According to a study, Ozempic could be produced profitably for less than $5 a month, although manufacturer Novo Nordisk A/S charges nearly $1,000 in the United States study That’s reopening questions about the prices of top-selling diabetes and obesity treatments.
The blockbuster drug could be made for 89 cents to $4.73 for a month’s supply, figures including a profit margin, researchers from Yale University, King’s College Hospital in London and the nonprofit Doctors Without Borders reported in the journal JAMA network opened. By comparison, the monthly U.S. list price for Ozempic, a weekly injection, is $968.52.
Novo declined to cover production costs for Ozempic and Wegovy, its anti-obesity drug. The company said it is investing significantly to ensure the public has access to its widely used medicines. The company is making about $6 billion in capital expenditures and is spending $11 billion to acquire manufacturing assets from Catalent Inc. as part of that effort, according to an emailed response to questions.
“This outrageously high price has the potential to bankrupt Medicare, the American people and our entire health care system,” Senator Bernie Sanders, who has held hearings on high drug prices in the US, said in a statement after the results were announced. The Vermont Independent called on Novo Nordisk to reduce Ozempic’s list price to $155 per month or less, in line with prices in other countries Countries.
The study expands on research showing how high the price premiums are in the U.S. for GLP-1 drugs like Ozempic and Wegovy and underscores long-standing criticism of the prices of diabetes therapies, particularly insulin. The study found that Ozempic can generally be made for less per month than various forms of insulin, a life-saving diabetes drug that has been available for decades.
“The profit margin is immense,” it is said for drugs like Ozempic Melissa Barber, a health economist at Yale University and corresponding author of the study. “Politicians should talk about what a fair price is.”
Novo’s combined revenue from Ozempic and Wegovy was over $18 billion in 2023. Accordingly, patents related to the drugs are expected to expire in June 2033 Estimates from Bloomberg Law. Novo shares fell 0.8% in Copenhagen and have gained 26% this year.
Transparency goal
The cost of drug production is often shrouded in secrecy, and it is rarely clear how, if at all, it relates to prices. Barber and her colleagues used updated raw material cost estimates and focused on the cost of producing diabetes drugs, including GLP-1 drugs like Ozempic as well as other diabetes pills and insulins.
“The goal of this research is to make receipts as transparent as possible,” Barber said.
Novo and other drugmakers cut U.S. prices for some forms of insulin by up to 75% last year under pressure from the Biden administration. But by some estimates, the cuts made these products more profitable because they eliminated the rebates paid to pharmacy benefit managers, the middlemen who negotiate prices for payers and employers.
Novo said in an email that 75% of its gross revenue goes to rebates and rebates to ensure patients have access to products like semaglutide, the active ingredient in Wegovy and Ozempic. Drug manufacturers often cite the high research costs, which can take years, as the reason for their prices. Spending on drug research and development was nearly $5 billion last year and will rise this year, Novo said.
Still, the debate over the cost of drugs like Ozempic and Wegovy is growing. State health insurers and Medicaid offices are seeing rising bills for Ozempic and its sister drug Wegovy, raising questions about whether the cost increases are sustainable. In January, North Carolina stopped providing obesity drugs to state workers, saying costs had risen and drugmakers had failed to agree on pricing.
Surprisingly, the study found that the biggest cost of producing Ozempic comes not from the active ingredient, semaglutide, but from the disposable pens used to inject it. They can be made for no more than $2.83 a month, the authors concluded based on interviews with former employees and consultants of injection device manufacturers. One Ozempic pen is used weekly and lasts for a month.
Other costs
By contrast, the active ingredient in Ozempic can be manufactured for about 29 cents for a month’s supply or 7.2 cents for a typical weekly dose, the research found. It’s not cheap to produce – semaglutide costs over $70,000 per kilogram. However, only a tiny amount of the drug is used in each weekly dose.
Other costs include the cost of filling each pen, estimated at 20 cents per monthly dose, and other chemical ingredients, estimated at 15 cents per monthly dose, according to the study.
The analysis does not provide estimates of the cost of producing Wegovy. Separate Research from the University of Liverpool and elsewhere found last year that Wegovy could be made for as little as $40 a month.