On May 13, Senator Bernie Sanders (I-Vt.) published an open letter to Novo Nordisk on the front page of a leading Danish newspaper, urging the Danish company to live up to its altruistic standards and lower U.S. prices for its successful diabetes and weight-loss drugs.
What Sanders didn’t know was that Denmark, a country of six million people, was struggling with its own crisis over the financing of Novo Nordisk’s drugs Ozempic and Wegovy.
Most other developed countries, including Denmark, negotiate drug costs for their citizens and pay prices that are a fraction of those in the United States. But if a drug is effective and expensive, pharmaceutical companies can clamp down on pricing. And Novo Nordisk did so, at least initially, pushing the Danish health care system to its limits.
The country’s public health system had adopted Ozempic as a diabetes drug for years, but in 2022 doctors began prescribing it for weight loss as well, and soon “they emptied all the coffers of the entire public health system,” said Jens Juul Holst, a professor at the University of Copenhagen and co-inventor of the drug.
Countries around the world are struggling with how and when to pay for Ozempic, Eli Lilly’s Mounjaro and other drugs in the same chemical class, especially when prescribed for weight loss. In fact, the astronomically high prices in the U.S. set a bar that pharmaceutical companies can use in their negotiations with other health systems.
In Denmark, where prescriptions for these drugs will consume 18 percent of the regional pharmaceutical budget in 2023, officials considered the unthinkable in a system that prides itself on free cradle-to-grave care: forcing patients to pay for Ozempic—a drug manufactured in the country—out of their own pockets.
In America, stricter insurance policies are making it increasingly difficult for patients to obtain the medications, which can cost up to $1,350 a month.
“In our clinic, there are month-to-month changes in terms of care, coverage and available drugs,” said Michael Blaha, director of clinical research at the Johns Hopkins Ciccarone Center for the Prevention of Cardiovascular Disease. He said doctors and patients play “a constant game of prior authorizations and appeals.”
The use of the drugs for weight loss is a particularly sensitive issue. Novo Nordisk and Lilly are fighting for reimbursement – backed by some doctors and patient groups, many of whom are funded by the drug companies. They are pushing to overturn a 2005 federal regulation that prohibits Medicare from reimbursing weight-loss treatments.
“There’s a strong likelihood that Medicare will cover these obesity drugs sooner or later,” said David Kim, an assistant professor of medicine and public health at the University of Chicago. If Medicare pays, he added, private insurers will likely follow suit.
The impact on government and private insurance budgets, he said, depends on three unanswered questions: How many people will ultimately get the drugs? How long will they take them? And at what cost?
The potential Medicare market alone is huge. In 2020, about 13.7 million Medicare beneficiaries, about a quarter of the total, were diagnosed as overweight or obese, according to Juliette Cubanski and Tricia Neuman, researchers at KFF, a nonprofit health information organization that includes KFF Health News. Assuming a 50% discount on Wegovy’s $1,300 monthly list price, that comes to $107 billion. The total federal share of Medicare Part D spending in 2024 has been estimated at $120 billion.
Novo Nordisk has spent $7.6 million lobbying Congress over the past 12 months, and lobbying disclosures show that the majority of that money was used to push bills in the House and Senate to expand the use of GLP-1 drugs.
The pressure from pharmaceutical companies is relentless. Pfizer, which has a GLP-1 drug in development, commissioned a white paper from the consulting firm Manatt arguing that Medicare law already allows coverage of these obesity drugs because they offer benefits beyond weight loss. Novo and other pharmaceutical companies have funded studies showing that taking these drugs leads to savings in health care for chronic diseases.
But the Congressional Budget Office, whose estimates of the costs of such measures are crucial to whether they are ultimately implemented, has not yet issued a final statement. In a presentation in March, the office said it was “not aware of any empirical evidence directly linking the use of obesity drugs to reductions in other health care spending.”
Prime Therapeutics, a pharmacy reimbursement manager whose clients are employers that sponsor drug plans, released a study this year that found that only a third of patients who take a GLP-1 drug take it for a full year. That means getting insurance companies to cover the drugs can sometimes be a waste of money, said Patrick Gleason, chief research officer at Prime Therapeutics, because research shows that patients tend to regain weight after stopping the drugs.
This does not really surprise Danish scientist Holst. He says that for many people, appetite suppression through GLP-1 drugs is “so miserably boring that they can no longer stand it and have to go back to their old lives.”
One answer could be weight loss programs that use GLP-1 for a year, for example, followed by maintenance therapy with cheaper drugs, Kim says.
Either way, many experts in the field say it makes sense to start losing weight before obesity-related chronic diseases such as type 2 diabetes develop.
Because obesity is associated with so many comorbidities, pharmaceutical manufacturers are currently conducting studies showing that GLP-1 drugs also have a positive effect on conditions such as sleep apnea and heart, liver and kidney disease.
But even those who support the use of these drugs admit that there is uncertainty about how long it takes for the health-promoting effects to occur and whether short-term use can prevent or alleviate longer-term illnesses.
“Modeling the impact is complicated,” says Alison Sexton Ward, a researcher at the Schaeffer Center for Health Policy and Economics at the University of Southern California. “Medical costs will not fall immediately. The diseases prevented may not appear for years.”
Starting next year, out-of-pocket costs for Part D Medicare enrollees will be capped at $2,000, meaning U.S. taxpayers will have to cover most Medicare drug costs. So it’s no surprise that the Congressional Budget Office expects the administration to begin Medicare price negotiations for semaglutide under the Inflation Reduction Act “within the next few years,” according to its March presentation.
Under the terms of the law, Ozempic could be subject to price negotiations by the government as early as next year, with new prices taking effect in 2027. The negotiated unit price would apply to all forms of the drug – Ozempic, its higher-dose weight-loss version Wegovy, and a pill called Rybelsus.
It is unclear how much the price will be. Wegovy costs patients in Denmark up to $365 a month, which does not normally cover the cost of the drug – and in Germany it costs about $140 and in the UK it costs $92.
Meanwhile, generic drugmakers are preparing to sell their versions of semaglutide, which are expected to hit the market in China and Brazil as early as 2026. In the U.S., Americans will likely have to wait until at least 2032 due to patent restrictions in the U.S. The Federal Trade Commission has sought to shorten the drugs’ exclusivity periods by challenging Novo Nordisk’s patent applications for applicators used to inject the drugs – which would extend their market exclusivity to as much as 30 months.
Currently, patients who cannot afford or do not have access to the drugs often resort to ready-made preparations that are not FDA-approved, even though their raw materials come from FDA-registered factories. Blaha has “a number of patients” who do not have access to the brand-name drugs and come to the clinic with vials of ready-made preparations.
Two weeks before Sanders published his letter in Denmark, Novo Nordisk cut the local price of Ozempic by 34 percent to $130 a month – about 15 percent of the U.S. list price. The government, which had threatened to stop covering the drug, agreed to cover the cost of Ozempic diabetes treatment, but only for patients who had previously tried a cheaper drug such as metformin.
Wegovy, the same weight-loss drug in higher doses, would have to be paid for by the patient in almost all cases. The monthly cost is $365. That price, while moderate by U.S. standards, has sparked heated debate about the unequal impact of social class on the affordability of the drug, says Nils Jakob Knudsen, an endocrinologist in Copenhagen.
Calculating drug prices is complex for the Danes, he added, because “the booming economy for Novo also drives our very healthy Danish economy.”
Novo Nordisk’s market valuation of $591 billion on August 2 was significantly higher than Denmark’s entire GDP.
