Senate Hearing on Weight Loss Drugs

The CEO of Novo Nordisk for being with us today for this important hearing. The issue that we are discussing this morning is not complicated. It has everything to do with the chart behind me, which shows that Novo Nordisk's diabetes drug, Ozempic, is sold in Canada for $155, in Denmark for $ 122, in France for $71, and in Germany for $59. In the United States, Novo Nordisk charges us $969, over 15 times more than they sell that product in Germany. Wegovy, Novo Nordisk's weight loss drug, is even more expensive. As the chart behind me also shows, Wegovy is sold for $265 in Canada, $186 in Denmark, $137 in Germany, and $92 in the United Kingdom. In the US, the list price for Wegovy is $1,349 a month, nearly 15 times as much as it costs in the United Kingdom. What we are dealing with today is not just an issue of economics, it is not just an issue of corporate greed. It is a profound moral issue. (01:47) Novo Nordisk has developed game-changing drugs which, if made affordable, can save the lives of tens of thousands of Americans every year and significantly improve the quality of life of millions more. If made affordable. If not made affordable, Americans throughout this country will needlessly die and suffer. As representatives of the American people, we cannot allow that to happen. And let's be clear, the outrageously high cost of Ozempic, Wegovy and other prescription drugs is directly related to the broken, dysfunctional, and cruel healthcare system in our country. While the current system makes huge profits for large drug companies like Novo Nordisk, huge profits for insurance companies, and huge profits for PBMs, it is failing the needs of ordinary Americans. In the United States today we spend almost twice as much per capita on healthcare as the people of any other country, nearly $13,500 for every man, woman, and child over 17% of our GDP, yet despite this huge and unsustainable expenditure, we are the only major country on earth not to guarantee healthcare to all people as a human right. (03:19) Further, despite all of that spending, our healthcare outcomes are not particularly good. Today over 85 million Americans are uninsured or underinsured, over 60,000 die each year because they don't get to a doctor when they should, and our life expectancy, which is actually declining in many parts of the country, is far below most other wealthy countries. So what does all of this have to do with Mr. Jorgensen, Novo Nordisk, and our hearing today? A lot. The simple truth is that we pay by far the highest prices in the world for prescription drugs, and that is a major factor in the healthcare crisis we experience. How does that happen? What's the connection? First, one out of four Americans are unable to afford the prescription drugs that their doctors prescribe. (04:16) Insanely, that means that millions of Americans go without the treatment that their doctors recommend. The result, some will actually die and others will become much sicker than they should, and millions will unnecessarily end up in emergency rooms or hospitals at great expense to our healthcare system. How crazy is that? Second, one of the reasons, hospital costs. It's not just prescription drugs, hospital costs in this country are rapidly rising, has to do with a very high cost of prescription drugs. And my hospital in Burlington, Vermont, CEO there tells me that 20% of his budget goes to the high cost of prescription drugs, and there are treatments now that cost hundreds of thousands of dollars a year. Third, a significant reason for the high cost of insurance policies. If you're upset out there that you're paying very high amounts of money for your insurance, has to do to a significant degree with the high cost of prescription drugs. (05:25) Yes, millions of Americans with decent health insurance pay minimal amounts for their prescription drugs. That's the good news. The bad news is that they're paying a fortune in premiums, deductibles and copayments for the insurance that covers those drugs. I should also add that if you're a taxpayer in this country, you're paying higher taxes than you should because of the inflated cost that Medicaid and other public health programs pay for prescription drugs. Now that is the overview and why the issue that we are discussing today is so important, it impacts every aspect of our healthcare system, the federal budget, private insurance. Now let's get to the particulars with regard to Novo Nordisk, Ozempic and Wegovy. Ozempic and Wegovy are different brand names for the same drug, semaglutide. These drugs are transformative new treatments for diabetes and obesity that help people control their blood sugar and lose weight. (06:31) Both are manufactured by Novo Nordisk and both are on track to be some of the best-selling and most profitable drugs in the history of the pharmaceutical industry. In fact, since 2018, Novo Nordisk has made nearly $50 billion in sales off of these two drugs. Importantly, for members of this committee, 72% of that revenue comes from sales in the United States of America. In other words, the United States is Novo Nordisk's cash cow for Ozempic and Wegovy. And given that these drugs will need to be taken over the course of a lifetime, it's not a one-time drug, you take it for your whole life, Novo Nordisk can expect to receive tens of billions in sales and huge profits from these drugs year after year after year. Now, why does Novo Nordisk charge the American people such outrageously high prices for Ozempic and Wegovy? Are they acting illegally by charging us such high prices? (07:44) Are they violating the law? No, they're not. What they're doing is perfectly lawful. They are simply taking advantage of the fact that until very recently, the United States has been the only major country on earth not to negotiate the cost of prescription drugs. In other words, Novo Nordisk and other drug companies, not just over Novo Nordisk, can charge us as much as the market can bear, and that is precisely what they are doing. Now, in a few minutes, when Mr. Jorgensen makes his presentation, and we look forward to hearing from him, I suspect that he will tell us that the healthcare system here in the United States is complex and that there is a difference between the list price and the net price as a result of the rebates that PBMs receive, and this committee has begun to do some serious work with regard to PBMs. (08:48) And if he says that he is correct, but even factoring in all of the rebates that PBMs receive, the net price for Ozempic is still nearly $600, over nine times as much as it costs in Germany. And the estimated net price of Wegovy is over $800, nearly four and a half times as much as it cost in Denmark. What must also be understood is that not everybody can take advantage of the net price of these drugs. If you are uninsured, you pay the full list price. If you have a large deductible, you pay the full list price. If you have co-insurance, the percentage of the price you pay at the pharmacy counter is based on the list price. (09:43) And let's be clear, 75% of Americans, over 190 million people with insurance, are unable to access Wegovy through their insurance policies. Mr. Jorgensen may also tell us that Novo Nordisk is afraid that if it substantially reduced the list price for Ozempic and Wegovy, PBMs may limit coverage for these drugs. Well, Mr. Jorgensen, let me ease your concerns. I'm delighted to announce today that I received commitments in writing from all of the major PBMs that if Novo Nordisk substantially reduced the list price for Ozempic and Wegovy, they would not limit coverage. (10:31) In fact, all of them told me they would be able to expand coverage, expand coverage for these drugs if the list price was reduced. I ask unanimous consent to insert the letters I received from the PBMs making this commitment into the record. Now, let me share with the committee some other important information that we have uncovered as part of our investigation. Last week I received a letter from over 250 doctors urging us to do everything that we can to substantially lower the price of these drugs. This should come as no surprise, what these doctors are telling us, is that if the price of Ozempic and Wegovy is not substantially reduced, many of their patients who have diabetes and obesity, especially lower income Americans, often minority Americans, will be unable to afford these drugs. Some of these people, some of these patients, will unnecessarily die and others will suffer a significant decline in their quality of life. (11:38) I ask unanimous to consent to enter that letter into the record. Earlier this year, Dr. Allison Galvani, an epidemiologist at Yale University, conducted a study on Wegovy, and what she found, and I hope Mr. Jorgensen pays attention to this, is that over 40,000 lives a year could be saved if Wegovy were made widely available and an affordable price to Americans who need the drug. 40,000 lives. I ask unanimous consent to insert that study into the record. A few months ago, Dr. Melissa Barber, a healthcare economist at Yale University, conducted a study on the cost, the cost of manufacturing Ozempic. And what she found is that Ozempic can be profitably manufactured for less than $5 a month. We all know the cost of production is not the only expense by far for a drug company. Pharmaceutical companies spend great sums of money on research and development to find new treatments with many of these products not coming to market. We all understand that. (12:42) But it is important to know that this drug can be manufactured profitably for a few dollars a month. We may hear from Mr. Jorgensen that Novo Nordisk spent $21 billion on research and development since 2018, and I take his word on that. What he may not tell you is that Novo Nordisk spent $44 billion on stock buybacks and dividends over that same time period. In other words, since Ozempic came onto the market in 2018, Novo Nordisk spent over twice as much on stock buybacks and dividends than it spent on research and development. And let's be clear, outrage over the high cost of Ozempic and other prescription drugs is not a partisan political issue, as I expect every person on this committee understands. It's not a Democratic issue, it's not a Republican issue. I'm an Independent, not an Independent issue. The vast majority of the American people are sick and tired of paying outrageously high prices for prescription drugs. (13:53) For example, Dale Folwell, the Republican Treasurer of the State of North Carolina, has told us that if he did not discontinue covering Wegovy for some 20,000 state workers in North Carolina, he would've been forced to double, double health insurance premiums for teachers, firefighters, and police officers in his state regardless if they needed this drug or not. He would've had to double health insurance premiums in North Carolina. Blue Cross Blue Shield of Michigan also announced that it would have to discontinue covering Wegovy because it was too expensive. And when we talk about differing political views, I will tell you that Elon Musk, not one of my great political allies, recently posted on Twitter, and I quote, "Solving obesity greatly reduces risk of other diseases, especially diabetes and improves quality of life. We do need to find a way to make appetite inhibitors available to anyone who wants them." End of quote. And Mr. Musk is right. (14:59) Further, not only must we be concerned about lack of access to these drugs, we have also got to take a serious look at the financial implications of what happens if the prices of these drugs are not substantially reduced. Bottom line, if just half of the adults in our country with obesity took weight loss drugs like Wegovy at current prices, the cost would be astronomical and would have a devastating financial impact on our country and on federal and state budgets. Best estimate that I have seen suggests that if half the adults in our country took these weight loss drugs, it would cost $411 billion a year, $411 billion, and that is more than what Americans spent on all prescription drugs at the pharmacy counter in 2022. In other words, the outrageously high prices of these drugs could bankrupt Medicare and radically increase premiums to absolutely unaffordable rates. (16:01) This does not have to happen. It does not have to happen. Over the last several months, I and my staff have been talking to a number of major generic pharmaceutical companies. These are large companies that supply hundreds of millions of prescriptions to many millions of Americans, and what these CEOs have told me is of enormous consequence. They have studied the matter and they have told me that they can sell a generic version of Ozempic, the exact same drug that Novo Nordisk is manufacturing to Americans, for less than $100 a month. $100 A month. Novo Nordisk charges us $969 a month for Ozempic, these generics can sell it to us for less than $100. Let's be clear, nobody here is asking Novo Nordisk to provide charity to the American people. Novo Nordisk has already made billions of dollars in profit of of these products, and in the coming years we'll make billions more. (17:03) All we are saying, Mr. Jorgensen, is treat the American people the same way that you treat people all over the world. Stop ripping us off. A few months ago, President Biden and I wrote an op-ed which appeared in USA Today, and here's what the president and I said. "If Novo Nordisk and other pharmaceutical companies refuse the substantially lower prescription drug prices in our country and end their greed, we will do everything within our power to end it for them. Novo Nordisk must substantially reduce the price of Ozempic and Wegovy As Americans, we must not rest until every person in our country can afford the prescription drugs they need to lead healthy, happy, and productive lives." End quote, from the op-ed from president and myself. That's what President Biden and I wrote a few months ago, and that's what I believe. Prescription drugs in this country must be affordable and we must not be forced to pay far higher prices than people in other countries for the same exact product. This is especially true when we face a national emergency in terms of the twin epidemics of diabetes and obesity which if not addressed with lower-cost, drugs could cost us tens of thousands of lives and an unimaginable amount of money. Congress and the administration have a moral responsibility to act now, act boldly, and to protect the American people. Senator Cassidy, you are now recognized for an opening statement.

