The CEO of Novo Nordisk, Lars Fruergaard Jørgensen, is gearing up for a tough interrogation from US lawmakers regarding the exorbitant prices of the company’s diabetes and weight-loss medications, including the popular Ozempic and Wegovy. The hearing, scheduled for Tuesday, September 24th, will be held by the United States Senate Committee on Health, Education, Labor, and Pensions (HELP), with Senator Bernie Sanders, the committee’s chair, taking the lead. Sanders, known for his outspoken stance against high drug prices, has been a vocal critic of the pharmaceutical industry’s pricing practices.
The hearing comes at a time when the high cost of prescription drugs in the US has become a major point of contention. President Joe Biden and Senator Sanders have both voiced concerns about the issue, with Sanders going as far as to state that the first question he will ask Novo Nordisk’s CEO is why the company charges 10 to 15 times more for Ozempic and Wegovy in the US compared to other countries. “This is absurd,” Sanders declared in an interview. “It is clear that Novo Nordisk is ripping off the American people.”
Novo Nordisk is expected to defend its current pricing strategy, highlighting the extensive development costs of these drugs, which the company claims exceeded $10 billion over three decades. They will also emphasize the fact that most patients are covered by insurance and blame pharmacy benefit managers for inflating drug prices through rebates. To further bolster its case, Novo Nordisk will point to its substantial investments in expanding its manufacturing capacity, exceeding $30 billion since early last year.
However, critics, including Bloomberg analysts, argue that the enormous sales of Ozempic and Wegovy, projected to surpass $65 billion by year’s end, undermine the company’s justification for high prices. They point out that after accounting for inflation, these sales figures would surpass the $68 billion Novo Nordisk has invested in all research and development since the mid-1990s, when the company began focusing on this class of drugs.
Furthermore, some analysts speculate that Novo Nordisk’s blockbuster diabetes drug Ozempic, along with other notable medications, might be included in Medicare’s negotiated prescription drug prices. This potential development could further impact the company’s pricing strategy and its future earnings.
As the hearing approaches, NVO stock has taken a hit, falling by 3.10% to $123.56 at the last check on Monday. The outcome of the hearing could significantly impact the company’s future prospects, potentially leading to changes in its pricing practices or facing increased regulatory scrutiny.
