What the Maker of Ozempic Doesn't Want You to Know: It's Bankrupting America

The transcript discusses the escalating fiscal crisis in America due to the high cost of revolutionary weight loss drugs like Ozempic and Wegovy, produced by Novo Nordisk. These drugs offer potential health benefits but are priced exorbitantly in the U.S. compared to other countries, straining state health plans like North Carolina's. Dale Folwell, North Carolina's State Treasurer, highlights the financial burden on public employees and retirees. The discussion includes calls for federal intervention to negotiate prices or open patents to generics, with advocacy from figures like Bernie Sanders and experts like Melissa Barber and Peter Maybarduk, emphasizing the need for affordable access.

• America is facing a significant fiscal crisis that threatens the stability of numerous systems, including Medicare.
• The crisis is exacerbated by the high costs associated with revolutionary drugs that could potentially solve widespread health issues.

"There's a looming fiscal crisis in America. It threatens to destabilize almost everything. In fact, it's going to bankrupt Medicare."

• The fiscal crisis is severe enough to potentially bankrupt Medicare, highlighting the urgency and magnitude of the issue.

• Drugs like Ozempic and Wegovy are noted for their revolutionary impact on health, including weight loss and unexpected benefits.
• These drugs are linked to reduced alcohol cravings, cardiovascular benefits, mental health improvements, and anti-cancer properties.

"They're seeing a positive side effect of those weight loss drugs like Ozempic and Wegovy... and that's a diminished craving for alcohol."

• The drugs have a notable side effect of reducing alcohol cravings, indicating potential broader health benefits.

"We're now learning they may have cardiovascular benefits, maybe mental health benefits, and now the latest is anti-cancer benefits."

• Beyond weight loss, these drugs may offer significant health advantages, potentially transforming treatment protocols for various conditions.

• There are significant cost disparities for these drugs between the U.S. and other countries, such as the U.K. and Denmark.
• The high cost in America has substantial economic implications, affecting accessibility and affordability.

"Let me show you something interesting. These are $50 bills. Here's how much a month of Ozempic costs in the U.K. And here's how much it costs in Denmark, where Novo Nordisk, the company behind it all, is headquartered. Now, here’s how much that same list price is in America."

• The visual comparison of drug costs highlights the stark pricing differences, underscoring the financial burden on American consumers.

• If widely adopted, the cost of these drugs could surpass the total spent on all prescription drugs in the U.S. in 2022.
• The financial strain on public health plans, like North Carolina's, illustrates the broader economic challenges posed by these drug costs.

"[Bernie Sanders] If half of the adults in our country with obesity took Wegovy, and the other new weight loss drugs, it would cost us $411 billion every year. That is $5 billion more than what Americans spend on all prescription drugs at the pharmacy counter in 2022."

• The potential national expenditure on these drugs could eclipse previous pharmaceutical spending, highlighting the need for financial reassessment.

• Novo Nordisk, the company behind these drugs, has become more valuable than the entire economy of Denmark.
• The company's monopoly on these drugs has significantly increased its market power and economic influence.

"[Eric] The company behind this revolution is called Novo Nordisk, and this year, Novo became more valuable than the entire economy of its home country."

• Novo Nordisk's financial growth reflects the economic impact and market dominance resulting from its exclusive drug offerings.

• State entities like North Carolina's public employee health plan are struggling with the high costs of these drugs.
• The rapid increase in drug prescriptions and associated costs presents a significant fiscal challenge for state health plans.

"[Dale Folwell] Our office has never questioned the effectiveness of these drugs. We're simply questioning what we're having to pay for them."

• The effectiveness of the drugs is not in dispute; rather, the focus is on the financial burden they impose on public health systems.

"[Eric] In 2021, 2,800 North Carolina public employees were prescribed GLP-1 drugs for weight loss. And then the drugs went viral."

• The surge in prescriptions reflects the growing demand and financial implications for state-funded health plans.

• The high cost of these drugs has sparked discussions among politicians, drug pricing experts, and policy advocates.
• There is an ongoing effort to make these drugs more accessible and affordable for all Americans.

"We spoke to politicians, drug pricing experts and policy advocates to understand who is currently benefiting from this revolution and who's paying the price."

• The dialogue aims to address the imbalance between those profiting from the drugs and those bearing the financial burden.

• Novo Nordisk has experienced significant financial growth over the past decade, with profits increasing from $4 billion to over $12 billion.
• The company has sold $38 billion worth of drugs, which has supported substantial dividends and stock buybacks.
• A notable portion of Novo's profits, specifically 2.6%, was sourced from the North Carolina state health plan.

"Ten years back, it had $4 billion in profit. Last year? Over $12 billion."

• This quote highlights the substantial growth in Novo Nordisk's profitability over a decade.

"Since launch, Novo has sold nearly $38 billion worth of the drugs, which has helped fund the same amount in dividends and stock buybacks for shareholders."

• It emphasizes the scale of Novo's drug sales and the financial benefits returned to shareholders.

"It's estimated that last year, 2.6% of the profits of this drug for Novo Nordisk came from our state health plan, not from our state— from our state health plan, specifically."

• Indicates the significant contribution of the North Carolina state health plan to Novo's profits.

• Negotiations with Novo and the state’s pharmacy benefit manager were challenging due to perceived prioritization of profits over patient needs.
• The North Carolina state health board decided to drop coverage for a popular diabetes and weight loss medication due to pricing concerns.

"When you're trying to negotiate with someone who is consistently putting profits over patients, you can see how those negotiations can break down very quickly."

• Highlights the difficulties in negotiations due to conflicting priorities between profit and patient care.

