DOSE OF REALITY: BIG PHARMA’S GLP-1 PRICE-GOUGING UNSUSTAINABLE FOR AMERICAN PATIENTS AND THE U.S. HEALTH SYSTEM

Brand Name Drug Companies Applying Price-Hiking, Patent Abuse Playbook to Blockbuster Products That Are Essentially Repackaged Versions of Older Medications

On Tuesday, September 24, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) is scheduled to hold a hearing examining the high price of blockbuster diabetes and GLP-1 weight loss drugs manufactured by Novo Nordisk. Several brand name GLP-1 drugs currently being marketed for weight loss are effectively older diabetes medications that have been repackaged for a different indication, enabling their manufacturer to extend patent exclusivity and keep prices high.

Ahead of the hearing, get a Dose of Reality on how Big Pharma is applying a playbook of price-gouging and blocking competition honed on diabetes drugs to this category of GLP-1 drugs for weight loss.

Big Pharma’s Egregious Pricing of GLP-1 Drugs in the U.S.

An August 2023 analysis from the Peterson-KFF Health System Tracker found that list prices for several blockbuster GLP-1 drugs, including Novo Nordisk’s Ozempic, Wegovy and Rybelsus products, as well as Eli Lilly’s Mounjaro, are significantly higher in the U.S. compared to other wealthy countries.

Brand name drug maker Novo Nordisk, for example, has set the U.S. list price for a monthly supply of Ozempic at $936 in the U.S., versus $169 in Japan. This means the company is charging patients 5.5 times more in the U.S. than in Japan for the same drug.

For Wegovy, the U.S. list price is $1,349, while the next highest price in a comparable country is $328 in Germany, again meaning U.S. patients pay more than four times more than the next comparable country for the same prescription drug.

Prices of GLP-1s Unsustainable for U.S. Health Care System

In March, the Congressional Budget Office (CBO) predicted that covering GLP-1 weight loss drugs “at their current prices, would cost the federal government more than it would save from reducing other health care spending.”

In August, a study published in the Annals of Internal Medicine by re­searchers from Brigham and Women’s Hos­pi­tal, found that if Medicare Part D coverage for high-priced GLP-1 weight loss drugs expanded for new classifications such as cardiovascular disease, it could cost the U.S. health care system upwards of $145 billion.

During a December 2023 hearing in the U.S. Senate Committee on Health, Education, Labor & Pensions (HELP), expert witness Kasia Lipska, M.D., M.H.S, Associate Professor of Medicine at the Yale School of Medicine explained how Big Pharma’s egregious pricing practices on this new category of drugs present staggering potential costs.

“The price tags for these new medications are simply outrageous,” Dr. Lipska said. “Ozempic, the brand name for Semaglutide approved for type 2 diabetes and marketed by Novo Nordisk, has a U.S. list price of over $900 per month. Wegovy, the brand name for the same drug approved for obesity, is $1,300 per month…”

“…If Medicare were to fully cover Wegovy for all of its beneficiaries with obesity for one year, we as American taxpayers would end up with a $268 billion invoice,” Dr. Lipska stated. “To give you some perspective, that’s 70 percent of all the money that was spent on prescription drugs in the U.S. in 2021. And could we stop at one year? Probably not. What we know about Semaglutide, and the related medications is that they work while people take them. However, as soon as they stop, their weight comes back, so patients are looking at a potentially lifelong treatment, and we could be facing the most expensive subscription service in the history of medicine.”

Big Pharma Already Hiking Prices On GLP-1 Products

In addition, the brand name drug companies who market these drugs have already begun hiking prices.

In January, Novo Nordisk increased prices on its Ozempic product, approved for type 2 diabetes, by 3.5 percent. Novo Nordisk increased the price of Ozempic by 4.9 percent in 2023 and in 2022 by 4.8 percent. Eli Lilly increased prices on its Mounjaro GLP-1 type 2 diabetes product earlier this year by 4.5 percent and in 2023 by five percent.