Thank you, Chair Sanders. Nearly one in three Americans live with obesity, nearly one in 10 have type two diabetes. I'm a physician, I'm very aware of the implications of that. There are so many complications. Obesity leads to more chronic disease than any other condition, taking lives and causing almost $173 billion in healthcare spending a year. It's almost impossible to bring down healthcare costs unless we effectively address obesity. Now we have GLP-1s. They have the promise to address both obesity and the complications that result. They're expensive. Now we can argue about the net versus the list, but they're expensive. But let me say, without a profit motive, without something in return, it's unclear that these drugs or any drug is going to be developed. There's a tension, a tension between the need to incentivize innovation and the ability to afford that innovation. (19:47) And we are here struggling with that balance. Now, if anyone thinks going after big pharma is the silver bullet, that if you do that, boom, health healthcare costs or drug costs go down, they don't understand what happens with pricing a drug. There is no silver bullet. But as my friend, Angus King, says, there is silver buckshot. You do a little bit here and a little bit there, and it adds up so the drugs become more affordable. Given that, we still have to preserve the profit incentive for the creativity for drug companies to invest in order to develop the drugs that are going to positively affect the burden of disease in our society. This is a simple example I've used before. When I was in medical school, one of the most common surgeries was removing a portion of someone's stomach because of peptic ulcer disease. (20:47) And then a drug called Cimetidine came out Tagamet, and within six months that surgery was rarely performed. Tagamet is so simple, it's now sold over the counter, but it has saved so many people having disabling surgery. Now that is an example but now we're speaking about Alzheimer's and cancer and obesity and the complications from obesity, and I think we have to be realistic. It is a profit motive that incentivizes creative people with capital to go in and find that cure. So as this committee examines the affordability of GOPs, we have to also examine how do we preserve that incentive for the innovation. That is the tension, how do we preserve? Because by the way, if we stop developing new drugs, Alzheimer's won't be cured, cancer won't be cured, and better drugs to address obesity in the complications of the metabolic syndrome will not either. So, back to this hearing. There are serious questions that need to be asked. (21:50) What has contributed to the high price of Ozempic and Wegovy? What are American patients actually paying for these drugs at the pharmacy counter? Frankly, what are Germans actually paying? They may pay some money at the counter, but I suspect that the health plan is also playing something. So what is the true cost relative to the true cost to us? By the way, I'm particularly concerned with folks with health savings accounts because the chair is right, if there is a list price which is really high and they have a drug benefit tied to their HSA, then that begins to drain their HSA. And I have always been an advocate of how do we make that health savings account more useful. But if it's being drained for a high list price, it is less useful. I'm about that. (22:33) So what can we do to make sure that Americans have access to an affordable cost and at the same time, we have adequate incentive so that someone out there with an incurable disease knows that there might be hope along the way. I appreciate Mr. Jorgensen for attending the hearing. I look forward to your answers. Now, it's important to note that while drug manufacturers play a significant role in determining the cost of a drug, the problem's greater, it's more complex than the actions of any one industry. So we need to make a serious effort to navigate the network of perverse incentives throughout our healthcare system, including taking a substantive look at health insurance benefit designs, price transparency, regulatory barriers, and the perverse effects of government discount programs have on prices that Americans pay at the commercial market. This committee has a long history of engaging in real bipartisan efforts to lower the cost of healthcare. Last year, Chair Sanders and I worked on the PBM Reform Act to address misaligned incentives affecting PBMs to lower the price patients pay for their prescriptions. The committee passed this legislation with overwhelming bipartisan support. By the way, we need to get this across the finish line and signed into law. And this is the kind of bipartisan work needed to tackle the high cost patients face for GLPs and for all drugs. So thanks again for coming today, Mr. Jorgensen. I look forward to you explaining how to balance this tension between innovation and affordability. And with that, I yield.

