Apr 29, 2024 - Health

Steep Ozempic, Wegovy prices face fresh scrutiny from officials

Illustration of semaglutide injector pens forming the dollar sign symbol.

Illustration: Shoshana Gordon/Axios

The prices of blockbuster drugs used for weight loss are gaining increased scrutiny as the universe of Americans who could receive these treatments expands.

Why it matters: With the drugs now available for heart risks and potentially soon for other conditions such as sleep apnea, there's urgent discussion about how to pay for treatments that are hailed as revolutionary but have budget-busting potential.

  • "It's almost hard to imagine what it could mean for total spending on prescription drugs," said Tricia Neuman, senior vice president at health policy research nonprofit KFF.

Driving the news: The head of Congress' budget scorekeeper last week said the net costs of the drugs — that is, after any rebates and discounts — would have to drop by 90% to even "get in the ballpark" of not increasing the national deficit, Politico reported.

  • His comments came a day after Sen. Bernie Sanders (I-Vt.) announced an investigation into the "unjustifiably high prices" of Novo Nordisk's Ozempic and Wegovy.
  • The list price for Ozempic, which is approved for diabetes, is $969 a month, or $11,628 a year. The list price of Wegovy, approved for obesity, is $1,349 a month, or $16,188 a year.
  • While Medicare doesn't cover drugs for weight loss, its decision last month to cover Wegovy to prevent heart attack and stroke instantly made an estimated 3.6 million enrollees eligible, per a recent KFF analysis.

The big picture: The class of drugs known as GLP-1 agonists have the potential to produce big savings for the health care system by preventing more serious conditions, particularly among patients with diabetes, for whom the treatments were originally approved.

  • However, research has been mixed so far on how cost-effective the drugs are. Though early data suggest people should take the drugs long term, many stop within a year, often because of unpleasant side effects.
  • Weighing the immediate costs of covering these drugs against their still largely theoretical long-term benefits has led to restrictive coverage policies for federal health programs, states and employers.

Private insurers are less likely to see a financial upside to covering the drugs since people generally change insurers every couple of years, said Michael Abrams, managing partner of Numerof & Associates.

  • "While over the lifetime of the patient there's lots of money to be saved, the commercial insurer doesn't get to save much of it. And that's a problem," Abrams said.

Between the lines: Sanders, in his announcement of the Novo investigation, pointed to the much cheaper list prices overseas.

While experts say list prices can offer a general idea of the distance between the higher prices the U.S. pays compared with peer nations, they also don't fully represent what governments and health plans actually pay.

The other side: "It's easy to oversimplify the science that goes into understanding disease and developing and producing new treatments, as well as the intricacies of U.S. and global healthcare systems," Novo Nordisk said in a statement to Axios, adding that the "public debate doesn't always take into account this extremely complex reality."

What we're watching: How long it could ultimately take for prices to come down, which generally happens as competition increases or as drugs come off patent.

  • The CBO also said it expects semaglutide, the active ingredient in Ozempic and Wegovy, to be selected for Medicare price negotiation within the next few years.
  • "But right now, the world can't get enough of these products," Abrams said. "This would not be the moment to expect the manufacturer to start lowering the price."
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