Thursday, April 18, 2024

Yet again, US medical consumers are paying for cheap drugs for the rest of the world


It seems that Novo Nordisk, producers of Ozempic (a popular treatment for diabetes) and Wegovy (ditto for weight loss), has been gouging the hell out of US customers to subsidize much, much lower prices elsewhere in the world.

It costs Novo Nordisk less than $5 per month to produce its top-selling diabetes injection, Ozempic, even as it charges nearly $1,000 for a month’s supply before insurance, according to a new study.

. . .

The foundational price for a weekly dose of injectable semaglutide—the generic name for Ozempic—ranges from $0.89 to $4.73 per month, the study found. By contrast, a vial of human insulin can be manufactured at a cost between $2.37 and $5.94 per month.

A month’s supply of Ozempic is $935.77 for those in the United States without health insurance, according to Novo’s website. The Danish company’s GLP-1 weight loss drug, Wegovy, is listed as $1,349 per month.

. . .

Citing the findings, Sen. Bernie Sanders (I-Vt.) called on Novo to slash prices for both Ozempic and Wegovy, highlighting the price gap for the identical drugs sold in America and other developed countries.

“A new Yale study found that Ozempic costs less than $5 a month to manufacture. And yet, Novo Nordisk charges Americans nearly $1,000 a month for this drug, while the same exact product can be purchased for just $155 a month in Canada and just $59 in Germany,” the senator said in a statement ... I am calling on Novo Nordisk to lower the list price of Ozempic—and the related drug Wegovy—in America to no more than what they charge for this drug in Canada,” he continued. “The American people are sick and tired of paying, by far, the highest prices in the world for prescription drugs while the pharmaceutical industry enjoys huge profits.”

There's more at the link.

I'm hardly in the same political camp as Senator Sanders, but I fully support him in this.  Novo Nordisk is far from the only company to charge super-high prices to US consumers, only to provide the same medication to the rest of the world at a tenth, or less than a tenth, of those prices.  The companies parrot the same line about it not being fair to compare non-insurance (i.e. full market) prices to those paid by people with medical insurance, but that misses the point.  The medical insurance premiums we pay are much higher than they need to be, precisely because of the higher prices of medications, surgeries, etc. on the US market.  If drug manufacturers were to lower their list prices to something more appropriate to their costs of research and production, we'd all pay a lot less.

It's easy to say that people can choose where to spend their money, and they can reject items that are too expensive - but medication is all too often essential, not optional, and that forces sick people to either pay the price, or accept decline and an early death.

We criticize US companies for exporting the production of their goods to Third World countries, thereby saving themselves a bundle but throwing literally millions of Americans out of work, or depriving them of work that pays (or used to pay) a decent wage.  Yet, at the same time, we have little to say about the producers of essentials like medication who charge whatever the system says they can get away with, and relentlessly gouge the US consumer, while giving a subsidized ride (at our expense) to the rest of the world.  Why are we not insisting that such companies justify their price differentials, and price their product more equitably in all their markets, including ours?  Why are we allowing them to subsidize others out of our pockets?



Anonymous said...

The problem is that thanks to some very interesting rulings by the WTO, international patent infringement for medicine is basically unpunishable, so pharmaceutical companies essentially have to sell their products in countries without strong patent protections at severely discounted prices if they want to make any international profit at all.

Also, most of the cost for pharmaceuticals isn't the production, but the R&D--for every drug that makes it to market, you're looking at tens of millions of dollars in costs for that individual drug, to say nothing of the ones that don't make it to market.

Now, pharmaceutical companies certainly engage in sharp business practices and are primarily interested in profit rather than patient well-being, but the reasons that Americans end up paying higher prices has as much to with a combination of the nature of the business and the international system as it does with corporate greed.

lpdbw said...

I used to be a free market capitalist, but then reality intruded. Corporatist, it turns out, does not equal free market.

I might support big pharma enforcing their patents.

If they quit quoting "relative risk" in their literature and advertisements.
If they admitted to adverse reactions honestly in their drugs.
If the .gov didn't coerce people into using them.
Ditto big med (corporate medicine, AMA, ADA, AHA, etc.)

Otherwise, they can ESAD.

