S. compared to just $59 in Germany.
During the hearing, Sanders highlighted the enormous financial burden these drugs place on the U.S. healthcare system. "If half of Americans were to use these weight loss drugs, it would cost the country $411 billion per year," he said, pointing out that this is $5 billion more than the total amount Americans spent on all prescription drugs in 2022. Medicare alone spent $4.6 billion on Ozempic in 2022, further escalating concerns about the sustainability of such expenditures.
In response to the pricing criticisms, Jørgensen defended Novo Nordisk's strategy, arguing that the company's products help reduce long-term healthcare costs by addressing the obesity and diabetes crises in the U.S. "If you look at the cost of obesity in the U.S., it's a disease that costs Americans more than $400 billion a year," Jørgensen said, adding that their drugs are "actually helping take that cost burden off."
Novo Nordisk has emphasized that the net price of Ozempic has decreased by 40% since it was introduced, though this reduction has not been fully passed on to patients. The company attributed the price discrepancy to the structure of the U.S. healthcare system, noting that "even when we lower our prices, too often patients in the United States don't receive the savings."
Sanders wasn't satisfied with that explanation, noting that generic pharmaceutical companies have claimed they could produce a version of Ozempic for less than $100 per month. However, Novo Nordisk currently holds the patent on semaglutide, the active ingredient in both Ozempic and Wegovy, preventing any immediate competition from generic manufacturers.
The hearing also touched on broader issues related to the affordability of weight loss and diabetes drugs, particularly as rival pharmaceutical company Eli Lilly has entered the market with its own costly treatments, including Mounjaro and Zepbound. Both companies' drugs mimic gut hormones to regulate appetite and blood sugar, but their high prices are causing concern about the long-term impact on the U.S. healthcare system.
The U.S. healthcare system's struggle to manage the rising costs of these treatments has led some insurers and employers to implement strict guidelines for coverage or to drop coverage altogether for weight loss medications. While many health plans cover these drugs for diabetes, coverage for weight loss remains limited. The federal Medicare program, for example, generally does not cover weight loss drugs unless prescribed for another medical condition.
As the hearing unfolded, lawmakers from both parties expressed frustration over the growing disparity between drug prices in the U.S. and other developed countries. A February report from the Department of Health and Human Services found that drug prices in the U.S. were nearly three times higher than those in other wealthy nations, reinforcing calls for regulatory action.
The Biden administration has made tackling high drug prices a priority, and Ozempic is likely to face future price negotiations under the Inflation Reduction Act. Wall Street analysts predict that the drug could be eligible for price negotiations by 2025, with price changes potentially taking effect by 2027. The Inflation Reduction Act, signed into law in 2022, aims to reduce drug costs for seniors by allowing Medicare to negotiate directly with drug manufacturers.
