The Senate Health, Education, Labor and Pensions (HELP) committee was back Tuesday with another hearing focused on the high cost of pharmaceutical drugs — this time with only Novo Nordisk CEO Lars Fruergaard Jørgensen in the hot seat.
The hearing centered around a theme that’s been revisited frequently in Congress lately: the question of why the cost of drugs — including popular weight loss drugs like Ozempic and Wegovy — are significantly higher in the U.S. than in other countries.
Given how notoriously expensive GLP-1 drugs are, Novo Nordisk is an easy target for the HELP committee, which has recently pushed for drug pricing reform under the helm of Sen. Bernie Sanders (I-VT).
Novo Nordisk’s GLP-1 products brought in $18.4 billion in sales in 2023, nearly double the $9.3 billion they garnered in 2022. Sanders highlighted that Americans pay far more for those drugs than Europeans or Canadians do.
“The issue that we are discussing this morning is not complicated,” Sanders stated. “It has everything to do with [the fact that] Novo Nordisk’s diabetes drug Ozempic is sold in Canada for $155, in Denmark for $122 and in Germany for $59. In the U.S., Novo Nordisk charges us $969.” That’s over 15 times more than the price tag in Germany.
The price disparity is similar for Novo Nordisk’s other GLP-1, Wegovy, which has a monthly price tag of $1,349 in the U.S. compared to $137 in Germany.
“Novo has created game-changing drugs, which could save the lives of tens of thousands of Americans every year if made affordable,” Sanders added. “If not made affordable, Americans throughout this country will needlessly die and suffer.”
Big Pharma vs. PBMs
Sanders asked Jørgensen if the CEO believed it was acceptable that without lower costs for these drugs, “40,000 people a year could die.”
“Any prospects of patients not getting access to the medicines they need is terrifying,” Jørgensen said in response. “We have to solve this challenge together. I don’t think any one company can solve that alone. I wish there were more at the table today so we can have a discussion about how we can do that together.”
Jørgensen proceeded to roll out his main argument — that drug middlemen, known as pharmacy benefit managers (PBMs), are actually the real culprit.
In particular, Jørgensen blamed PBMs and insurance companies for being set up to extract fees from pharma companies. He noted that on average, Novo Nordisk pays 74 cents to PBMs in rebates for every dollar it makes on a drug.
“[PBMs] are rewarded based on list price,” he said. “The higher the list price, the more fee they get for the same job. In our experience, products with a lower list price are less attractive [to the PBMs]. That becomes troublesome for patients, because patients who do not have insurance or have high deductible plans are asked to pay the list price.”
But Sanders was quick to point out that he had received commitments in writing from the three biggest PBMs — CVS Health, OptumRx and ExpressScripts — that they would not limit coverage of Ozempic and Wegovy if Novo Nordisk agreed to reduce the list prices.
“In fact, all of them told me they would be able to expand coverage for these drugs if the list price was reduced,” Sanders said.
When asked to commit to lowering the list price, Jørgensen did not provide a clear answer. But he suggested he was open to having discussions with the PBMs.
“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.”
Rita Glaze-Rowe, president of transformative healthcare markets at Real Chemistry, noted that the hearing underscored the complexity of the U.S. healthcare system and the need for all industry players to be under the spotlight.
“There was a theme [around] PBM accountability within that system, and quite frankly, the perverse incentives that they create — which is being accentuated in this obesity and GLP-1 market,” she said. “The senators made it clear that they would like that focus to continue on looking at the role of the insurance plans, the PBMs and pharma companies in that mix.”
When asked whether Novo Nordisk would consider supplementary programs or treatments such as nutrition coaching to help patients stay off the expensive drugs, Jørgensen said he believed there is a path forward for certain segments of patients.
“I believe there will be a market with such a solution, and it will coexist with our products,” he explained. “We don’t want to [put] people on medicines they don’t need — but many Americans will need help for a long time.”
Senators push for transparency
Toward the end of the hearing, Sen. Mike Braun (R-IN) drilled in on Novo Nordisk’s revenue after accounting for rebates, fees and discounts to PBMs, asking Jørgensen what the company’s revenue of Ozempic was after taking those out. Jørgensen said he didn’t have the number off the top of his head.
“That’d be something that ought to be at the top of your head, because most of us would want to see that so you can make the case against PBMs,” Braun said. “[It’s a] basic lack of transparency, that to me comes from the top, that cloaks the system in general.”
The lack of transparency is what has attracted recent congressional scrutiny, Braun argued, from Medicare’s new negotiating power to ongoing legislative efforts to crack down on PBMs and pharma.
“When you operate like an unregulated utility, you’re going to get government regulating you,” Braun said. “Unless you, hospitals and insurance take the bull by the horns, you’re going to increasingly be in more conversations like this.”
“I think you’re hiding behind your opaqueness, and you need to provide more transparency for your own good,” he concluded.
