Big Pharma’s Five-Step Manual for How to Maintain High GLP-1 Prices
This week Novo Nordisk – one of the largest drug companies manufacturing GLP-1 weight-loss medications – will testify in front of the Senate Health, Education, Labor and Pensions (HELP) Committee. It’s no secret that big name drug manufacturers are charging patients steep prices for these lifesaving drugs. What’s less well known are the games they play to stack the deck and keep patients paying high prices.
CAPD dug in and identified the games the makers of these expensive – but critical – drugs play to maintain the high price of GLP-1s:
1. Charging Americans thousands of dollars more than prices abroad
Drugmakers are charging American patients many times more for GLP-1s compared to what they charge in similar industrialized nations. The difference is stark: in Denmark, drugmaker Novo Nordisk charges $130 for its weight loss drug Ozempic – compared to the $1,350 list price it sets in the U.S. A recent Yale University-led JAMA study found that injectable semaglutide – the active ingredient in Ozempic – could be profitably made for less than $5 a month.
2. Spending billions on advertising to keep demand high
Recent research from Public Citizen came to a striking conclusion: drug manufacturers often spend more on advertising and executives’ salaries than research.
Open Secrets found that drug manufacturers have spent billions to advertise GLP-1s each year. In 2023 alone, Novo Nordisk spent $471 million on an aggressive advertising campaign marketing Ozempic and Wegovy. The reason? To drive as many patients as possible to their drugs.
3. Forcing patients to compounding pharmacies to get the drugs they need
As demand has skyrocketed, GLP-1 drugs have gone into shortage. Compounding pharmacies have stepped in to this vacuum, providing generic versions of these medications to reduce shortages. But studies found that compounded weight loss drugs can be riskier than the FDA-approved versions; there have been reports of adverse reactions to compounded semaglutide, or of patients taking it incorrectly.
Patients unable to pay the huge price of GLP-1s bear the burden – and uncertainty – of taking compounded medications. Meanwhile, the same big manufacturers whose high prices push Americans to these unregulated alternatives are pressuring the government to shut off Americans’ access to compounding – all to preserve their monopolies and their prices.
4. Taking advantage of consumers by using the direct-to-consumer (DTC) model
A recent Forbes article reported that drug companies are setting up online sites to sell drugs directly to patients. This is concerning, because GLP-1s are complex biologic drugs with 35 listed side effects and 236 possible adverse drug-drug interactions.
The DTC model steers patients to a discounted of the manufacturers’ weight loss drug. In August, Eli Lilly announced it would begin selling Zepbound directly to consumers. Don’t be fooled: this does not make the drug more affordable. Most patients eventually require higher doses to achieve significant weight loss, and will be non-discounted, significantly higher prices for the high-dose pen once they’re in the middle of their treatment.
This model has huge revenue potential for drug manufacturers, but fails to give patients any further discounts on GLP-1s and other medication. In other words, Big Pharma makes more revenue through this model, without giving patients any discount.
5. Building patent thickets to create monopolies – and maintain profits – on GLP-1s
An analysis in JAMA Network found that the brand drugmakers marketing GLP-1s are increasingly relying on device patents to build patent thickets to elongate periods of monopoly pricing power. In other words, drug manufacturers aren’t innovating new drugs, but rather gaming the system to limit competition, maintain high prices and boost profits.
Even though GLP-1s have been on the market for decades, drug companies have amassed an average of 19.5 patents per drug, limiting competition for years more. Despite having a stronghold on a billion-dollar market, Big Pharma is blocking the entrance of lower-cost alternatives so that they can keep their list prices high for years to come – and they’re suing other manufacturers, like Mylan and Sun – to block lower cost versions from being approved by the FDA.
To combat Big Pharma’s games, pharmacy benefit managers (PBMs) work on behalf of employers and unions to negotiate discounts from drug manufacturers, generating savings for patients at the pharmacy counter. As the only actor in the pharmaceutical supply chain actively working to lower out-of-pocket costs for patients, PBMs are crucial to offsetting Big Pharma’s out-of-control prices.
Simply put: effective PBM negotiation have proven to be one of the only ways to make these exorbitantly priced drugs accessible to the patients who need them. Policymakers should take heed before putting restrictions on PBMs that limit their ability to negotiate effectively with drug companies and lower costs for millions of Americans.