Thank you, Senator Cassidy. We will now turn to our witness panel. For the awareness of all senators and the witness ranking, member Cassidy and I have reached an agreement where we will both have an equal amount of time to ask the witness questions, and all other members will have seven minutes to ask the witness questions. Our sole witness today is Mr. Lars Jorgensen. Mr. Jorgensen has been with Novo Nordisk since 1991 and was appointed president and CEO of the company in January 2017. Mr. Jorgensen, thank you very much for being with us. You may proceed with your testimony.

Chairman Sanders, ranking member Cassidy.

Sir, make sure the mic is on there.

It is on. Maybe I'll move this. Can you hear me now?

Yeah, much better.

Okay. Chairman Sanders, ranking member Cassidy, senators, thank you for the opportunity to speak again before the Health Education Labor and Pension Committee on behalf of Novo Nordisk. Last year I was asked to testify about patients living with diabetes and insulin affordability. This year I volunteered to appear before the committee on policy solutions for patients living with obesity and the challenges they face navigating the complex US healthcare system. I appreciate the opportunity to engage here today. For decades, our public discourse about obesity and to some extent, type-two diabetes, was based on misinformation and blame. These conditions were treated as a personal choice, a failure or ill-power. No one was talking about how these are chronic diseases and treatable diseases. With the discovery of Semaglutide and the development of Ozempic and Wegovy, our collective understanding of these diseases fundamentally changed. (25:52) But this shift was not a foregone conclusion, this was a long and winding road. It began more than a hundred years ago when our company was born. Novo Nordisk was founded on the mission to not only treat but defeat diabetes, to one day find a cure. And it was built on the idea that our success must be measured by looking at more than our financial sustainability, but also our societal and environmental sustainability. To this day, Novo Nordisk maintains its unique ownership structure that protects its mission. The Novo Nordisk Foundation is among the top three largest foundations in the world, rivaling the Gates Foundation, and it serves as our controlling shareholder. For over a hundred years, the foundation has supported initiatives that improve health and sustainability of the planet. This ensures that time and resources are focused on unlocking cures for chronic diseases.

Mr. Jorgensen, can you push-pull that microphone a little bit closer to you.

Yes, sorry about that. Is it better now?

And can you work on a medicine for bad hearing? Okay, that'd be the next thing.

Well, it's not really our expertise, but maybe one day. This ensures that our time and resources are focused on unlocking cures for chronic diseases, not on daily stock fluctuations. And our focus on this mission is how Ozempic and Wegovy came about. In the early 1990s, Novo Nordisk scientist, Dr. Lotte Bjerre Knudsen, then a junior researcher in our labs, set out to take a hormone that naturally decays in the body within minutes and to make it last long enough to become a medicine to combat diabetes. It took years before she and her team evolved and solved that puzzle, and more than a decade longer to turn the research into liraglutide, our pioneering once daily GLP-1 medicine. After this discovery, many believed that innovating beyond liraglutide was at best unnecessary and at worst impossible, including most of our competitors. However, another tenacious team of Novo Nordisk scientists refused to give. (27:56) In November 2004, these scientists created 12 milligram of semaglutide, an even more potent molecule to combat diabetes. Even after that, it was still 14 years more in the making until Ozempic was finally approved, and another four years after that until Wegovy was approved. And we didn't stop there. In 2017, we launched the largest clinical trial in the history of the company, enrolling more than 17,000 patients across 41 countries. We demonstrated semaglutide's dramatic reduction in mortality for those suffering from cardiovascular disease and living with obesity. And because of our commitment to health discovery, we can now say that liraglutide is the only weekly GLP-1 on the market that is FDA approved to reduce the risk of major adverse cardiovascular events, which is the number one cause of deaths in America. Today we are also conducting even more clinical trials to understand how semaglutide may affect and treat chronic kidney disease, liver disease, and Alzheimer's disease. (29:02) But we know these discoveries are only effective if patients can access them, so along with discovering revolutionary medicines, we have committed to expanding manufacturing capacity. It took over 50 years to advance our science and manufacturing capacity for insulin production To meet demand. Today we can provide insulin to nearly 30 million patients. But patients living with type-two diabetes and obesity can't wait another 50 years, that is why since the beginning of last year, we have committed over $30 billion to expand manufacturing capacity. To put the 30 billion in perspective, this is 20% more than the entire US space program. It's also four times the amount that Congress has set aside for the National Electrical Vehicle Charging Network. Our commitment includes 4 billion in new investments to expand our facility in North Carolina, on top of the 5 billion we have already invested there, creating thousands of construction jobs and manufacturing jobs in the state. (30:04) We spent these resources because we can't afford not to. Type-two diabetes costs the US $413 billion every year, and obesity costs the US $1.7 trillion, and we all know the physical and emotional toll these diseases make. You have said that our amazing medicines can't help patients if they can't afford them. That is true. It is also true that the full value of Ozempic and Wegovy can only be realized if patients can access them. Patients need both affordability and access. That's why we afford to secure public and private insurance coverage for patients with type-two diabetes and patients with obesity. We are pleased to say that a Ozempic is covered by 99% of all commercial plans by Medicare and by Medicaid in 50 states. And while Wegovy was only recently approved by the FDA in 2021, today it's covered by half of the commercial plans as well as over 20 state Medicaid plans, the Department of Veterans Affairs, and the military, the Indian Health Service, and for all federal employees, and hopefully soon, for seniors. (31:16) With that said, it's clear that patients too often struggle to navigate the complex US healthcare system. It's also clear that no single company alone can solve such vast and complicated policy challenges. So what I can promise is that Novo Nordisk will remain engaged and work with this committee on policy solutions to address the structural issues that harm patients and drive up cost, and I can also commit that we'll never stop driving change to defeat serious chronic diseases like obesity and obesity. I appreciate the committee's focus on ensuring patients living with chronic diseases can have affordable access to the medications they need, and I look forward to your questions. Thank you very much.

Thank you very much, Mr. Jorgensen. Mr. Jorgensen, this committee and you and others have talked a lot about list prices. You make the point that we have a complicated system, and you're certainly right. So we talked about list prices, we've talked about rebates, we've talked about net prices. But at the end of the day, under your best case scenario, the price you are charging Americans for a Ozempic is still nearly $600, that's with all of the rebates and all of the discounts. That's over nine times as much as people in Germany pay for the product. (32:44) And the price you are charging for Wegovy to Americans is over $800, nearly four and a half times as much as it costs in Denmark. So very briefly, and a number of people are going to be asking you questions, please tell me why you think it is appropriate to charge Americans nine times more for the same exact product that you sell in Germany. And by the way, correct me if I am wrong here, but I assume that when you sell Ozempic for $59 a month in Germany, you are making a profit there. Am I correct on that?

So senator, let me start by acknowledging and sharing your wish to have affordable medicines for Americans. And there's been a number of numbers mentioned here, and I think it's important to say that these are not comparable data. When I mentioned that it's really, really important for us to secure access to patients and affordability, we are hard at work in making sure that patients have access via the insurance schemes. And today, 80% of all Americans

...with insurance have access to these medicines at $25 or less for a month's supply. So it's a price point at the pharmacy counter we have to talk about.

Let me just interrupt you if I might. Okay. You are correct that many people pay $25 a month for Ozempic. But what you're forgetting to mention is that many of those people are paying outrageously high prices for the insurance that covers Ozempic and other drugs. So simply this is a pass due to the insurance companies. Bottom line is, you are charging the American people substantially more for the same exact drug than you are charging people in other countries. And my question is why?

