The Biden-Harris administration is tackling the soaring costs of anti-obesity medications with a new proposal aimed at expanding Medicare and Medicaid coverage. This move is designed to make life-changing treatments like Wegovy and Ozempic more accessible to millions of Americans, addressing concerns over their high prices, which often exceed $1,000 per month without insurance.
The push for expanded coverage comes amid growing debate over the affordability of anti-obesity drugs manufactured by Novo Nordisk (NVO). These medications, which have shown significant potential in treating obesity and preventing Type 2 diabetes, are seen as revolutionary. However, their high price tags have made them out of reach for many who could benefit the most.
Why Novo Nordisk Defends High Drug Prices
Novo Nordisk’s CEO, Lars Fruergaard Jørgensen, has defended the company’s pricing strategy, explaining that the medications ultimately reduce the long-term economic burden of obesity-related diseases. In addition to helping with weight loss, Wegovy and Ozempic have been shown to lower cardiovascular mortality by up to 20% and prevent the onset of Type 2 diabetes.
Despite these benefits, the price remains a major barrier for many. The proposed rule change aims to make these life-saving treatments more affordable by reducing out-of-pocket costs for Medicare and Medicaid beneficiaries. If passed, the expansion could cover an estimated 3.4 million Medicare recipients and 4 million Medicaid enrollees, potentially reducing treatment costs by up to 95% for qualifying individuals.
The Price Discrepancy: U.S. vs. International Markets
The Department of Health and Human Services (HHS) has drawn attention to the stark price differences between the U.S. and other countries, where these medications are priced significantly lower. The proposed expansion is part of a broader effort to curb high prescription drug costs through increased competition and negotiations, ensuring that essential medications remain accessible to all Americans.
Analysts suggest that Novo Nordisk’s popular diabetes drug, Ozempic, could be included in upcoming Medicare drug price negotiations, further intensifying the spotlight on drug pricing. Additionally, Novo Nordisk recently launched Wegovy in China at a much lower price of CNY 1,400 (approximately $194), a stark contrast to the $1,349 monthly cost in the U.S.
Financial Impact and Market Reactions
The third-quarter financial performance of Novo Nordisk highlights the strong demand for its GLP-1-based treatments. Wegovy sales surged by 81%, reaching 17.30 billion Danish kroner, while Ozempic sales rose by 26% to 29.80 billion Danish kroner. Jørgensen attributed this growth to the increasing need for both diabetes and obesity treatments.
Despite Medicare covering Wegovy for obese patients at risk of heart disease, many older Americans still face significant challenges in obtaining prescriptions, underscoring the need for broader access and affordability.
Stock Market Reactions
The news had a mixed impact on the stock market, with Novo Nordisk (NVO) up by 1.7%, trading at $106.41. In contrast, Eli Lilly (LLY) rose 3.9% to $785.49, while Amgen Inc. (AMGN) saw a decline of 11.4%, falling to $260.84. Pfizer Inc. (PFE) dipped by 1.3% to $25.81, and Viking Therapeutics (VKTX) increased by 5.2% to $54.74. These market reactions reflect the complex dynamics at play in the pharmaceutical sector as debates around drug pricing intensify.