I'm bitter on several counts. The government, big med, and big pharma conspired to get me fired and end my career, simply by exercising my informed choice. The so-called vaccine they rolled out has killed a lot of people, and now my best friend has a brain cancer. Until proven otherwise, I'm assuming it's due to immune system damage caused by the vaccine.

lynn said...

I am a capitalist but I do not like this disparity in pricing between countries, especially first world countries.

Dirty Dingus McGee said...

I have a worse example. I have a prescription for Otezla due to bad plaque psoriasis. If not for insurance I wouldn't be taking it.

libertyman said...

Just a thought -- I wonder what the illegal aliens have to pay for any drugs and/or medical services? I wonder who pays for that? They must have great insurance, I wonder how they can afford it?

Steve Parker, M.D. said...

"Open Secrets" reported that the healthcare industry spent $739 million on federal lobbying in 2023. Of that total, $379 million was lobbying on behalf of drugs and health products, $131 million for hospitals and nursing homes, and $120 million for healthcare services and HMOs.

"Statista" produced a list of the leading lobbying industries in the U.S. in 2022: Leading the pack was pharmaceuticals/health products at $373 million. Far behind at #2 was electronics manufacturing & equipment at $221 million. #7 was hospitals/nursing homes at $124 million. #10 was health services/HMOs at $122 million. #15 was health professionals at $96 million. In case you’re wondering, positions 3 through 6 were insurance, securities & investment, real estate, and business associations, respectively.

A January 2020 article at Axios by Bob Herman details the amount of money ($309 million) spent on federal lobbying by 60 of the largest U.S. healthcare companies and trade organizations in 2019.
The article lists the top 20 spenders on lobbying in 2019:
1. Pharmaceutical Research and Manufacturers of America (aka PhRMA): $28,900,000
2. American Hospital Association: $22,160,000
3. American Medical Association: $20,030,000
4. Biotechnology Innovation Organization (trade association for drugs/devices companies): $12,210,000
5. Pfizer (drugs/devices): $10,990,000
6. Amgen (drugs/devices): $10,940,000
7. America’s Health Insurance Plans (insurers): $9,540,000
8. CVS Health/Aetna (Aetna health insurance, pharmacies, MinuteClinics, pharmacy benefits management): $9,487,000
9. Genentech (biotech pharmaceuticals): $8,690,000
10. Cigna/Express Scripts (health insurance/pharmacy benefits management): $8,250,000
11. Merck (drugs, vaccines): $6,955,000
12. Eli Lilly (drugs/devices): $6,910,000
13. Blue Cross Blue Shield Association (insurers): $6,840,000
14. AbbVie (drugs): $6,340,000
15. Novartis (drugs/devices): $5,970,000
16. Johnson & Johnson (drugs/devices, consumer products): $5,750, 000
17. Gilead Sciences (drugs): $5,720,000
18. Humana (health insurance, administers Medicare Advantage programs and Tricare): $5,690,000
19. Sanofi (drugs): $5,117,000
20. Anthem (health insurance, pharmacy benefits manager, administers Medicare Advantage programs): $5,070,000

The pharmaceutical industry spent more than other industries and trade organizations. Many of the individual drug companies listed also contribute to the #1 spender, PhRMA.

Eaton Rapids Joe said...

I want to point out that "cost to manufacture" can have many different meanings.

In the mid 1980's it cost General Motors $1400 to assemble a Pontiac Grand Am. The UAW jumped on that number and demanded much higher wages, after all, GM was charging $10,000 for a car that only cost $1400 to make, right?

The misunderstanding that "cost to assemble" was just the cost of the hourly labor to put the pieces together (assemble them) into a car. It did not comprehend the cost of the parts, the cost of the design, engineering or the cost of the tools or the cost of the facility.

Anonymous said...

One thing not mentioned here is that many countries have price controls and will use the threat of taking over patents to enforce them.
The US pays essentially all drug development costs globally - and almost all drugs developed are in or for the US.
Insurance is different subject that I don't know enough to comment on.

Old NFO said...

Americans pay for the research for the world... sigh...

Contrarian View said...

Ozempic and Wegovy are "elective" drugs. Nobody actually needs them. A proper, animal-based diet and increased physical activity are all these people need to cure all Type 2 diabetes and other metabolic conditions. So if people would merely use their tiny brains and get their butts off the couch, the price of these drugs would fall to nearly zero as nobody would want them.