So Senator, I appreciate the question. Let me try to explain how I see it. We launched Ozempic in 2018. We have had it on the market for some years. During those years, our price has declined by 40%. I mentioned that patients with insurance have access to the $25 or less for 80% of the cases. And if you look in this period in Medicare where there's broad coverage, premiums have not gone up. In the same period the insurance companies and their PBMs, the big conglomerate of legal entities they have have more than doubled, actually close to tripled their profit. So the fact that we can actually secure that 99% of people with insurance have access, that there's a co-pay at the pharmacy of $25 or less without premiums going up in Medicare while profit goes up for the middlemen, I think is a concerning data point.

Well, I would simply say that most Americans would be surprised to learn that insurance rates are not going up. In my state they're going up by 14%. But once again, you are not answering my question. It's a very simple question. In Germany they're paying $59 for Ozempic. In the United States we pay $969. And again, even with all of the discounts, we are still paying very substantially more than the people of any other country. And you are selling, as I understand that 72% of your revenue comes from the United States. That right? Roughly.

If it's based on our accounts, you're right. I don't have the number from the top of my head.

Okay, so you're selling, you're making huge amounts of money in this country and you're charging us far more. And you haven't given me an answer as to why. Let me ask you another question. A recent study from Yale University has estimated, as I mentioned earlier, that 40,000 lives in America could be saved each and every year if Novo Nordisk substantially reduced the price of Wegovy and made it available to everyone who needs this drug at an affordable price. From a moral perspective, does it bother you knowing that keeping the price of Ozempic and Wegovy so high in the United States could lead to the preventable deaths of tens of thousands of Americans?

So Senator, we are very committed to make sure that Americans have access at affordable price point for our medicines. There's no thing we would rather see happen. We have just announced 30 billion investments to increase capacity to serve these patients. There is a market we have to operate in and we negotiate hard to make sure that Americans have access. We negotiate against the PBMs and give them significant rebates, discounts, and fees-

Mr. Jorgensen, you're not answering the question. And look, as you may know, I'm a great respecter of the people of Denmark. I think you have a social system which is very progressive. But I'm asking you a simple question as a decent human being. What studies tell us is that because of the very high price of your products, 40,000 people a year may die in America and you have not... Increased production is fine but what I am asking you is if you don't act, 40,000 people a year could die, is this acceptable to you?

Senator, any prospects of patients not getting access to the medicine they need, I think is terrifying and we have to solve this challenge together. I mentioned in my opening that I don't think any one company can solve that alone. I wish there were more at the table today so we could have discussion about how we do that together. We don't decide the price for patients. That's set by the insurance companies. I do acknowledge that there are patients who have poor insurance or no insurance. And if you in the US do not have insurance, if you have low income, we actually have support programs to help those patients. I'm proud about those, but they are not a real solution because patients should have access to medicines via insurance because if you live with a chronic disease like Type 2 diabetes or obesity, these are complex diseases that requires access to physicians. There are comorbidities you need to have treatment for. So I strongly believe we need to solve this within insurance. And when you are in insurance, there is access to our medicine.

Mr. Jorgensen, this committee has heard from insurance companies, we've heard from PBMs, we've heard from everybody in the world and everyone blames everybody else. But you still have not answered my question. It's a very simple question. Why Novo Nordisk is charging Americans substantially higher prices for these drugs than the people in other countries? Let me get to another issue. Mr. Jorgensen you have told this committee that you are concerned that if you substantially lowered the list prices of Ozempic and Wegovy in the United States, PBMs may take these drugs off of their formularies and deny access to the patients who need these drugs. (40:40) I think you used insulin as an example of that. However, I have received commitments in writing from the major PBMs that if Novo Nordisk lowered its list price, they would not limit access to Ozempic and Wegovy and would not take these drugs off of their formularies. Given this fact, will you commit today that Novo Nordisk will substantially reduce the list price of these drugs in the United States so that the American people are not paying higher prices, far higher prices for these drugs than the people in Europe and Canada?

So thank you Senator for that information. That's new information for me. Anything that will help patients get access to affordable medicine, we'll be happy to look into. I'd just like to make a comment also that the experience as you also allude to yourself from insulin is one of when we had a discussion last year in the hearing on insulin, we actually lowered insulin pricing. That had a consequence. So when we dropped some of the insulin prices, we had our products dropped from formulary codes so less patients got access to those in insulins. So I have a bit of concern how this could play out, but anything that can help patients get access to the medicines they need at affordable price point, we'll be happy to collaborate around that.

All right. Are you prepared to have Novo Nordisk sit down with the PBMs who have made that commitment to me that they will not take your products off of the formulary, sit in a room with us and work on an agreement?

I'd be happy to, as I said, do anything that helps patients and I don't know under which conditions such a promise comes. I haven't seen any of that.

Okay, I will get you the... They're in writing and I'll get you the letters. All right, that's it for me right now. Senator Cassidy, do you want to ask some-

I'll defer to Senator Collins for her seven minutes of questions.

Thank you very much Senator Cassidy. Mr. Jorgensen, you testified that the net price of what your company is actually paid for Ozempic has declined by about 40% since its introduction. Is that correct?

Yes, that's correct.

But the question remains, how do we get relief to patients at the pharmacy counter? As Senator Cassidy has mentioned, this committee's examined the role of the middlemen, the PBMs in inflating costs. And more than a year ago in May of 2023, our committee reported a comprehensive bill that reformed to PBM practices. And the whole purpose of that bill was to ensure that consumers got relief at the pharmacy counter. Unfortunately, the Senate majority leader and the chairman have not brought that bill to the senate floor in more than a year. Could you give us some indication of what the impact on cost to consumers would be on prices if we had enacted that PBM reform bill?

Yeah, thank you Senator for that question. If we look at it today, PBMs and their insurance companies, or I think typical insurance companies that own the PBMs and a number of legal entities set up to extract fees from the US system. They are rewarded based on list price. So they get a fee based on list price. So the higher list price, the more fee they get for the same job. Which means that in our experience, products that comes with a low list price get less coverage, it's less attractive. And that becomes troublesome for patients because patients who do not have insurance or have high deductible plans are then asked to pay the list price. We pay on average 74% in rebates, discounts, and fees and even more when we are into Medicaid 340B, etc. So if we did our business based on net price instead of list price, that would mean that our products would be much more affordable for patients. And if we simply paid the PBMs a small fee for the limited risk and contribution they make, I think patients would be significantly better off.

So for every dollar that you sell in medicine, how much of that dollar goes to rebates, fees and discounts that largely do not get passed on to the patient?

For every dollar we make, we give 74 cent to the PBM's insurance companies.

So 74 cents of every dollar. Let me switch to another issue just to make sure that I understood. In your opening statement, you seem to say that your largest shareholder is a nonprofit charitable foundation. Is that correct?

Yes, that's correct.

Let me turn to another issue. Recently, your company discontinued production of Levemir and that is a popular long-lasting basal insulin. Ironically, just yesterday I heard from a mother from Denmark Maine whose daughter takes Levemir and feels that it has unique benefits for her clinical situation. So making a sudden switch or change in her medication is very much of concern to this mother. What led to this discontinuation?

