Novo Nordisk was the company of 2023, soaring to the mantle of Europe’s most valuable company as its bumper weight-loss-aiding drug Ozempic flew off pharmacy shelves and shaved several inches off consumers’ waistlines. That is, provided its U.S. customers could first cough up the exorbitant price.
Now, Novo Nordisk CEO Lars Fruergaard Jørgensen has volunteered to testify to the U.S. Senate to defend the massive markup Americans pay compared to Brits and Europeans.
Ozempic’s U.S. markup
A Wegovy prescription costs about $1,349 per month in the U.S., while it costs just $140 in Germany and $92 in the U.K. Novo Nordisk’s Ozempic carries similar markups.
Novo president Doug Langa was to face a vote from the Senate Committee on Health, Education, Labor, and Pensions that would force him to testify to the group, chaired by Senator Bernie Sanders.
“The American people are sick and tired of being ripped off by giant pharmaceutical companies who make huge profits every year while charging us outrageous prices,” Sanders said in a prepared statement last week.
“It’s obvious. It’s simple. We want Novo Nordisk to stop ripping off the American people and charging us prices that are far higher than they charge in other countries,” Sanders said.
“That’s what I want to see. That’s what the American people want to see.”
A vote in favor would have seen Langa face senators in July. However, Novo Nordisk CEO Jørgensen has now volunteered to defend Novo’s pricing to the committee in a hearing set for September.
A representative for Novo Nordisk told Fortune: "As part of Novo Nordisk’s continued efforts to cooperate with the chairman, our CEO reaffirmed our position. He and Chairman Sanders had a productive call and agreed to find a mutually acceptable date for a hearing.
"We look forward to discussing solutions that ensure access and affordability for all patients within the complex U.S. healthcare system."
Based on Sanders’s statement, Novo Nordisk is the latest sacrificial lamb in a long-running fight with the pharmaceutical industry, which has a long history of extensive lobbying to maintain its profits at the expense of the consumer.
In his remarks, Sanders also called out German pharmaceutical group Merck, another maker of diabetes medication.
In May, after previous criticism from Sanders, Novo wrote to the Senator explaining that the U.S. health care system was to blame for the massive price disparity with Europe.
The drugmaker argued that a portion of its revenues went to middlemen in the U.S. in a way they don’t in the U.K. and Europe, meaning it retains only about 60% of the list price of Wegovy and Ozempic, Bloomberg reported.
Novo’s argument that the U.S. health care system was to blame for its handcuffed pricing strategy was undermined by a landmark study into Ozempic production costs.
In research published in the JAMA Network, academics found Ozempic could be manufactured for 89 cents to $4.73 for a month’s supply. Researchers said that price would include a profit margin for Novo.
The drugmaker hasn’t disclosed how much it costs to produce its appetite suppressants, but has said that under current market conditions, it expects the net price of Ozempic and Wegvy to decline gradually.
The company’s rising profitability, too, has caught U.S. lawmakers’ attention.
Shares in Novo Nordisk ballooned by 53% last year amid growing demand for its GLP-1 drugs, originally used to treat diabetes, by people trying to lose weight.
In January, it became only the second European firm in history, after LVMH, to surpass a $500 billion valuation, in the process overtaking the luxury giant as Europe’s most valuable company. That valuation also makes it more valuable than the entire economy in its native Denmark.
Novo’s net profits increased by 51% to DKK83,683 million ($12 billion) in 2023 and rose a further 28% in the first quarter of 2024 compared with the same period last year.
Like all drugmakers, Novo will be keen to make the most of its period of drug exclusivity before competitors can make their own versions of the appetite suppressant.
But with unsympathetic lawmakers breathing down its neck, CEO Jørgensen will need to be pretty convincing come September to make that happen.
