The spotlight on pharmaceutical giant Novo Nordisk shifted this week from Ozempic/Wegovy gastroparesis lawsuits to a grilling on the drugs’ prices.

On Tuesday, the company’s CEO, Lars Fruergaard Jørgensen, faced intense scrutiny during a U.S. Senate hearing over the high cost of the company’s popular diabetes and weight-loss drugs. While senators criticized the corporation for charging American patients much higher prices than those in other countries, Jørgensen placed much of the blame on pharmacy benefit managers (PBMs) and the complex U.S. drug pricing system.

Accusations of Overpricing

The Senate hearing, led by Sen. Bernie Sanders (I-Vt.), focused on the glaring disparity in the cost of semaglutide drugs between the U.S. and other nations like France, Canada, Germany, and the United Kingdom, where prices are hundreds of dollars lower.

“We pay 75 cents of every dollar of medicine we sell back into this complex system in rebates, discounts, and fees.”

Novo Nordisk CEO Lars Fruergaard Jørgensen

Sanders, a long-time critic of high drug prices, displayed a chart showing the stark contrast and called out Novo Nordisk for what he described as “ripping off” Americans. “Treat the American people the same way that you treat people all over the world,” Sanders said during the hearing.

Jørgensen defended the company by pointing to the American healthcare system’s unique features, explaining that more than 80% of insured patients pay less than $25 per prescription for Ozempic or Wegovy. He attributed the high list prices to negotiations with PBMs, not the company itself. “We pay 75 cents of every dollar of medicine we sell back into this complex system in rebates, discounts, and fees,” Jørgensen said, further blaming the U.S. healthcare system for driving up costs for patients.

PBMs: The Focus of Blame

Jørgensen explained that the high list prices set by the company in the U.S. are primarily due to PBMs, who act as intermediaries in the drug supply chain. PBMs negotiate prices with drug manufacturers on behalf of insurance companies, and Jørgensen argued that the rebates and fees demanded by these middlemen significantly raise the cost of medications for consumers. He suggested that simply lowering the list price wouldn’t guarantee lower costs for patients, as PBMs often limit access to drugs with lower list prices because they receive less financial benefit from them.

In recent months, PBMs have come under increasing scrutiny from lawmakers and regulatory bodies. Last week, the Federal Trade Commission (FTC) sued three large PBMs for anti-competitive practices. Jørgensen’s testimony echoed concerns raised by many lawmakers that PBMs were creating barriers to affordable medications by prioritizing profits over patient access.

PBMs and drugmakers are also facing heat in civil litigation currently underway in the insulin pricing multidistrict litigation (MDL 3080). The MD centralizes for pretrial hearings and discovery insulin pricing lawsuits filed on behalf of self-funded healthcare plans and their healthcare plan holders, as well as state attorneys general.

“…these companies have the right to make a profit so that they have an incentive to innovate and create new medicines, but that does not give them the right to price gauge the American public…”

Cameron Stephenson, attorney, Levin Papantonio

The responsibility of fair pricing falls on drugmakers and PBMs alike, according to Cameron Stephenson, an attorney with Levin Papantonio. Stephenson was appointed to the Plaintiffs Executive Committee in the Ozempic multidistrict litigation [IN RE: GLUGAGON-LIKE PEPTIDE-1 RECEPTOR AGONISTS (GLP-1 RAS) PRODUCTS LIABILITY LITIGATION (MDL 3094)].

“Both of these parties are to blame, the pharmaceutical companies and the PBMs,” Stephenson said.

“Look, these companies have the right to make a profit so that they have an incentive to innovate and create new medicines, but that does not give them the right to price gauge the American public they claim to be helping.

“The simple fact is both camps have fault, and the American public is paying for it, literally and figuratively,” Stephenson concluded.

A Question of How PBMs Would Respond to Lower Prices

Sen. Roger Marshall (R-Kan.), a physician, was one of the few senators to voice sympathy for Novo Nordisk’s position, suggesting that the company was not the villain in the pricing debate but rather a “hero” for developing life-changing medications like Ozempic.

…a Yale University study that found semaglutide could be manufactured for as little as $5 a month, a figure that starkly contrasts with its list price of nearly $1,000.

However, other senators were less forgiving. Sanders, along with Sen. Maggie Hassan (D-N.H.), pressed Jørgensen on whether he would commit to lowering prices if PBMs agreed to maintain patient access. Jørgensen expressed a willingness to engage in discussions, stating, “If it works in a way that patients get access to more affordable medicine, and we have certainty that it happens, we would be positively disposed to doing it.”

The Success and Controversy of Semaglutide

Ozempic and Wegovy, part of a class of drugs known as GLP-1 agonists, have been highly successful in helping patients manage type 2 diabetes and promote weight loss. By mimicking a gut hormone that regulates blood sugar and appetite, these drugs have gained widespread attention for their effectiveness, even drawing interest from those without diabetes who seek to lose weight.

At the same time, the makers of Ozempic, Wegovy, and Rybelsus are facing lawsuits for failing to warn users about the harmful side effects of taking these drugs, including gastroparesis (“frozen stomach”).

Dissecting the Price Tag

Despite their popularity, these drugs come with a high price tag, especially for patients without insurance or those whose insurance doesn’t cover weight-loss medications. Wegovy, specifically marketed for weight loss, carries a list price of $1,349 per month, leaving many patients to pay out of pocket.

While insurance companies typically cover Ozempic for diabetes treatment, coverage for Wegovy is far less common. This has led to public outcry, with some pointing to a Yale University study that found semaglutide could be manufactured for as little as $5 a month, a figure that starkly contrasts with its list price of nearly $1,000.

Jørgensen countered these findings by explaining that the study didn’t account for the enormous costs associated with research and development (R&D) and the building of manufacturing facilities to produce the drugs. He highlighted that Novo Nordisk had invested over $10 billion in developing GLP-1 drugs and that successful drugs like Ozempic and Wegovy must bear the financial burden of failed drugs as well.

Rising Demand and Growing Criticism

As demand for semaglutide drugs has surged, so has the scrutiny surrounding their pricing. The success of these medications has turned Novo Nordisk and its rival, Eli Lilly, into two of the world’s most valuable pharmaceutical companies.

This financial success, however, has brought criticism, particularly from those who argue that the drugs are overpriced in the U.S. compared to other countries where prices are regulated. In these countries, government agencies set drug prices, ensuring that life-saving medications are accessible to a broader range of patients. In contrast, the U.S. relies heavily on market forces, which pharmaceutical companies argue is necessary to recoup the costs of R&D.

Adding to the complexity, the Inflation Reduction Act has empowered Medicare to negotiate the prices of certain drugs, marking a significant shift in U.S. drug pricing policy. This move could potentially lower costs for some medications, but critics argue it doesn’t go far enough, as the new regulations do not yet cover widely prescribed drugs like Ozempic and Wegovy.

Looking Forward

The Senate hearing underscored the deep frustrations lawmakers and the public have with the high cost of semaglutide-based medications in the U.S. While Novo Nordisk’s CEO pointed to the role of PBMs and the broader U.S. healthcare system as driving factors, it remains to be seen whether any meaningful changes will be made to reduce the financial burden on patients. With PBMs under increasing legal scrutiny and growing bipartisan support for reform, the conversation around drug pricing, access, and affordability is far from over.