Study Reveals Ozempic Could Be Produced for Under $5, Sparking Pricing Debate

📝 SUMMARY: A recent study has brought to light a significant discrepancy in the pricing of Ozempic, Novo Nordisk A/S’s ($NVO) widely used diabetes medication, suggesting it could be profitably produced for less than $5 a month, a stark contrast to its almost $1,000 price tag in the United States. Researchers from Yale University, King’s College Hospital in London, and Doctors Without Borders examined the cost of manufacturing Ozempic, concluding that a month’s supply could range between 89 cents and $4.73, factoring in a profit margin. This finding, published in JAMA Network Open, challenges the current pricing model and raises questions about the affordability of diabetes and obesity treatments.

Novo Nordisk has defended its pricing strategy by highlighting its substantial investments in research and production facilities, including a $6 billion capital expenditure and an $11 billion acquisition of production facilities from Catalent Inc. However, the study's revelations have prompted criticism from figures such as Senator Bernie Sanders, who argued that the drug's high cost could potentially burden Medicare and the American healthcare system. He has called for Novo Nordisk to reduce Ozempic's price to $155 or less, aligning it with international standards.

The debate over drug pricing is not new, especially for diabetes treatments like insulin, which have seen similar scrutiny. The study aims to shed light on the actual production costs of drugs, advocating for transparency and a reevaluation of what constitutes a fair price. Notably, the research highlighted that the most significant expense in producing Ozempic is not the active ingredient, semaglutide, but rather the disposable pens used for injection, suggesting that substantial price reductions could be possible without compromising on profit margins.

As discussions continue, the study serves as a critical examination of the pharmaceutical industry’s pricing practices, urging a balance between innovation and accessibility.

🔍 SOURCE: https://www.bloomberg.com/news/articles/2024-03-27/ozempic-novo-s-1-000-diabetes-drug-can-be-made-for-less-than-5-a-month?srnd=industries-v2