What Are Pricing Strategies for Ozempic And Wegovy With Potential Medicare Coverage Expansion? Senate Committee Questions Novo Nordisk

Zinger Key Points
  • The committee questioned why Wegovy, containing the same compound as Ozempic, bears a higher price tag.
  • Despite major insurance plans covering these medications to varying extents, rising costs have led to coverage restrictions and termination.

The Senate Committee on Health, Education, Labor, and Pensions is reportedly scrutinizing  Novo Nordisk A/S NVO ‘s pricing strategies, particularly those of its diabetes and obesity medications, Ozempic and Wegovy.

Senator Bernie Sanders emphasized the necessity of reducing prices to ensure accessibility for consumers and sustainability for governments.

Senator Sanders penned a letter to Novo Nordisk’s CEO, Lars Fruergaard Jorgensen, demanding internal communications regarding the pricing discrepancies between the U.S. and other countries. 

The committee questioned why Wegovy, containing the same compound as Ozempic, bears a higher price tag, the New York Times noted. A response has been requested by May 8.

Senator Sanders also intended to investigate Eli Lilly And Co LLY, the manufacturer of rival medications, Mounjaro and Zepbound, to address industry-wide pricing concerns. 

With obesity affecting nearly 42% of American adults and over 11 percent with diabetes, ensuring affordability poses a significant challenge.

A recent study by the Kaiser Family Foundation (KFF) revealed that approximately 3.6 million overweight or obese patients with heart conditions covered under the U.S. Medicare program may become eligible for coverage of Wegovy

The study highlights that the expanded coverage would affect Medicare beneficiaries and other insurers’ coverage for individuals with heart conditions. 

Currently, Medicare prescription drug plans (Part D) administered by private insurers do not cover drugs approved solely for obesity. 

However, new guidance suggests that drugs approved for secondary use Medicare covers could be eligible.

Citing the KFF study, Reuters highlights that the approval could open up Wegovy to over a quarter of the 13.7 million Medicare beneficiaries diagnosed with heart disease and obesity. 

Among these eligible patients, approximately 1.9 million also have diabetes, making them already eligible for Medicare coverage of other drugs like Novo’s Ozempic.

Although some Part D plans have announced plans to cover Wegovy this year, broader coverage may be anticipated by 2025. 

The extent of the drug’s coverage and its impact on Medicare spending will depend on various factors. These include the number of Part D plans adding coverage, potential restrictions on use such as prior authorization, and negotiated prices paid by plans.

Despite major insurance plans covering these medications to varying extents, rising costs have led to coverage restrictions and termination, exacerbating accessibility issues. 

Medicaid and Medicare coverage disparities further compound the problem.

Price Action: NVO shares are down 1.91% at $126.18 at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photos courtesy: Shutterstock

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