Novo Nordisk Unconcerned About Medicare Price Negotiations for GLP-1 Drugs
Novo Nordisk's CEO, Lars Jørgensen, expresses optimism amidst upcoming Medicare drug price negotiations for GLP-1 treatments. Despite industry concerns, Novo Nordisk is confident in the fairness of its pricing, considering its alignment with European benchmarks.
The Inflation Reduction Act (IRA) introduced these negotiations, with their continuation under the Trump administration uncertain. Nevertheless, Novo Nordisk's experience with previous insulin pricing negotiations instills confidence in its ability to navigate the process.
The inclusion of Wegovy, Ozempic, and Rybelsus in the negotiations was expected, given their market success. However, Medicare is not Novo Nordisk's largest US market, with commercial channels driving the majority of revenue.
Novo Nordisk anticipates a limited impact on future revenue growth from the negotiations. Its commercial market remains stable, with employers opting in and out marginally. Over 80% of patients pay less than $25 per prescription.
The company acknowledges long-term challenges, including Medicare negotiations in 2027 and semaglutide's patent expiration in 2032. To mitigate these, Novo Nordisk focuses on its pipeline and next-generation drugs.
CFO Karsten Munk Knudsen highlights the sizeable spread between gross and net sales in the US, attributed to rebates to pharmacy benefit managers (PBMs). Jørgensen emphasizes that pricing in the US is comparable to Europe despite higher list prices.
Despite these challenges, GLP-1 products remain a significant revenue generator for Novo Nordisk, accounting for 60% of its $40.5 billion revenue in 2023. Wegovy experienced notable growth of 150% year-over-year.