Novo Nordisk looks at flexible pricing for obesity drug
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Novo Nordisk is in talks with healthcare systems about innovative pricing deals for its Wegovy weight loss drug, as it hopes to expand take-up of the obesity treatment by helping health services spread the cost across many years.
Lars Fruergaard Jørgensen, Novo Nordisk’s chief executive, told the Financial Times that to make a “dent” in a condition such as obesity, the company needed to treat many more than just the millions of patients who were taking the drug at the moment.
He said the company was willing to be “flexible” on pricing schemes “to make it possible to adopt medicines upfront, see the benefits and pay down the road.
“We are open to what types of arrangements we can make with healthcare systems that could help them serve the patients who need it the most,” he added.
The Danish drugmaker has no plans to cut the price of the blockbuster weight-loss drug, despite new competition from US rival Eli Lilly, which plans a list price for its Zepbound drug that is 20 per cent lower than Wegovy.
But Jørgensen said the company was willing to spread the cost. “How can healthcare systems justify making a large one-time payment upfront that leads to significant savings down the road? I think we need to share that risk to get going,” he said.
Under such “risk-based contracts”, healthcare providers could spread the cost over a longer period during which they could see savings, for example, from not having to treat as many expensive heart attacks. Recent trial data showed that Wegovy cut the risk of serious cardiac events by about 20 per cent.
Jørgensen said for the foreseeable future, the number of patients taking the drug would likely be a “very small fraction” of the eligible population, because the number of potential patients is so high.
About 42 per cent of the US population suffers from obesity, according to the Centers for Disease Control and Prevention, costing the country almost $173bn a year. In the European Union, about 17 per cent of people were obese and 36 per cent overweight in 2019.
Wegovy, which can help patients lose about 15 per cent of their body weight, sells for a US list price of over $1,300 a month. But about half of US commercial insurers do not yet cover it, and it is not available on Medicare, the US government-funded insurance for seniors.
Novo Nordisk is at the early stage of rolling out the drug in Europe, where it is cheaper, but there are signs governments may only pay for the patients with the highest body mass index.
The new type of contract has previously only been used to spread the cost of advanced treatments such as gene therapy. These one-off drugs can cost hundreds of thousands or even millions of dollars, but transform the health of a patient and reduce healthcare costs in the longer term.
But Jørgensen admitted it was hard for health services to adapt. He said Novo Nordisk was facing a “similar challenge” as some of the companies selling advanced therapies.
“It is not easy for healthcare systems to commit to payment schemes that have a multiyear impact. In Europe, where it is typically funded by national governments, they come in one-year increments,” he said.