Novo Nordisk will reduce U.S. list prices of several insulin products by up to 75% next year, following political pressure to lower prices.
NoVo Nordisk Jumps on Insulin Price Reduction Bandwagon
On Tuesday, Novo Nordisk (NOVOb.CO) announced it will cut the U.S. list prices of various insulin products by up to 75% in the coming year. This move comes in response to growing political pressure to make these essential diabetes treatments more accessible, and follows similar action taken by competitor Eli Lilly and Co (LLY.N).
These actions are a response to the Inflation Reduction Act passed by President Joe Biden last year, which placed a cap of $35 per month on insulin prices for Medicare beneficiaries. However, this cap does not extend to patients without insurance.
According to the American Diabetes Association, approximately 8.4 million out of the 37 million people in the United States who have diabetes use insulin.
Despite the high list prices of insulin in the U.S., drug manufacturers usually offer significant rebates to private insurers and government programs, resulting in lower prices for most Americans who have insurance.
However, uninsured individuals often have to bear the full list prices of insulin, which can be prohibitively expensive, leading some to ration or even forego taking their medication.
President Biden is Pleased
In response to Novo Nordisk’s announcement, President Biden released a statement expressing his satisfaction with the decision and urging other insulin manufacturers to follow their lead.
Novo Nordisk, the Danish drugmaker, has stated that it will decrease the list price of its NovoLog insulin by 75%, while also reducing the list prices of Novolin and Levemir by 65%. Although the company has not yet determined the financial impact of this move, it is expected to have a significant effect on the market.
Following Novo Nordisk’s announcement, its U.S.-listed shares saw a 1.7% increase to $142.95, while its Denmark-listed shares closed slightly higher on Tuesday. In contrast, Eli Lilly’s shares experienced a slight decline.
Novo Nordisk, which currently holds a 43% share of the insulin market in the United States and Canada as of November, has also announced that it will decrease the list price of unbranded insulin products to align with the reduced prices of the corresponding branded insulin products.
Earlier this month, Eli Lilly also declared that it would decrease the list prices of its most commonly prescribed insulin products by 70% in the fourth quarter of this year.
“I think it is a relatively natural consequence of what we have seen their competitor Eli Lilly do. We know there has been political pressure on this issue in general, it is a focus area in the U.S., especially for uninsured patients,” Jyske Markets analyst Henrik Hallengreen Laustsen said.
Drug Company Has Nothing to Lose
Stacie Dusetzina, a drug pricing expert and associate professor at Vanderbilt University, said the move was not surprising given the stiff competition for insulin.
Novo Nordisk’s price cuts will also allow the company to avoid paying significant rebates to the U.S. government’s Medicaid program beginning in 2024.
If the company had kept its prices high, it would have been subject to these rebates under the American Rescue Plan Act of 2021.
“They have little to lose by making this change,” Dusetzina said.
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