Xoph said...

Anonymous makes the point, I studied this in Business School over 20 years ago. Many countries have laws setting the price at a small percentage over cost of manufacture. Drug companies can not recoup development costs in such a case (Development in US means our patent, tax and laws surrounding testing are in the drivers seat) "What can be done about it?" was the question. "Don't sell to these countries until a licensing fee has been paid." I replied. "Oh, so terrible you are to poor people who need medicine." "Yes I am said the ant to the grasshopper."

There is plenty of chicanery to go around. COVID and Ivermectin is just one example. But the whole insurance thing is another issue.

Many drugs could be avoided with diet and life style changes. If you see a practitioner of Traditional Chinese Medicine, or at least the guy I go to, he prescribes diet changes and exercise - and it works. Drugs are more about your money than they are your quality of life. There are some people like Peter or my MIL with medical issues that do require medication, I get that. But we could greatly reduce it. Plenty of studies show that the more we follow the govt dietary guidelines the more health problems we have and the more money big pharma has made. Read "Lies my Doctor Told Me." Western Doctors are not trained to keep you well, they are trained to find problems and treat them. Very big difference.

Anonymous said...

Pharmaceutical companies should have a single price for anywhere on the planet. They can set it as high or as low as they want, but it should not be allowed to vary by nation. If a nation wants to violate international patent law, we should play the same game with theirs. ALL of their patents, not just pharma.

Frankly, I suspect a lot of pharma product know-how could be better protected by trade secrets than patents.

If that doesn't work, there's always industrial sabotage and cruise missile to the third world off-license factory. Let the corporate world fight it out.

And if this has a chilling effect on pharma research and new drug development, so be it. Most of their products are of questionable health value anyway.

Hamsterman said...

While I haven't thought it completely out, ever since I heard about 'cheap drugs from Canada' decades ago I have suggested we have a 'Most Favored Nation' status from drug companies. We pick a block of nations, and the price we pay in the US is equal or less than any of those other nations. That would spread the cost out and eliminate some (but not all) of the free riders.

Aesop said...

Simply dictate that Medicare will pay for all drugs at no more than the lowest price charged worldwide, or else all that company's drugs will be banned from any purchase or reimbursement by the government, across the board.

Maybe additionally stipulate a minimum 7-year FDA approval process for all future pharmaceuticals from offending companies, ensuring everything they invent is a royalty- free generic drug the day it's released.

Perhaps stipulating annual IRS audits across the board for the galactically stupid companies, just to make sure the company and all their corporate board members are "paying their fair share", just to drive the point well home.

Which will have roughly the same effect as if you had put 10-ton capacity floor jacks well up the back ends of Big Pharma CEOs, and then raised all of them to the maximum elevation.

Sometimes the Invisible Hand of capitalism needs to put on an iron glove, and administer a spanking or three.

Anonymous said...

After Katrina, the perfidious major insurance companies started taking corporate insignia off their rep's cars, to avoid vandalism and violence. I used to see lots of pfizer cars parked at medical complexes and on the streets. I haven't seen even one in a few years. Or any other pharma company. Doesn't mean their profits are in trouble. They just don't like paying for body work. And it offends their sense of professional courtesy when another trade gouges them.
I have medicare and socsec, doesn't help if the local doctors aren't affordable and competent. And pretty much every good doctor that I've heard about is retiring or about to. It's telling that every serious medical emergency gets airlifted to a real hospital someplace else. My cousin developed blood clots in the lungs and heart after a fall several weeks ago, the local doctors misdiagnosed and sent her home, and only a life flight to ochsner in New Orleans saved her life. I avoid the local ER, it's a bad sign when the funeral homes have reserved parking next to the doctors and the disabled.
Might have read it here, still makes me laugh: "This medication was prescribed for you by your doctor because some pharma-hottie with a wheeled suitcase gave him a pen " And brought lunch .
rick m

Anonymous said...

Not true. I have Diabetes 2, am 5' 11"", weigh 190 lbs, eat animals, plants and watch my carbs. I walk 5000+ steps 3-4 times a week. I take Ozempic because my Diabetes 2 is genetic.