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New-generation weight-loss drugs can retail for about $1,350 a month, but a new study from Yale University suggests they cost just $22 to make.
Similarly, life-saving insulin can be manufactured for well under $250 a year, the study found, but it took pressure from the Biden administration to bring out-of-pocket costs for many Americans down to about $420 annually.
Everyone likes to complain about how much drug companies are overcharging for medications, but it’s been nearly impossible to know how much it actually costs to get a dose from a laboratory bench to a patient’s bloodstream.
Now, a Yale postdoctoral researcher has provided rare transparency on the cost of manufacturing weight-loss and diabetes treatments, with some help from Doctors without Borders, a global nonprofit that negotiates with drug companies, and information the pharmaceutical giant Sanofi provided ‒ perhaps by accident ‒ to a Senate committee.
Pulling back the curtain revealed the prices to be “outrageous,” according to Sen. Bernie Sanders, who released a statement shortly after the study published late Wednesday in the journal JAMA Network Open. He specifically called out the diabetes drug Ozempic, which has the same active ingredient as Wegovy, a weight-loss drug. Both are made by the Danish drug company Novo Nordisk.
“Ozempic has the potential to be a game changer in the diabetes and obesity epidemics in America,” Sanders said in a statement. “But, if we do not substantially reduce the price of this drug, millions who need it will be unable to afford it. Further, this outrageously high price has the potential to bankrupt Medicare, the American people and our entire health care system.”
Sanders complained that Ozempic is available for $155 a month in Canada and just $59 in Germany, and called on the company to match the Canadian price in the U.S.
“The American people are sick and tired of paying, by far, the highest prices in the world for prescription drugs while the pharmaceutical industry enjoys huge profits,” he said in the statement, noting that Novo Nordisk made nearly $15 billion in profits last year. “A prescription drug is not safe or effective for a patient who cannot afford it.”
Novo Nordisk said it is doing what it can to make the drugs more affordable and available.
“While we are unaware of the analysis used in the (new) study, we have always recognized the need for continuous evaluation of innovation and affordability levers to support greater access of our products,” Novo Nordisk said in a statement from Jamie Bennett, director of media relations and issues management. “We continue to support greater health equity to those in need of diabetes treatment and care.”
The study found Ozempic and Wegovy cost between 95-cents and $5.50 to produce per unit, or no more than $22 a month. Although the highest dose of Wegovy is higher than the full dose of Ozempic, “the main driver” is the cost of the delivery device, a needle embedded in a pen, said Melissa Barber, who led the research.
By Barber’s calculations, if Medicare and Medicaid fully covered the cost of drugs like Ozempic and Wegovy for everyone who qualified, it would run taxpayers over $100 billion a year. That’s about six-times more than the government spends now on Eliquis, used to treat and prevent blood clots and to prevent stroke.
Eliquis is among 10 drugs whose price the Biden administration is negotiating to help make important, lifesaving treatments more affordable.
Barber, who has been researching true manufacturing costs since 2016, said she’s just trying to introduce some transparency to an imbalanced system.
“The system we have is companies can charge literally whatever they want,” she said. “How much should we be paying Novo Nordisk? There’s a big difference between a multiplier of 10 and a multiplier of 10 million.”
She noted that Novo Nordisk, Europe’s most valuable company, has as its controlling shareholder a charity that is now the largest in the world, wealthier even than the Catholic Church, thanks to these medications. The company was reportedly founded to sell insulin and owned largely by a nonprofit so it would plow its earnings back into research.
Frederick Banting, the Canadian credited with co-discovering insulin, sold the patent for $1 because he thought the discovery belonged not to one person, but to the world.
Synthetic insulin, the new study finds, can be made for about $11 for a box of 5 pens, including the cost of the needle and a 10% profit. But the current sales price is more than five times that, Barber found.
A year ago, Eli Lilly, which makes several types of insulin, capped out-of-pocket costs for the drug at $35 monthly at participating retail pharmacies for people with commercial insurance using Lilly insulin. Sanofi has said that most of those who use its insulin products pay about $15 out of pocket per month, or $180 per year, because of a copay assistance program. Novo, which had reduced the price of one popular form of insulin called Levemir, then announced it would discontinue the product in the United States.
The real-world cost of insulin is often higher than it appears and roughly 1 in 4 to 1 in 7 insulin-dependent Americans ration the drug because of price, Barber said.
Ozempic sells in the United States for over $900 a month. Wegovy, which was recently also approved to reduce risk of serious heart problems in people with obesity or overweight, retails for about $1,350, although most people pay far less than the list price.
Eli Lilly makes two drugs, in the same GLP-1 class of medications as the Novo Nordisk medications, though it also includes a second active ingredient. Both Mounjaro, for diabetes, and Zepbound, which is the same medication for weight loss, retail for about $1,000.
All four drugs have been in such high demand that they have been in short supply since winning federal approval. Many private insurers and government-funded Medicare and Medicaid typically don’t cover these drugs for weight-loss, leaving them out of reach for significant numbers of people who want them.
Novo Nordisk does not disclose detailed information about costs, but Bennett said it spent almost $5 billion on research and development last year and will spend even more this year. Three-quarters of its gross earnings go to rebates and discounts to “ensure patients have access to products like semaglutide,” she said in the statement.
And the company is spending $6 billion on capital expenditures and another $11 billion to purchase American contract-manufacturer Catalent, in large part to meet the demand for GLP-1 products.
Lilly referred in a statement to its commitment to improving access by 2030 to “quality health care” for 30 million people living with limited resources.
The company also collaborates with EVA Pharma to provide affordable insulin to 1 million people with types 1 and 2 diabetes in low- and middle-income countries, largely in Africa, as well as providing $4.3 billion in medicines last year to charitable organizations.