Yeah, thank you, Senator. Any decision to stop supplying a medicine is a very difficult decision because we acknowledge that different patients have different needs. In the case of Levemir, we actually lowered the list price in the US by 65% last year just to realize that after we dropped the price of Levemir, the PBMs dropped coverage. So it went from being on 90% of insurance schemes to being only on some 35%. So we see a dramatic lowering of volumes, and as I mentioned in my opening, we serve 30 million people living with Type 1 diabetes in need of insulin, and it's difficult for us to run high-volume manufacturing lines with small products because it prohibits us from actually serving all those patients. So it was a difficult choice we had to make sure that we could sustainably supply enough insulin for all people with Type 1 diabetes, but I do acknowledge that it comes with some stress for individual patients, unfortunately.

Well, I hope that you will be giving guidance to these families because for some of them this is a real blow and they're very concerned about the impact. I want to go back to the cost issue, which is critically, how does your company help individuals who are part of low-income families, do not have insurance and simply cannot afford your drugs?

Yeah, thank you Senator. It's important for us that we also try to help the most vulnerable patients. So we have worked hard to make sure that's covered in Medicaid for our medicines. And we also have patient support programs. So for instance, if you live with Type 2 diabetes and you are in need of a product like Ozempic, you can contact Novo Nordisk. And if you make less than 400% of the national poverty line, which as illustration is $120,000 as a household income, you can get free Ozempic from Novo Nordisk and I believe we're the only company having such a support program.

So if your household makes less than 120,000, you can participate in your patient assistance program?

Yes, and I don't think it's an ideal situation because honestly patients should have access to insurance because if you live with Type 2 diabetes, you're also at risk of having cardiovascular disease, kidney disease, so you need a range of medical support. So I think we should have as a shared objective, we really make sure that people have access to proper insurance and when they have that, we can work with different mechanisms to make sure that when they're at the pharmacy counter, they can pick up our medicines for $25 or less in most cases. But that's difficult when you don't have insurance.

My time has expired. Thank you.

Senator Lujan.

Thank you Mr. Chairman. Mr. Jorgensen, thank you for being here, sir. In your opening statement you said, quote, "Patients need both affordability and access." I very much appreciate you saying that. Now, Wegovy and Ozempic are groundbreaking drugs that are making a huge difference in people's lives. The ability to quiet food noise and successfully manage their weight after so many failed attempts is truly a life changing innovation. But to make a positive difference in people's lives, they have to be able to afford it as well. I've heard from New Mexicans about un-affordability. I'll share a story that I heard from Bernadette. She's a mother of three in Albuquerque, New Mexico. In October '23, Bernadette was prescribed Wegovy for diabetes and a liver condition. Her insurance denied coverage of Wegovy three times. Bernadette's Wegovy prescription would've cost about a thousand dollars after a $300 discount. Her doctor then prescribed Ozempic. (51:42) After two appeals Bernadette's health insurance company approved her prescription. Even with health insurance, Bernadette's Ozempic prescription would've cost around a thousand dollars a month. Bernadette made the difficult decision to not pay $12,000 annually for either Wegovy or Ozempic, both prescriptions prescribed by her doctors. She now goes without. According to JAMA, the adult Hispanic population in the United States has a 45.6% obesity incidence. Black and Hispanic people are more predisposed to having Type 2 diabetes, a condition related to obesity. The median household income in New Mexico is $62,268 or $5,189 a month. The median household income for Hispanic families across the United States is $65,540 or $5,461 a month. Even with the 40% reduction in the list price, the cost of these drugs represent a huge part of the monthly income of New Mexicans and Hispanic Americans. I also heard through your testimony the coupons or things or things of that nature that are included from the list price. Why don't you just sell the drug at the coupon price if you're willing to give people a coupon that can afford it instead of that list price that we see on that board?

Thank you Senator for bringing up that question and also addressing the needs of Hispanic and Black populations. I think that's really, really important. It is not our intention that anyone should pay the list price. The list price is the starting point for our negotiation against the PBMs and insurance companies in bringing coverage of our medicines to patients and in particular those you mentioned here in having a bigger need. We see that when there is insurance coverage, there is a price point of the $25 I mentioned for 80% of patients. (54:00) And you can say, what about the remaining 20%? The price point is if $50 or less for 90% of the cases, then there are remaining 10% where there are either a situation without insurance or you can say low quality insurance where insurance schemes have high deductibles or certain restrictions on use of the products. And it's important for me to say we don't set the price for those patients. That's a function of the insurance scheme. But for those who fall outside of insurance and actually including the income level you mentioned we have for Ozempic a support program where we try to help them.

And Mr. Chairman, if I may, Mr. Jorgensen, Bernadette had insurance, couldn't afford it.

No.

So I appreciate the statistics and the number. She's a real person. Mother of three. There's a problem here. I've not quite understood the notion of list prices with pharmaceutical companies and then the price that they're willing to sell the drug at so they can still make a profit. It sounds like a game to me and a game that I don't understand. But a game I certainly hope in a bipartisan way that we can get to the bottom of. I very much appreciate Senator Collins line of questioning at the opening as well. Legislation that's moved out of this committee deserves to be heard on the floor and I certainly hope we can get there. I'm going to move on. Before I do, while I appreciate very much that the Indian Health Service and the VA include coverage for obesity and for other reasons of this drug, it's still high. (55:31) It's still a high cost. And when we look at those programs as a whole, I'm still very concerned as to what's happening in that space, but I look forward to visiting with your team more about that into the future. Mr. Jorgensen, because of the work that was done with the Inflation Reduction Act, Medicare can finally negotiate the price that seniors pay for prescription drugs in Medicare. In your written testimony, you have acknowledged that Ozempic may be listed in the negotiations due to its high cost. Despite these contentions that Medicare negotiation will resolve the price, Novo Nordisk has attempted to block the law when Medicare sought to negotiate the prices of insulins. These insulins, by the way, had the list prices of almost $6,000 annually. Now, as we both know, the court rejected that as well. My question for you, Mr. Jorgensen, when you mentioned in your written testimony that you expect Ozempic, your diabetes product will be included in Medicare's list of drugs for negotiations, yes or no, should Ozempic be selected for negotiation, will you commit to not initiating legal action to stop it?

So Senator, thank you for bringing up that question. So we share the objective of making products accessible and affordable for patients. No doubt about that. On the IRA negotiation, we have had some concerns that if it's a real negotiation, I support that. But if it's a price setting, I think it'll have unintended negative consequences to access to patients for innovation. So it's been described as a negotiation, but it's actually a setting of a maximum price. So I don't know what price we'll end up having for our insulins. I don't know if the PBMs will include it on formulary at all because of that lower price and impact on rebating. So I have nothing against negotiating pricing with the objective of improving affordability for patients. But if it's not a fair negotiation, but actually price setting, I think it'll have negative consequences on the innovation being brought to Americans.

Mr. Chairman, as I close, my time has expired, I would remind you Mr. Jorgensen of those words that you used in your opening statement again. "Patients need both affordability and access." I certainly hope that that rings true, and I would encourage you to sit down with Chairman Sanders and the committee staff associated with that PBM letter to find a place where you will lower those prices and do the right thing and send the message to everyone because your drugs will save people's lives. 40,000 more people that can't get them today, many in the community that don't get them today, and I certainly hope we can get to that place. Thank you, Mr. Chairman.

Thank you. Senator Cassidy.

I'll defer to Senator Budd.

Thank the ranking member. Thank the chair. Mr. Jorgensen, thank you for being here. According to reports, the North Carolina State Healthcare Plan attempted to limit coverage of one type of obesity drug, the GLP-1s that we're talking about today. Four enrollees to avoid raising premiums. Now, however, CVS Caremark, the state health care plans PBM inform them that they would lose $54 million in discounts if coverage was limited. So Mr. Jorgensen, do you know if these allegations are true?

I have to admit, I don't know all the details of the specifics North Carolina, but I don't think we stopped paying these rebates.

