A high-profile US Senate committee hearing on the drug prices of Novo Nordisk’s marketed versions of semaglutide, Ozempic and Wegovy, started with Senator Bernie Sanders claiming that the Danish company is treating the US as its “cash cow”. Soon after, the discussion devolved into an exercise of assigning blame for high list prices, to different parties including pharmacy benefit managers (PBMs).
On 24 September, Novo Nordisk’s CEO, Lars Fruergaard Jørgensen, appeared before the Senate Committee on Health, Education, Labor, and Pensions (HELP) to discuss the US prices for the company’s blockbuster glucagon-like peptide-1 (GLP-1) receptor agonists that are approved in type 2 diabetes and obesity. Jørgensen was quick to point out that Novo Nordisk does not expect anyone to pay list prices for their medications, and those are “just a starting point of the negotiations” with the PBMs.
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He added that PBMs favour drugs with higher list prices on formularies and that dropping the list prices often leads to narrower insurer coverage. For every dollar the company makes, 74 cents are passed onto the PBMs, he added. Jørgensen also noted that list prices are based on rebates that Novo Nordisk has to pay in the US to PBMs and federal programmes like Medicare. Consequently, he emphasised that Novo Nordisk does not control the price that patients pay for the medications as these are determined by the insurance companies.
The role and impact of PBMs became the contentious centre of the Senate hearing, which pulled up Novo Nordisk and its GLP-1 drugs in particular, having called Jørgensen as the only witness. In the last few years, GLP-1 receptor agonists have come into the mainstream earning several billion dollars in revenues for leading companies like Novo Nordisk and Eli Lilly, and continue to be on a growth trajectory. PBM executives have also been called to the fore in recent Senate hearings to explain their role in rising drug prices.
Jørgensen said if the US could delink the PBM income to list prices it would create an incentive for lower drug costs.
However, Senator Sanders hit back saying “I have received commitments in writing from all of the major PBMs that if Novo Nordisk substantially reduced the list price for Ozempic and Wegovy, they would not limit coverage. In fact, all of them told me they would be able to expand coverage for these drugs if the list price was reduced.”
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By GlobalDataJørgensen remained sceptical as he said that immediately after Novo Nordisk dropped the US list price for Levamir (insulin detemir), a long-acting insulin, by 65% last year, insurer coverage for it dropped from 90% to about 35%.
Novo Nordisk discontinued Levamir in January. When questioned about the discontinuation, Jørgensen cited the coverage and the subsequent decrease in the demand for Levamir as the primary reasons. When pressed by Senator Maggie Hassan if the company will transfer the Levamir formulation to a manufacturer interested in making the product, Jørgensen noted that the company has not found anyone interested in manufacturing Levamir. Adding that Novo Nordisk would be happy to collaborate with the government or any company interested in such an endeavour, he, however, cautioned that the market for Levamir is disappearing.
