Novo Nordisk Unfazed by Medicare Price Negotiations for Blockbuster GLP-1 Drugs
Novo Nordisk's CEO, Lars Jørgensen, expresses limited concern over the upcoming Medicare price negotiations for GLP-1 drugs. He acknowledges the industry's opposition to government price setting but points out that GLP-1 prices in the US are comparable to those in Europe.
Background on Medicare Price Negotiations
The Inflation Reduction Act introduced Medicare price negotiations in 2023, targeting drugs covered by Medicare Part D and Part B. The negotiations are intended to bring down drug prices and reduce government spending.
Novo Nordisk's Experience and Confidence
Novo Nordisk has experience with Medicare price negotiations, having participated in the first round for its insulin products. The company believes it can effectively manage the process for its GLP-1 drugs, including Wegovy, Ozempic, and Rybelsus.
Limited Impact on Novo Nordisk
Medicare is not Novo Nordisk's largest market in the US. Commercial insurance and cash payments account for a significant proportion of GLP-1 revenue. Dave Moore, president of Novo Nordisk in the US, emphasizes the company's strong commercial positioning.
Focus on Future Growth
Despite being affected by Medicare negotiations and a potential patent cliff in 2032, Novo Nordisk is investing in its pipeline and next-generation drugs. CagriSema and amycretin, currently in late-stage trials, are expected to contribute to future revenue growth.
Rebates and Pricing Considerations
CFO Karsten Munk Knudsen notes the widening spread between gross and net GLP-1 sales, highlighting the impact of rebates provided to pharmacy benefit managers (PBMs). Jørgensen clarifies that pricing in the US is not significantly different from Europe, but list prices are often used to create a perception of higher prices.
Financial Performance
GLP-1 products accounted for approximately 60% of Novo Nordisk's revenue in 2023, with Wegovy experiencing a substantial 150% growth year-over-year.