"North Carolina is dropping its coverage for a popular diabetes and weight loss medication."

• Reflects the outcome of failed negotiations, leading to the removal of coverage for certain medications.

• Melissa Barber, a health economist, has conducted extensive research on the costs of manufacturing pharmaceutical drugs.
• Her study estimated the manufacturing cost of semaglutide (Ozempic) at $0.89 per month with a 10% profit margin, highlighting the disparity between manufacturing costs and market prices.
• The list price for Americans is significantly higher, around $1,000, sparking discussions on fair pricing.

"The estimated costs for the semaglutide, which you might know as Ozempic, is $0.89 per month, and that's if you assume a 10% profit margin."

• This quote underscores the low manufacturing cost of semaglutide compared to its market price.

"The list price for Americans isn't $5 or even $50. It's about $1,000."

• Illustrates the vast difference between manufacturing costs and the price consumers pay.

• Melissa Barber's study garnered attention, challenging industry norms and prompting responses from pharmaceutical executives.
• Novo’s CEO, Lars Jorgensen, expressed concerns about the study, suggesting it might mislead patients about production costs.

"Melissa’s study went viral... or about as viral as an academic study on generic manufacturing can go."

• Indicates the widespread attention and impact of the study within academic and public spheres.

"I'm actually quite disturbed by a number like that because I don't think that’s a true representation of what it cost to produce medicine."

• Reflects the pharmaceutical industry's pushback against the study's findings, questioning its accuracy.

• Sanofi, another major insulin manufacturer, reported production costs similar to those estimated by Melissa Barber, adding credibility to her research.

"Sanofi, one of the largest insulin manufacturers, told Congress that its production cost is $1.42 per vial."

• Provides a comparison point, supporting Barber's cost estimates and challenging industry pricing strategies.

• The disparity in knowledge between pharmaceutical companies and the public leads to an imbalance in drug price negotiations.
• Pharmaceutical companies have access to real production costs, while the public does not, putting them at a disadvantage.

"The public is just wildly disadvantaged when it comes to drug price negotiations, right? One side knows real costs and the other side doesn't."

• Highlights the imbalance in knowledge, where pharmaceutical companies have an advantage over the public due to their access to production cost information.

• Melissa's study is part of a larger effort to balance the scales in drug pricing negotiations.
• The study aims to provide transparency in drug production costs, contributing to broader efforts to address pricing issues.

"This study is just one piece of a much broader body of work where I'm trying to even the scales just a little bit."

• Emphasizes the study as part of a broader initiative to bring more fairness and transparency to drug pricing negotiations.

• Folwell, a Republican, wrote to the U.S. Department of Health and Human Services to negotiate with Novo Nordisk for patent access to generic manufacturers.
• The proposal aims to end monopolies, increase drug access, and lower prices through competition.

"He asked the federal government to enter negotiations with Novo Nordisk to open up patents to generic manufacturers."

• Illustrates Folwell's initiative to involve the government in negotiating patent access to promote competition and reduce drug prices.

• Folwell's actions align with some of Bernie Sanders' views, despite their differing political affiliations.
• The focus is on practical solutions to reduce drug costs, transcending typical political labels.

"It also puts Folwell, who is a Republican, seemingly on the same side as Bernie Sanders, America's highest ranking Democratic socialist."

• Highlights the cross-political alignment on the issue of drug pricing, emphasizing practical solutions over political ideology.

• The government has legal tools, such as section 1498, to authorize generic competition for patented drugs.
• This provision allows the government to use patented inventions for public purposes, ensuring reasonable royalties to patent holders.

"There's a simple provision of law that we call section 1498. When the government wants to use a patented invention to support public purposes, the rights of the patent holder are to a reasonable royalty."

• Explains the legal mechanism available to the government to promote generic competition and reduce drug prices by using patented inventions for public benefit.

• The government has the authority to use patented inventions for its own purposes, which can influence drug pricing.
• This authority has been previously used in defense technologies and could apply to pharmaceuticals.
• Even the threat of government intervention can lead to significant price reductions.

"The government can open up the patent while paying them a royalty. There's no question that the government can use patented inventions for its own purposes, and it does so all the time for defense technologies, for things like night vision goggles."

• The government can leverage its power to use patents to negotiate better prices for medications, similar to its use in defense.

"They just said, 'We've been thinking about it.' And that was enough to kind of halve the price."

• The mere suggestion of the government using its authority can be enough to compel companies to lower prices, as seen in the case with Bayer.

• Negotiating drug prices is a common practice in many countries but was historically restricted in the U.S. for Medicare.
• The Inflation Reduction Act has begun to allow Medicare to negotiate drug prices, though with limitations.

"The really low-hanging fruit is just negotiating a better price, something that, until very recently, Medicare was legally not allowed to do."

• Legal restrictions previously prevented Medicare from negotiating prices, contributing to higher drug costs in the U.S. compared to other countries.

"Thanks to the Democrats’ Inflation Reduction Act, each year, Medicare can negotiate the price of a handful of drugs, but there are some restrictions."

• The Inflation Reduction Act has introduced changes, allowing limited negotiation for drugs that have been on the market for a certain period.

• The current political climate creates pressure to address high drug prices.
• The effectiveness of this pressure in leading to meaningful change is uncertain.

"The issue is that political pressure has to dissipate somehow. The question is, is it going to dissipate meaningfully?"

• Political pressure is acknowledged as a factor in the drug pricing debate, but its long-term impact remains unclear.

"It's not time to be pointing fingers at anyone. It's time to actually try to solve the problem."

• The focus should be on finding solutions to high drug costs rather than assigning blame, emphasizing collaborative problem-solving over conflict.