Ozempic could be profitably produced for less than $5 a month even as maker Novo Nordisk charges almost $1,000 in the US
Ozempic could be profitably produced for less than $5 a month even as maker Novo Nordisk charges almost $1,000 in the US.
Ozempic could be manufactured for less than $5 a month, even with a profit margin, while Novo Nordisk A/S charges nearly $1,000 in the US, according to a study that raises questions about pricing for leading treatments for diabetes and obesity.
The research, published in the journal JAMA Network Open by researchers at Yale University, King’s College Hospital in London, and the nonprofit Doctors Without Borders, suggests that the production cost for a month’s supply of Ozempic ranges from 89 cents to $4.73. This is in stark contrast to the monthly US list price of $968.52 for Ozempic, which is administered as a weekly injection.
Novo Nordisk declined to disclose the production costs for Ozempic and Wegovy, its related drug for obesity. The company stated that it is making significant investments to ensure public access to its popular drugs, including about $6 billion in capital expenditures and a $11 billion acquisition of production facilities from Catalent Inc.
Senator Bernie Sanders criticized the high price of Ozempic, stating that it could potentially bankrupt Medicare, the American people, and the entire healthcare system. He called on Novo Nordisk to reduce the list price of Ozempic to $155 a month or less, in line with prices in other countries.
The study highlights the significant markups for GLP-1 drugs like Ozempic and Wegovy in the US and underscores long-standing criticisms of diabetes drug prices, particularly insulin. The study found that on a per-month basis, Ozempic can be produced for less than various forms of insulin, a drug that has been available for decades.
Melissa Barber, a public health economist at Yale and the study’s corresponding author, emphasized the immense profit margin on drugs like Ozempic and called for a policy discussion on what constitutes a fair price.
Novo’s combined 2023 sales of Ozempic and Wegovy exceeded $18 billion. Patents for these drugs are expected to expire in June 2033. Novo shares fell 0.8% in Copenhagen following the news but have gained 26% this year.
The study, aiming for transparency, focused on the costs of producing diabetes drugs, including GLP-1 drugs like Ozempic, along with other diabetes pills and insulins. The authors utilized updated estimates for raw ingredient costs.
Novo stated that 75% of its gross earnings go towards rebates and discounts to ensure patient access to products like semaglutide, the active ingredient in Wegovy and Ozempic. The company cited the high costs of research and development as a reason for its pricing strategy.
Debate over the cost of drugs like Ozempic and Wegovy is intensifying, with state health plans and Medicaid offices facing escalating bills for these drugs. In January, North Carolina discontinued coverage of anti-obesity medicines for state employees, citing soaring costs and lack of agreement on pricing from drugmakers.
Interestingly, the study found that the biggest cost in producing Ozempic is not the active medicine, semaglutide, but the disposable pens used for injection, which can be manufactured for no more than $2.83 per month’s supply.