After a while, a much-ballyhooed U.S. Senate committee hearing with Novo Nordisk’s CEO became less a roasting of Novo’s pricing of Wegovy and Ozempic and more a roasting of pharmacy benefit managers for merely existing.
Members of the Senate Health, Education, Labor & Pensions didn’t really follow the lead of the panel’s chairman, Vermont independent Sen. Bernie Sanders, who wanted answers for why the list prices of the GLP-1 diabetes and weight-loss drugs are much higher in the U.S. than in Europe.
Novo CEO Lars Fruergaard Jørgensen repeatedly stiff-armed that question, and instead sought to put the spotlight on PBMs.
As more committee members weighed in, it was obvious that most were happy to go along.
“Novo Nordisk is not the villain in this story,” said Sen. Roger Marshall, R-Kansas, a physician and OB/GYN. “They’re a hero. We should be here celebrating this miracle innovation that’s responding to this diabetic epidemic we have in this country.”
Marshall added that “the PBMs are making the bank here,” using negotiated rebates with Novo and other drugmakers to extract value for themselves and their parent companies.
(PBMs are middlemen who in theory bargain with drug companies for lower prices. Critics say vertical integration with insurance companies and pharmacies has undermined PBMs’ original purpose.)
Novo Nordisk is investing $4.1 billion and adding 1,000 jobs at a second “fill and finishing” manufacturing plant in Johnston County to meet surging demand for its weight loss and diabetes drugs, the company said in June. It now has about 2,500 employees in the Triangle region.
Amplifications of Marshall’s point came from Sens. Mitt Romney, R-Utah, Tim Kaine, D-Virginia, and Mike Braun, R-Indiana.
Compared with the pharmaceutical sector, “we’re letting PBMs get away scot-free,” Kaine said.
“One company, one industry, researches. One doesn’t. One industry produces life-saving treatments,” Kaine said. “One doesn’t. One industry is super-duper profitable and another one profitable, but the one that’s super-duper profitable is the one that’s not doing any research and not producing any life-saving innovations.”
“The complexity of our PBM system is such that it’s very hard for us to figure out just exactly who’s getting what and why,” Romney said. “And I happen to believe that one of the reasons our health care cost is so expensive, particularly as it relates to pharmaceuticals, is the opaque nature of our pricing in this country.”
Braun signaled he didn’t think Jørgensen’s deflections of the Sanders query had done his cause any favors — mainly because the facts are on Novo’s side.
“Until you put it out there, expose the PBMs in terms of what they’re getting, and you get consumers engaged in it, you’re not going to solve the problem,” Braun said. “You’re going to end up having government as your business partner, because when you operate like an unregulated utility, you’re going to get government regulating you.”
Concerning criticism of Novo’s $1,396 list price for Wegovy in the U.S, Jørgensen’s basic answer was that “it is not our intention that anyone should pay the list price.”
Rather, “the list price is the starting point for our negotiations with the PBMs and insurance companies,” he said. PBMs prefer having high-list drugs on their formularies because they can negotiate steep discounts via the rebate system, keeping a big chunk of the difference for themselves, he added.
That figured in Novo’s decision late last year to halt manufacturing of Levemir, an insulin variant, he said.
After Novo cut the drug’s price, a number of PBMs dropped coverage, to the point that it was available in “only 35% of insurance schemes,” he said, adding that with lower volume comes inefficient production.
But Sanders said the leading PBMs have signaled a willingness to keep Novo’s flagship products on their formularies even if it cuts prices. Pressed on that, Jørgensen signaled willingness to discuss that with the relevant players, though he’s skeptical about the PBMs’ intentions.
Budd and Moore take on Folwell
North Carolina U.S. Sen. Ted Budd, a Republican, joined in the HELP committee’s musings about what he called “an industry with a lot of strange incentives,” but he also used Tuesday’s hearing to launch an interesting side quest.
This came in the form of a letter from state House Speaker Tim Moore that attacked State Treasurer Dale Folwell and his supervision of the State Health Plan.
Folwell has been one of the leading critics of Novo Nordisk’s GLP-1 pricing and earlier this year successfully urged plan trustees to drug coverage of the drugs when they’re prescribed for weight loss.
He has joined forces with Sanders in blasting the drug company and urging price cuts, which could involve federal-government licensing and production of the drugs.
Writing on Monday, Moore said he finds Folwell’s entire stance on GLP-1s “troubling.”
With the licensing idea (which would use a long-standing federal war-production law), Folwell has “advocated for a solution that is tantamount to a socialist takeover of the pharmaceutical industry,” Moore said.
Price controls and “the redistribution of privately owned intellectual property” are “reckless ideas” that would “destroy companies that have invested billions of dollars into North Carolina,” Moore said.
That alluded to Novo’s manufacturing plant in Johnston County, which CEO Lars Fruergaard Jørgensen said amounts to a $9 billion investment once a planned expansion occurs.
The real reason for the State Health Plan’s inability to cover GLP-1s is “the failure of Treasurer Folwell to work out a deal with pharmacy benefit managers, the ones who negotiate the price, not the manufacturer,” Moore said.