So I received a letter from North Carolina Speaker of the House, Tim Moore, and it includes data on the State Health Plan's board of trustees blaming the Inflation Reduction Act, not drug spending on the plan's shortfalls. So I ask unanimous consent to enter the letter into the record. Mr. Chairman?

[inaudible 00:59:48].

Thank you. Mr. Jorgensen, could you describe in as simple terms as possible how federal programs like the 340B drug discount program and reimbursement for prescription drugs through Medicare Part B actually lead to higher prices and I would say higher list prices?

Yeah. Well, when we set a list price, we have to take into consideration what are the rebates we have to pay because unless we pay rebates into the system, when we negotiate against the PBMs, we're not getting access to the formulary. So a higher list price is more likely to lead to more access to patients. And on top of that comes additional payments we have to give when we are in Medicaid, when we are in 340B programs, et cetera, where there are additional payments we have to make to make products affordable, so it leads to higher prices for those patients who then do not have access via insurance of some of these programs because they're faced with a list price. And really nobody should pay the list price because that's not how we intend to do business. But we don't control the price set for the patients. That's done by the insurance schemes. We only negotiate against the PBMs to make sure that we can move products to patients. But whether patients get insurance coverage and what price they pay, we have no impact on.

It seems like an industry with a lot of strange incentives. Last November, the Wall Street General reported that PBMs often favor drugs with higher list prices. And I appreciate my colleague, Senator Collins line of questioning, but the favoring drugs with higher list prices is because PBMs are reimbursed based on a percentage of the drug's list price as I understand it. That means PBMs are going to make more money if they cover the higher price drugs. So here for an example, insulin. One type of insulin had a list price of $274, while an unbranded version of the same insulin had a list price of $25. (01:02:03) And even though the unbranded version was $250 cheaper, the PBM didn't cover the cheaper version. And my understanding is only half of Americans have insurance coverage for that cheaper insulin. So this is a direct result of PBMs facing or favoring the more expensive type of insulin. So I understand, and I appreciate your statement earlier, that whatever's best for patients, and I believe that you and the many great team members that you have at Novo. So Mr. Jorgensen, are there ways to reduce these perverse incentives? We're asking for suggestions here and perhaps this will come in ongoing discussions with the committee, but in your time here, do you have some suggestions to reduce these perverse incentives to deliver savings and value to the patients in need?

Thank you, Senator. We should really unite around what help patients and if you have the industry making big risks in R&D, making big commitments into manufacturing, and then we have to negotiate against PBMs and their insurance companies not taking much risk and yet benefiting from a significant fee linked to the list price, I think that's absurd. So if we could stop linking their income to a list price, I think that would create incentive that is not as absurd as it is today. (01:03:38) I would prefer doing business on the net price where I compete against competitors based on what is the real price for our medicine and what is the value of the medicine. And these are medicines that are addressing societal challenges that are paramount. And we talk about the cost of the medicine, but it's really the cost of the diseases that's breaking the system. And we have to find a way where we transact in a way where it becomes much more transparent. What is the real price of the medicine to really adopt the medicine and mitigate the societal costs that diabetes and obesity is putting on the US healthcare system and economy.

As you observe outside looking in, what changes would you suggest that we consider to move from a list price scenario so where you could and other companies and competitors even could compete on a net price scenario and do you believe that would be better for patients?

Yeah, if we passed on the rebates we pay to the PBM and the insurance companies and group purchasing organization, whatever they're called, if we pass that on to patients, then they are faced with a net price at the pharmacy counter. I think that would dramatically change it to a much more affordable system where it's the value of the medicine for the patient, the prescriber, that determines what products is being used, not who gives the highest rebate. So anything that opens up transparency and make it really competitive in a free market context where you compete on price and value of medicines, I think would be a great benefit for American citizens.

Thank you. Chairman.

Senator Baldwin.

Thank you Mr. Chairman. Thank you for holding this important hearing about outrageous prices that Americans pay for prescription drugs compared to the rest of the world. I remain deeply concerned that pharmaceutical companies continue to put profits over patients. Patients deserve access to affordable prescription drugs. We have taken meaningful steps to lower prescription drug costs. For example, working with Chairman Sanders and other members of this committee, we secured commitments from three companies to cap the cost of asthma inhalers at no more than $35 per month out of pocket. Moreover, by allowing Medicare to negotiate drug prices for the first time ever, 150,000 Wisconsinites will soon see significant savings on 10 of the most widely used and costly medications. Insulin is now capped at $35 per month for Medicare patients and next year out-of-pocket costs will be capped at $2,000. But there is much more work to be done, and I'm committed to working with my colleagues to find more ways to lower the cost of prescription drugs and hold pharmaceutical manufacturers accountable for outrageous prices. (01:07:02) Today I would like to begin by discussing patient access to medications. Mr. Jorgensen, your company was originally founded to provide insulin to patients with diabetes. For diabetic patients, the inability to access insulin can be life-threatening. Without access to their prescribed medications, patients would be left to scramble to find alternatives or they would be faced with rationing their supplies. Mr. Jorgensen, you and your company have attributed shortages of your products, including GLP-1s, and insulin to manufacturing capacity. You have noted in your testimony that the overwhelming majority of your company's recent manufacturing investment is to expand production of GLP-1 medications. However, there have been reports of looming

... being discontinuation of insulin products and ongoing shortages of insulin products. So is Novo Nordisk shifting... Excuse me. Is Novo Nordisk shifting manufacturing capacity away from insulin to prioritize manufacturing of GLP-1 drugs?

Thank you Senator for raising these important questions. And you're right, we have a hundred-year history in diabetes. We are committed as ever to diabetes. We are one of very few companies who are still doing research in insulin. We actually have, I would say, a breakthrough insulin being reviewed by the FDA and we hope to launch that in the US market in a couple of years. So we are as committed to insulin as we have always been. (01:08:57) When there's been challenges in supply, it's not because we are taking capacity away. There is a market now where insulin pricing is going down dramatically. I am concerned about the long-term supply of insulin because we have a hundred-year commitment to that and we will keep producing in insulin, but I think it's becoming difficult for new companies to get in. I think it's very difficult for biosimilar manufacturers to get into this market because they can simply not get on formulary. So right now in insulin pricing is declining still by 10, 20% year-over-year. If this market structure continues, it'll be challenging to supply insulin. And this is in dire contrast to the public narrative around insulin price going up. (01:09:54) So if it's dramatically going down for manufacturers, biosimilars are not willing to start producing insulin and cost goes up for patients, I think that's a good example of how this system is not working. But to answer your question, we will keep producing insulin. We are committed to patients in need of insulin.

How will your company ensure that the manufacturing capacity for critical insulin products remains stable within your company? I know you were talking a lot about other companies, but how will you ensure that manufacturing capacity within Novo Nordisk remains stable?

That's a commitment we have made, a priority we have made in the company and I mentioned the discontinuation of Levemir as a difficult choice to make because when a product is going down significantly in volume, it actually ends up, you can say, destroying the ability to produce enough on the line. Because every time you have to produce a different product, you lose capacity. (01:11:03) So we focus our manufacturing to ensure that we can still supply the 30 million people around the world who need insulin from [inaudible 01:11:13]. And we continue to do research and development to make sure that people with type 1 diabetes who, I agree with what has been mentioned today, probably live the most difficult life of all in terms of having a life-saving medicine they rely on each. And every day and they need a company they can trust for supplying high-quality products that live up to FDA requirements, et cetera. And we are committed to do that.

So I have your commitment that notwithstanding the manufacturing capacity that you're creating for GLP-1s, that you will continue to have a focus on providing critical insulin. You will not reduce your manufacturing capacity in that area.

