Will Broader Access Beget Lower Prices for Obesity Meds?
In thoughtful reporting for Fortune, Rachel Shin explores the possibility for broader access to advanced obesity meds leading to lower prices. But it’s a bit of a chicken-and-egg puzzle because it might be more likely that lower prices will lead to broader access.
Novopoly
Shin calls it a Novopoly. Novo Nordisk invested billions of dollars to invent, research, and scale up production for semaglutide under the brand names of Ozempic and Wegovy. They took this risk because they had patents for the use of this drug in diabetes and obesity that essentially grant them a monopoly for a limited time. Daniel Touchette, a professor of pharmacoeconomics at the University of Illinois at Chicago, told Shin:
“Novo Nordisk has a monopoly for a very short period of time, or something close to a monopoly. They have a very short time to recoup as much profit or money as they can. So they’re going to charge as much as they can.”
Novo Nordisk was pretty clear that they see a simple solution to this and it’s not about lowering the price. They explained it to Shin in writing:
“Novo Nordisk believes the most effective way for the millions of Americans who need anti-obesity medicines to be able to access and afford them is to ensure these medicines are covered by government and commercial insurance plans.”
A Theory of Better Access Bringing Lower Prices
Kibum Kim, a professor of pharmacy systems, outcomes, and policy, sees the possibility for coverage of these medicines by Medicare to bring lower prices:
“If Medicare starts to cover the drug under their coverage via the Inflation Reduction Act, then it would be the trigger to lower the price and get coverage for the larger population.”
We like the theory, but realities of the marketplace and the courts might be a little messy. Already, litigation is arising in response to drug pricing provisions of the Inflation Reduction Act.
Cheering for Competition in a Dysfunctional Market
So we are left to cheer for competition to bring prices down and open up access to these new medicines. It’s important because they meet a tremendous medical need. We like the optimism of Sean Wharton, who says that new drugs like orforglipron, which are simpler and cheaper to produce, might bring prices down. “I see it as a game changer,” he says.
The dysfunctional U.S. marketplace of laissez-faire drug pricing makes the future somewhat unpredictable. But we can predict that the future will surely be better than our current situation of constrained supply, high prices, and low access to much needed obesity medicines.
Click here for Shin’s reporting in Fortune, here, here, and here for further perspective.
Door in Marquayrol, painting by Henri Martin / WikiArt
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July 10, 2023
