(Bloomberg) — Shares of Novo Nordisk A/S and Eli Lilly & Co. fell on Tuesday as US President Joe Biden continued his push for cheaper drugs by demanding price cuts for their blockbuster weight loss and diabetes drugs.
Most Read by Bloomberg
Companies are paying “unconscionably high prices” that are above those paid in other countries, Biden said in an editorial with Vermont Sen. Bernie Sanders published in USA Today. If “pharmaceutical companies refuse to significantly lower prescription drug prices in our country and end their greed, we will do everything in our power to end it for them,” they wrote.
Novo fell 1.1% in Copenhagen on Tuesday, while Lilly shares lost as much as 3.9% before losses in New York.
“Comparing list prices in the United States to other countries ignores patient affordability programs,” as well as billions of dollars in rebates and fees paid to pharmacy benefit managers who must cut costs, a Lilly spokesman said in a statement sent by email. “Unfortunately, this system can drive up prices.”
Novo Nordisk did not immediately respond to a request for comment.
Analysts predict rising sales for injected drugs, particularly in the fight against obesity, a market that Goldman Sachs estimates could reach $130 billion a year by the end of the decade. Companies including Pfizer Inc., AstraZeneca Plc and Amgen Inc., along with a host of smaller biotechs, are racing to offer competing products to consumers.
A Bloomberg News/Morning Consult poll from May — six months before the U.S. election — showed voters in swing states trusting Biden over Republican presidential nominee Donald Trump on health care by 45% to 39%. Specifically on health care costs, Biden held a four percentage point lead over Trump at 44%.
Biden’s comments appear to be “a last-ditch effort to appease some voters,” according to a note from Mizuho’s Jared Holz. Given the drug’s benefits in diabetes, heart disease and other ailments, he said the price tag of about $1,000 a month “actually seems pretty cheap.”
Drug costs have been a long-term focus for the Biden administration. The Inflation Reduction Act has given Medicare, the US health program for the elderly, unprecedented power to negotiate prices after drugs have been on the market for a certain period of time. Novo’s Ozempic and Wegovy became a major concern for Sanders earlier this year after a study showed Ozempic could be profitably produced for less than $5 a month.
Trump has also called for lower drug costs. He issued an executive order during his tenure mandating the US government to pay the related awards to those overseas. A federal judge struck down the order and the Biden administration froze it, but Trump has vowed to revive it.
This year’s price debate reached Novo’s home market of Denmark, with Sanders urging Danes in a letter to one of the country’s biggest newspapers to force Novo to lower prices. Denmark also recently asked doctors to start switching Ozempic patients to cheaper drugs.
Novo has blamed the high US list prices for Ozempic and Wegovy on the way the health system is structured, citing discounts and fees paid to intermediaries. The company said in a letter to Sanders in May that it is prepared to work with US lawmakers to address what it called systemic issues. Chief Executive Lars Fruergaard Jorgensen will testify before a Senate committee chaired by Sanders in September on drug prices.
Novo has said it expects rebates for both drugs to continue to rise, especially as more insurers cover Wegovy. Lilly has avoided some of the scrutiny that Novo has been under until now.
Optimism over increased sales of Novo’s Wegovy for obesity and its sister diabetes drug Ozempic have seen its market capitalization rise beyond $600bn this year, cementing its position as Europe’s most valuable listed company . The stock is up more than 80% in the past year and has quintupled since the start of 2020.
–With assistance from Riley Griffin and Anne Cronin.
(Updates with Eli Lilly’s statement in the fourth paragraph.)
Most Read from Bloomberg Businessweek
©2024 Bloomberg LP