Findings

Health--if you can afford it

Tallying the markup on drugs like Ozempic.

Alex Eben Meyer

Alex Eben Meyer

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Since its approval in 2017, Ozempic—the diabetes drug—has skyrocketed in popularity, due to its ability to slim people down. As its reputation has risen, so have its prices. But how much does it take to make a drug like Ozempic?

Melissa Barber, a postdoctoral associate at the Yale School of Medicine, has spent her career researching pharmaceutical markets—including breaking down the manufacturing costs of drugs. The purpose: helping health systems understand how much a generic version might cost, or whether they might be able to better negotiate pricing with a private company.

In her latest study, funded by Doctors Without Borders, she found that a month of semaglutide injections—the drug branded as Ozempic—is priced at a minimum of $968.52 in the United States. The cost of manufacture? Between 89 cents and $4.73, an estimate that includes a profit margin.

To Barber, who has researched dozens of drugs with huge mark-ups, this didn’t come as a shock. “I think whatever part of me is able to be surprised has been broken,” she says.

But the real impact of the study is that millions of people around the world could be helped by a drug like Ozempic. Over 500 million people live with diabetes globally, and of those in low- and middle-income countries, nine in ten struggle to access expensive medications. In the US, one in six people with diabetes ration their insulin because they can’t afford it.

Semaglutide is another drug that improves blood-sugar levels: a glucagon-like peptide-1 agonist (GLP-1) sold as Ozempic for Type 2 diabetes and as Wegovy for weight loss. In the US alone, some 70 percent of adults are overweight or obese. But at current pricing, says Barber, prescribing the drug to everyone eligible in the US would leave an “enormous hole” in Medicare’s budget.

All of which is why Barber’s study has instigated a wave of criticism of Novo Nordisk, the company that makes Ozempic and Wegovy—including an investigation by Senator Bernie Sanders (I-VT). “This is a typical case at the individual level, but it’s an exceptional case in that it’s kind of broken the system,” Barber says. “It’s forced us to ask system-wide questions, which are, ‘How much are we willing to give a company, and reward them, for innovation?’”

Pharmaceutical companies often point to the cost of research and development as a major pricing driver. But as Barber points out, private industry didn’t develop Ozempic on its own. University and public labs, including a researcher at the Department of Veteran Affairs, first developed GLP-1 agonists.

Even if a company created a drug entirely on its own, the idea that it could be sold at any price, regardless of public-health need, doesn’t make sense to Barber. “We need new models for paying for innovation,” she says. And studies like hers, she hopes, might persuade others to do the same. 

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