January 20, 2024
New weight loss drugs like Ozempic, Wegovy and Zepbound have been on fire - but how does pricing in the US compare to other countries?
It’s no secret that drugs cost more in the US than in other developed economies, and the Inflation Reduction Act’s provision to allow Medicare to negotiate drug prices has reignited that debate.
Looking at some specific examples for GLP-1 type drugs is eye-opening:
Ozempic is between 2x and 8x more expensive in the US than other wealthy economies like the UK, Germany, or the Netherlands.
Another example is Wegovy - it’s the exact same drug as Ozempic, but is prescribed specifically for weight loss instead of diabetes.
Wegovy has a US list price of $1,349 for approximately 1 month of supply. In the UK the list price is approximately $220, but the country’s National Health Service negotiated an additional discount.
Those numbers don’t tell the complete picture though, because pharmacy benefit managers (PBMs) in the US often negotiate additional discounts. For example, Aon estimated that the net price for Wegovy is between $700-$900/month after those discounts.
The final part of the calculation is understanding how insurance helps cover the cost, but regardless of the specifics, its clear Americans will pay well above what those in other countries do.
One catch: the biggest insurer in the US - Medicare, doesn’t cover any of the new GLP-1s for weight loss. Why?
When Part D was established in 2003, the law explicitly prohibited it from covering drugs used for weight loss.
That was based largely on the view that weight loss is just a cosmetic treatment - but is it?
Obesity is the underlying cause of a multitude of health problems, and a recent study by Novo Nordisk found that the risk of serious events like heart attack and stroke declined 20% for those on Wegovy.
Over time, Medicare will likely expand coverage given the significant overall health benefits.
Taking a step back, the disparity in drug pricing between the US and other countries is a mirror reflecting our healthcare system's priorities - is our system valuing and properly incentivizing innovation, or just revealing its inefficiencies?
