Novo Nordisk, Eli Lilly singled out by Biden, Sanders over drug prices

By Eleanor Laise

Critique of obesity and diabetes drug prices avoids examining middlemen who influence cost and access

Shares of Novo Nordisk and Eli Lilly & Co. dropped Tuesday after President Joe Biden and Sen. Bernie Sanders criticized obesity- and diabetes-drug prices in a USA Today opinion piece.

The prices of Novo's diabetes drug Ozempic and weight-loss drug Wegovy took particular heat from Biden and Sanders, a Vermont independent, who wrote that it's "unacceptable" that U.S. prices for the medications can be several times higher than prices in Canada, Germany and other major countries.

Novo Nordisk's American depositary receipts (NVO) were down about 2% Tuesday afternoon, while Lilly's stock (LLY) fell about 1.2%.

The comparison of drugs' list prices in the U.S. versus other nations mirrors the criticism that Sanders has aimed at other major drugmakers, including Merck & Co. Inc. (MRK), Johnson & Johnson (JNJ), and Bristol Myers Squibb Co. (BMY). Yet those comparisons do little to illuminate the U.S. prescription-drug affordability issues, drug-pricing experts say. U.S. brand-name-drug list prices are typically sharply reduced by rebates and other price concessions that drugmakers give to pharmacy benefit managers, wholesalers and payers - including government programs.

The result is a growing disconnect between list prices and the net prices that drugmakers realize, pricing experts say, although it can be hard to pinpoint the size of the gap because of the lack of transparency in the amount of rebates. List prices for the drugs targeted in the Biden and Sanders piece range from about $968 for Ozempic to $1,349 for Wegovy. But a recent report by the American Enterprise Institute estimated that the average discount from list price to net payment was 69% for Ozempic, 48% for Wegovy, and 79% for Lilly's diabetes drug Mounjaro.

Biden and Sanders nodded to the "opaque discounting mechanisms" in their piece Tuesday, saying, "these non-transparent tactics prevent payers from understanding what the drugs actually cost, thereby lowering their negotiating position."

The president and the senator, however, still directly called on Novo to cut its prices. "If Novo Nordisk and other pharmaceutical companies refuse to substantially lower prescription drug prices in our country and end their greed, we will do everything within our power to end it for them," Biden and Sanders wrote in the opinion piece Tuesday. "Novo Nordisk must substantially reduce the price of Ozempic and Wegovy."

"We are disappointed that a very difficult and complex problem is being oversimplified and mischaracterized for political purposes," a Novo Nordisk spokesperson said in a statement Tuesday. The cost of both Ozempic and Wegovy has dropped about 40% since launch, and over 80% of U.S. patients with insurance pay $25 or less monthly for the drugs, the spokesperson said. But even when the company cuts its prices, U.S. patients often don't receive the savings, and "this is a problem," the spokesperson said.

Lilly is also charging "unconscionably high prices" for Mounjaro, Biden and Sanders wrote. The opinion piece did not mention Lilly's new weight-loss drug Zepbound, which also has a list price over $1,000 but is available to many patients at much lower cost.

"We offer Zepbound and Mounjaro for as low as $25 a month to those eligible for our savings card program," Lilly said in a statement Tuesday. Comparing list prices in the U.S. to other countries "ignores patient affordability programs and hundreds of billions of dollars in discounts and fees" paid to pharmacy benefit managers, the company said. While those discounts should lower U.S. patients' costs, Lilly said, "unfortunately this system can drive prices higher."

The piece published Tuesday extends a months-long tussle between Novo Nordisk and Sanders, chairman of the Senate Health, Education Labor and Pensions committee. Sanders said on June 11 that the committee would vote on whether to subpoena Novo president Doug Langa to testify about Ozempic and Wegovy prices, although Novo's lawyers said in a June 12 letter to Sanders that Chief Executive Lars Jorgensen had already agreed to testify. Jorgensen is set to appear before the committee in September, Sanders announced late last month.

Novo Nordisk's ADRs have climbed 38% in the year to date, while Lilly's stock is up 54%.

-Eleanor Laise

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07-02-24 1352ET

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