Bringing the Patent Abuse Playbook to a New Category of Blockbuster Products

A February 2024 analysis published in JAMA Network found brand name drug makers marketing a new category of weight loss drugs, glucagon-like peptide 1 (GLP-1) receptor agonists, are increasingly utilizing device patents to build patent thickets around these products to create and elongate periods of monopoly pricing power — despite the drugs effectively being older diabetes medications repackaged for a different indication. In other words, Big Pharma isn’t protecting actual innovation, but gaming the patent system to block competition, keep prices high, and boost profits.

The authors state in their conclusion, the “removal of these patents may substantially reduce barriers to generic entry by decreasing the number of patents that generic firms must contest ahead of [U.S. Food and Drug Administration] approval.” Without this competition, “prices for GLP-1 receptor agonists will remain high for many years, reducing access for patients and raising health care costs.”

Egregious GLP-1 Prices to Increase Health Care Costs for Employers

According to new research from the Business Group on Health and professional services firm Aon, health care costs for employers are expected to increase next year driven by Big Pharma’s egregious prices for blockbuster GLP-1 drugs and out-of-control prices on gene and cell therapy treatments. “GLP-1s and multimillion-dollar gene therapies,” are the “major culprits,” according to coverage of the analysis in Axios.

Research firm Aon anticipates companies’ health care costs will increase by nine percent next year. The Business Group on Health expects costs to increase by close to eight percent.

56 percent of respondents in the Business Group on Health’s survey expect GLP-1s to be a “great” or “very great” driver of increased costs. Meanwhile, 46 percent of respondents expect high-cost cell and gene therapies to be a “great” or “very great” driver of costs. These were the leading two answers in the survey over the next closest response by 20 percentage points.

The findings on the rising impact of Big Pharma’s egregious prices on GLP-1s and other high-priced treatments align with key takeaways from several other recent reports, including a broader analysis on prescription drug spending in the United States released by The IQVIA Institute for Human Data Science in May.

That report found net spending on prescription drugs increased 9.9 percent in 2023, rising to $435 billion. As IQVIA’s report outlines, this is a “significant acceleration in spending growth,” driven by price hikes outpacing inflation on existing drugs, increasingly out-of-control launch prices on new drugs, and egregious prices on GLP-1 weight loss drugs.

The report found spending on drugs for the treatment of obesity was $5.4 billion in 2023, “up from just $0.7Bn in 2018 and largely driven by the uptake of novel GLP-1 treatments.” The report also highlighted that the median annual cost for new prescription drugs launched in 2023 “exceeded $150,000” annually. Meanwhile, average annual treatment costs for “oncology and rare diseases [are] both approaching $300,000 per patient.”

A SEQUEL TO BIG PHARMA’S PRICE-GOUGING ON DIABETES DRUGS

GLP-1s grew out of a category of medicines originally designed for treating diabetes. So it’s no surprise Big Pharma intends to bring a similar profiteering playbook to an expanded market building on decades of egregious pricing practices around insulin and medications for patients living with diabetes.

Two of the largest players leading the pack in terms of the development of new weight loss medications have also been two of the worst offenders when it comes to insulin: Eli Lilly and Novo Nordisk.

Egregious Price Increases on Diabetes Medications

According to an August 2023 study from AARP’s Public Policy Institute, which examined list price increases for the top 25 best-selling prescription medications in the Medicare Part D Program, several products with the greatest percentage price increases since entering the market have been diabetes drugs. These include Sanofi’s Lantus product, which has increased by 739 percent since coming to market and Novo Nordisk’s Novolog, which has increased by 628 percent since coming to market, as well as Merck’s Type 2 diabetes drug Januvia, which has increased by 275 percent since coming to market.

Other diabetes drugs that have faced significant price increases since coming to market include Eli Lilly’s Trulicity product, which has increased 91 percent since 2014, Eli Lilly and Boehringer Ingelheim’s Jardiance product, which has increased 97 percent since 2014, and Novo Nordisk’s Ozempic, which has increased 38 percent since just 2017.

Working In “Lockstep” To Increase Prices

For years, Big Pharma companies have engaged in a practice called “shadow pricing” to increase prices in lockstep across the insulin market — with minimal-to-no improved efficacy of the drug. Between 1996 and 2006, the price of insulin increased by 700 percent. And in 2016, the average price per month reached $450.