The world market for insulin is actually declining, so there's less demand, but we are committed to supply to the patient that has been using our insulin for years also into the future. (01:12:12) And we'll keep investing in innovation because using insulin is probably the most difficult pharmaceutical intervention patient does. So staying in range is difficult. And we have a major innovation in weekly insulin coming, something most physicians would say would be impossible to do, yet our committed researchers cracked the code and we hope we have approved for that in the US in the coming years time. And that will simplify how people who rely on insulin can dose the insulin and take some of the fear away. Thank you.

Senator Cassidy.

I will defer to Senator Marshall.

Thank you Dr. Cassidy and thank you Chairman Sanders. Mr. Jørgensen, welcome and thank you for attending this hearing. Look, Novo Nordisk is not the villain in this story. Novo Nordisk is not the villain in this story. They're a hero. We should be here celebrating this miracle innovation that's responding to this diabetic epidemic we have in this country. It's a miracle drug. (01:13:26) 38 million Americans with diabetes that we're helping out; this nation is spending 250, maybe $350 billion a year treating diabetes, not to mention the loss of work. And here's a drug that's going to help us treat the problem. (01:13:44) Now, we all agree on this committee across the Senate that the cost of healthcare is too much and that prescription drugs are too high, especially the out-of-pocket expenses. But we need to figure out who the villain is, who is the real culprit here? Who's making the money? So on this particular poster, you've said it once, you've said it twice, everybody up here said the same thing. Whatever the cost is, whichever number we want to use, Novo Nordisk keeps 24% of it and the PBMs extract 74%; 26 and 74%. So really, the PBMs are making the bank here. (01:14:26) So let's talk about PBMs for a second here-- the real culprit in this room, in this story. So these three big parent companies, the three big PBMs control 80, 85% of the industry. Their gross revenue last year was $800 billion. Their parent companies gross revenue, $800 billion. (01:14:50) This committee's worked so hard on PBM reform. We've not passed our delinking bill and I would ask the Chairman to consider bringing the delinking bill back to the committee and let us mark it up as well. (01:15:02) In that delinking bill PBMs would receive a flat fee for their efforts as opposed to a percentage of the sale. So we go to a flat fee model. And next, there just can't possibly be enough transparency on this issue. (01:15:18) I came to Congress to save Medicare. The people of Kansas sent me here to save Medicare. I cannot save Medicare without a miracle drug for Alzheimer's. We're spending I think way over $200 billion on Alzheimer's disease. So if we thwart the innovation that this type of company does, it tells people to stop researching drugs that are going to solve Alzheimer's. (01:15:45) Mr. Jørgensen, let's talk about research and development for a second. How many years have you been researching diabetes and then eventually you got... Probably decades ago you started going down this Ozempic path, and how many other rabbit holes have you all been down?

Yes. Thank you Senator for the question. We have a hundred-year research effort in diabetes, and the past three decades we have been researching the GLP-1s starting in diabetes and then in obesity. And when we started the obesity research efforts, everybody thought it was a stupid idea.

I'm going to... Sorry, to get through this. So you've spent three decades specifically on the GLP-1 model and I'm sure that there was lots of molecules that didn't work out and at the end of the day, you've spent in excess of $10 billion of research. And then how much money are you going to spend on research this year approximately?

So we are spending approximately 14% of our turnover on research.

Okay. I want to make a quick point here that companies like yours benefit from the Trump tax cut, the research and development dollars, the tax cut on that, that expired. Is that true that doing research in this country, you benefited from that tax cut?

We have no, say, funding support from the NIH whatsoever in our research efforts. We benefit from tax benefits in different situations.

So the RMB and I would write the R&D off over a year as opposed to five or 10 years would be a significant... would prevent you from or decrease your reinvestment opportunities?

Yeah, perhaps. I'm not... I don't know as a specific data in terms of how much we benefit from it.

The one thing I am disappointed in your company, all big pharma, is the marketing that they do. I think that the marketing is very influential. I really think that Congress needs to go back and revisit that as well. I think that the marketing is so good, there's people on this drug that shouldn't be on it and are being taken advantage of. And so I do think we need to go back and look at that. (01:17:59) Again, instead of coming up to hear all this story, we need to look in a mirror. America needs to look in a mirror, that nutrition is a big problem in this country and lack of activity. (01:18:11) The Chairman, Ranking Member, all of us have worked on community health center funding. I think that's where the opportunities to work on the nutrition problems remains. (01:18:20) So it's frustrating to me that Congress can spend a trillion dollars on the military, Medicare can spend a trillion dollars, but we can't spend $3 billion on primary care, $3 billion to address the primary care needs of this country, which I think would have a big impact on driving down the need for these type of expensive drugs. (01:18:40) America, I said it for 20 years as a physician that America suddenly wants drive through healthcare and we want to drive through a fast food service that gives medicine to fix our problem rather than addressing the real challenges before us, which is our nutrition in this country is horrible. (01:18:59) So I think that's something we need to continue to work on. The other thing we can still work on is bringing competition, promoting competition to you will bring this price down. (01:19:09) We've passed legislation, the president assigned legislation that helps drive biosimilars and generics to market more efficiently. There are several in the hopper, so to speak, but still the FDA remains very inefficient. Very inefficient. (01:19:24) The FDA should focus on the safety of the drugs and then let the physicians and the patient decide if they're right for them. And that type of a model will drive down that process by years. (01:19:34) And I'll just close one more time, emphasizing that this committee needs to demand that the leader bring our PBM reform to the floor, but we need to include that delinking bill. There's other opportunities to drive this price down. Again, Novo Nordisk is not the villain in this story. Thank you. I yield back.

Thank you. Senator Hassan.

Thanks Mr. Chair, and to you and Senator Cassidy for this hearing. Mr. Jørgensen, this year Novo Nordisk abruptly discontinued the drug Levemir. And I know Senator Collins raised this with you, but I want to follow up on it a bit. (01:20:12) Levemir is a critical insulin product and one of the few long-acting insulins approved for use during pregnancy. By discontinuing Levemir in January of 2024, Novo Nordisk interrupted the diabetes care plans of millions of Americans with only a few weeks notice. Will Novo Nordisk agree to provide any interested company with the necessary information and drug formulation to make Levemir?

Senator, thank you for the question. Any decision to take a product off the market is a very, very difficult decision and I have to explain why we had to do that. We, last year, reduced the price for Levemir. We dropped the price yet to find that PBMs dropped access to Levemir, so much less patients have access to it.

I understand that, but my question is now that you're not making it and there are still patients who need it, will you provide necessary information and drug formulation to other pharmaceutical companies that decide they want to make it?

We have given a yes-notice more than the weeks you mentioned.

Sir, my question is a direct one, please answer it or tell me you're not going to.

We have collaborated and followed up with all those that were brought forward as potential manufacturers, but we have not found anyone interested in manufacturing it. (01:21:40) And if there is a company interested in manufacturing it or the government wants to manufacture it, we'll be happy to collaborate. The reality is that the market is disappearing for Levemir because of how it's contracted and I don't make a decision like that an easy decision.

I understand. And have you worked actively to find a manufacturer to take on Levemir? Sounds like you've had some conversations, but are you continuing the outreach because there are some patients who really need this medication?

Yes. The companies we know of have not shown interest. All the companies that has been mentioned as potential partners on this we have discussed with and none have come forward as being interested.

