Tackling the Exorbitant Pricing of Weight Loss Drug Wegovy
Public Citizen News / July-August 2024
By Jishian Ravinthiran
This article appeared in the July/August 2024 edition of Public Citizen News. Download the full edition here.
The outrageous prices of new weight loss drugs like Wegovy are not just a health concern but a financial crisis waiting to explode. Public Citizen is stepping into the fray, advocating for solutions to tackle exorbitant costs that threaten to burden American patients and insurers alike. With Wegovy, which shares the same active ingredient (semaglutide) as the diabetes drug Ozempic, now at the center of national drug pricing debates, drugmaker Novo Nordisk’s pricing strategies have come under intense scrutiny. Charging Americans nearly 15 times more than their European counterparts, Novo Nordisk’s practices highlight a stark disparity that could lead to catastrophic economic impacts on the U.S. health care system.
Novo Nordisk sells Wegovy, which is currently the most prescribed GLP-1 medication for weight loss. Whereas Wegovy costs just $186 in Denmark (where Novo Nordisk is headquartered), $140 in Germany, and $92 in the United Kingdom, the list price of Wegovy is an astounding $1,349 for a month’s supply in the United States.
The price of these GLP-1 medications and similar drugs is of national concern, as the costs of covering these medications for weight loss uses would impose virtually unheard financial consequences on patients and insurers. A recent report from the Senate Committee on Health, Education, Labor, and Pensions found that the annual cost to the health care system for covering Wegovy for half of the eligible population ($411 billion) would exceed the expenditure on all retail prescription drugs in 2022 ($406 billion). The report further illustrated that covering Wegovy could cost one trillion dollars by 2031, and potentially almost two trillion dollars depending on uptake of the drug.
Beyond the unprecedented costs to the American health care system, these drugs’ widespread use combined with their excessive prices pose significant financial challenges to wide swathes of American patients. According to a Kaiser Family Foundation Poll, one in eight adults have used these new weight loss drugs, with over half saying that it was difficult to afford their costs. This was true for both patients with and without health insurance.
For additional context as to the almost unheard financial consequences of covering these drugs, a recent study published in the Journal of the American Medical Association shows that these drugs could be sustainably priced at less than $5 a month, and potentially as low as 89 cents, or around 0.07 percent of the current U.S. list price of Wegovy based on its cost of manufacture.
The colossal challenge of covering these weight loss drugs led North Carolina’s state health insurer for state employees to issue a public request for information on how to sustainably cover these drugs. In response, Public Citizen advised North Carolina’s public insurer to request that the Department of Health and Human Services (HHS) help secure generic manufacturers to make the same drugs and offer them at a fraction of current market costs. In securing additional manufacturers and creating a generic supply of these medications, HHS could also distribute these lower-cost alternatives to other state health insurance plans and their enrollees.
Public Citizen first suggested that HHS could try to secure voluntary licenses from the branded manufacturer to allow for generic production. Novo Nordisk admits that demand is outstripping supply for its popular drug, and as such, HHS can propose that the company voluntarily license the production of the drug in order to supplement the manufacturing base. Importantly, Public Citizen argued this approach would be more likely to be successful if HHS simultaneously considered leveraging its authority to involuntarily license generic production by invoking a federal law, 28 U.S.C. § 1498, to permit expanded affordable supply.
The law gives the U.S. government the authority to make or purchase a patented invention without the permission of the patent holder in exchange for reasonable compensation. When the government exercises its authority under § 1498, the patent holder cannot block the government from using the patent, nor can a government contractor or subcontractor be held liable for infringement by the patent holder. They can only seek reasonable compensation.
The law has been used for more than a century across technologies, ranging from fraud detection banking software and electronic passports to methods of removing hazardous waste and genetically mutated mice. The federal government repeatedly used the law in the 1960s to buy low-cost generics of patented drugs. More recently, the Bush administration publicly considered using § 1498 to procure generic versions of antibiotics during the Anthrax Scare of 2001, which led the manufacturer to cut the price of the antibiotic in half. In 2017, the Louisiana Secretary of Health began simply to explore whether she should request the federal government to use § 1498 on a hepatitis C cure. The drug corporation price gouged on the medicine by setting its price initially at $84,000 for a drug that cost $150 to produce, reaping billions in the process. Leveraging the prospect of licensing using § 1498, the Secretary negotiated major discounts. More Louisiana residents received the cure in the next 75 days than in the entire fiscal year before.
Given the colossal financial consequences of these weight loss drugs that are impacting access—not only for the North Carolina, but patients and health care systems across the United States—Public Citizen believes a complementary approach of pursuing voluntary licensing and invoking § 1498 for achieving generic competition on these drugs is necessary to achieve affordable access to these medications across the nation.