As a 2021 U.S. Senate Finance Committee report revealed, three companies – Novo Nordisk, Sanofi and Eli Lilly – control 99 percent of the marketplace and have worked in “lockstep” to limit competition and increase prices:

• Over The Past Decade, The Three Largest Manufacturers Of Insulin – Novo Nordisk, Sanofi And Eli Lilly – “Aggressively Raised The List Price Of Their Insulin Products Absent Significant Advances In The Efficacy Of The Drugs.” “Sanofi’s long-acting insulin pens, Lantus SoloStar, increased from $303 in 2014 to $404 in 2019. The WAC price of Novo Nordisk’s long-acting insulin pens, Levemir FlexTouch, increased from $303 in May 2014 to approximately $462 in January 2019, representing an increase of $159—or 52%— in a little more than five years. Eli Lilly’s rapid-acting insulin, Humalog 50-50 Kwikpen, had a WAC of $530 in 2017 compared to $323 in 2013—an increase of $207 or 64% in four years. Sanofi’s rapid acting insulin, Apidra Solostar, also increased—from $302 in 2014 to $521 in 2019— while Novo Nordisk’s rapid-acting insulin, Novolog FlexPen, rose from $324 in 2013 to $558 in 2018, representing a more than 70% WAC price hike for both companies during this time period.” (Staff Report, “Insulin: Examining The Factors Driving The Rising Cost Of A Century Old Drug,” United States Senate Finance Committee, 1/14/21)

• Sanofi Aggressively Increased Its List Price Between 2012 And 2014 In Response To Market Pressure And Competition. “From 2001 to 2012, Sanofi increased list price as much as 18% annually, raising its price from $34 to $131 by the end of 2012. However, in 2013 and 2014, Sanofi embarked on much more aggressive increases, nearly doubling the drug’s WAC to $248 by the end of 2014.” (Staff Report, “Insulin: Examining The Factors Driving The Rising Cost Of A Century Old Drug,” United States Senate Finance Committee, 1/14/21)

• “Novo Nordisk And Sanofi Not Only Closely Monitored The Others’ Price Increases, They Actually Increased Prices In Lockstep—Sometimes Within Hours Or Days Of Each Other—A Practice Known As ‘Shadow Pricing.’” “Rather than seeking to undercut its competitors’ pricing, from 2014 on Novo Nordisk engaged in a cat-and-mouse strategy of pricing that followed Sanofi’s price increases closely, sometimes mirroring them within days or even hours. In 2015, Novo Nordisk changed its pricing strategy in advance of launching Tresiba, its next generation basal insulin (also known as long-acting insulin). Instead of following Sanofi, it led with a list price increase in order to set a high basal insulin price floor from which to launch Tresiba’s initial list price. However, in 2017 and 2018, Novo Nordisk resumed increasing its list price to respond to Sanofi’s pricing actions. According to internal memoranda, on October 1, 2017, Sanofi increased Lantus’s list price by 3% and Toujeo’s list price by 5.4%. Roughly three weeks later, Novo Nordisk recommended that the company make a 4% list price increase on January 1, 2018, in response to Sanofi, which was approved as recommended on November 3, 2017. Novo Nordisk would make at least one more list price increase in response to Sanofi in 2018.” (Staff Report, “Insulin: Examining The Factors Driving The Rising Cost Of A Century Old Drug,” United States Senate Finance Committee, 1/14/21)

The massive cost implications of Big Pharma’s egregious pricing on GLP-1 drugs for weight loss increases the urgency for policymakers to hold the pharmaceutical industry accountable and advance bipartisan, market-based solutions to lower prescription drug prices.

Read more on how Big Pharma’s high-priced GLP-1 diabetes and weight loss products and expensive cell and gene therapy treatments are expected to lead to increased costs for employers HERE.

Read about how Big Pharma is utilizing device patents to build patent thickets on GLP-1 diabetes and weight loss drugs HERE.

Read about how Big Pharma’s egregious prices on GLP-1 diabetes and weight loss drugs are leading to unsustainable costs for the health care system HERE.

Learn more about market-based solutions to hold Big Pharma accountable HERE.

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