I will follow up with you in writing to ask for specific steps that you'll continue to take over the next, let's say, three months to find a manufacturer for this drug. (01:22:39) I'd like to move on if I can because in response to a question from Senator Luján about your pricing of Ozempic and Wegovy, you said if you drop the price of these obesity drugs, PBMs would take them off their formularies. But here's what the PBMs say, Cigna, Express Scripts, the question they were asked is: "If Novo Nordisk lowered the list price for Ozempic and Wegovy tomorrow and the net cost stayed the same or went down, would your PBM limit access?" (01:23:14) Here's what Cigna, Express Scripts said, "No. If Novo Nordisk lowered their list price for Ozempic and Wegovy tomorrow to a price that was the same or lower than current net cost, that change by itself would not result in less favorable formulary placement." (01:23:29) To support this claim, the company provided an example. It did not disfavor a competing weight-loss product, Eli Lilly's Zepbound, even as it launched at a list price 20% lower than Wegovy. (01:23:42) Here's what United Health Group, Optum Rx, said, "No. Assuming the net price remains the same or lower, lowering the medicine's list price would not lead to less favorable formulary placement by Optum Rx, particularly for high-demand drugs like Ozempic and Wegovy. To be clear, lower list prices and lower net prices support formulary placement and access." (01:24:04) CVS health Caremark said something similar. It said, "The simple answer is no. In fact, we can point to recent history as a proof point. When Novo Nordisk drastically reduced the price of their insulin NovoLog in 2023, it did not result in a less favorable formulary placement with Caremark." (01:24:24) And they were also asked if Ozempic and Wegovy were available for a hundred dollars per month or less, "What impact do you expect that it would have on coverage and access?" (01:24:34) Cigna Express says, "If Novo Nordisk lowered the price for plan sponsors to a hundred dollars or less per patient per month, we would expect the vast majority of our clients to expand coverage and access to these products for diabetes and weight loss assuming clinical evidence continues to support efficacy and safety." (01:24:52) CVS said, "Lower list prices would open up access for obesity treatment." In particular, United Health Group, Optum Rx, said, "Given the significant price differential for these products across borders, a decision by Novo Nordisk to align US pricing more closely with those in other countries would meaningfully increase access for US patients." (01:25:11) So with that in mind, would you please commit to lowering the list price of these drugs?

So Senator, allow me to share a few points before I answer your question.

Yes.

Is that okay?

Mm-hmm.

So the experience we have is one of losing access when we lower price. I know you can always find specific plans that did include in insulin with a lower price, but the broad, say, totality is that less patients have access to our medicines when we have lowered the price. (01:25:46) I understand that perhaps the PBMs have changed their mind and I'd be happy to collaborate with them on this because anything that helps patients to get access and affordability we are supportive of and the rebates that were shown before, we hand those out, they're not in our books. So if we can go to a delinking model or any model where we do business based on net price and I'll be more than happy for that, but it's not how history has told-

Well, but you've now got these companies publicly committing to continuing access and increasing access if the list prices are lowered. So I would strongly recommend that with these companies on the record, they represent a huge amount of the covered patient population in the United States that you consider strongly lowering the list price. (01:26:44) And lastly, I just want to note that one way of reducing drug prices is encouraging the entry of generic and biosimilar medications which can provide lower cost options for patients. (01:26:59) So I will follow up with you to, I hope, get a commitment that Novo Nordisk will not stand in the way of other companies coming up with lower cost versions of these drugs if the companies currently have them in development. Thank you Mr. Chair.

I just want to pick up on Senator Hassan's important point. We have in writing, we will certainly share it with you, commitments from the three major PBMs that if you substantially lower your list price, they would not limit coverage. (01:27:34) Now, what I'm hearing from you is that you are prepared, Novo Nordisk is prepared to sit down and work with those three companies. I am prepared to negotiate that, work with you. Do I have a commitment that you will sit down with the three companies to make sure that they keep that commitment?

Yes. Anything that can help patients get access, I'm supportive of and that also includes collaborating and negotiating with anyone who can help that.

All right. But picking up on Senator Hassan's point, if in fact they keep their commitment, are you then prepared to substantially lower the list prices in the United States?

I have to understand what this entails because when I hear statements that PBMs would accept a low list price product, it needs to go all the way to patients. So it means that they talk about insurance companies being their clients, it's actually their owners. So it needs to get to insurance schemes and it needs to get to the patients because-

I am aware of that.

Yeah.

All right. But I'm asking you again, A, will you work with this committee and the PBMs?

Yes. We-

Number two, if in fact they keep their word, I understand that it's complicated, will you in fact substantially lower list prices in this country?

If it works in a way where patients get access to a more affordable medicine and we have certainty that it actually happens, and not like when we lowered list price prior round to round that less people got access to our medicines-

Right. I understand that.

... we will be positive towards that.

We will be in touch with you and the PBMs to work on this and I want to thank Senator Hassan for that line of questioning. Senator Cassidy.

I'll defer to Senator Romney.

My goodness. Senator Cassidy, thank you very much; appreciate that. Mr. Chairman and Ranking Member appreciate the chance to have this witness here, appreciate your willingness to be here. (01:29:35) I don't know whether it's voluntary or not, but given the nature of our hearings, which are mostly opportunities for us to talk and you to listen, I appreciate your willingness to be here. (01:29:46) I guess, there were a couple of models that one could have for developing new drugs. One was the idea of a patent, which we'd say, "We want the private sector to invest massive amounts of money to developing new products, new innovations, and then if one works, to have a patent to allow you to charge whatever you want to recoup a return on investment and make it potentially enormous profit." That's one model. The other model is to say, "No, we, the government, are going to develop drugs, and we're going to spend our money and keep the price down." (01:30:19) Sometimes we live in a fantasy land, which is we want you to invest and the industry generally to invest massive amounts of money, but then we want you to keep the prices low. That's fantasy land. That's not real, that's not reality. (01:30:34) You, under our system, are able to charge whatever you believe the market will bear and get as big a profit as you could possibly get. I presume you're a fiduciary for your shareholders, you're trying to maximize your profit. Is that right?

Senator, I agree with you that... I'm not aware of any government has developed a product, so it's typically done in the private sector and that can only happen if there's patent protection. (01:31:05) I don't think we set our price in a way where we just look at our shareholders because we have also an obligation to set a price that it's available and affordable for patients.

Yeah, there's no question long-term your profit is going to be enhanced to people believe that you are good guys, not bad guys. And so there are a number of considerations considering what's the best return, but there are a number of folks that would like you to invest a lot, but then to limit what you can get back and somehow ascribe malevolent intent if you charge a high price. It's like that's the system we have. (01:31:40) There are alternative systems which is, "No, no, we're going to limit how much you can get back." And I look around the world, I don't recall a lot of drugs coming from China and Russia and North Korea and Iran. We don't see a lot of innovation coming from there. (01:31:54) But yes, I would love a setting where you invested massive money, but then you gave us the products cheap. I mean, that's just not reality and I wish there were a way of that to happen, but I don't see how that happens and I very greatly appreciate the innovations that have been made by the industry. (01:32:14) I do wonder what the reason is for the differences in price between what's available here in this country and what's available in some other countries. And not now just talking about Wegovy and Ozempic and I don't know the pricing differences to the extent they exist around the world, but we in this country often talk about how products are much cheaper in Canada and the UK and France and Germany than they are here. (01:32:38) Why is that? Why are we so out of aligned with the rest of the world in terms of the pricing that comes from the industry, not necessarily your own company, but the industry at large?

Yes. I think there are, Senator, a number of differences when if you, for instance, compare US and European market. If you look at all the innovation that's made, a lot of it made in this country, so the economic activity in place here, all of those innovative products, in 80%, 85% of their cases get to the market in the US, it's only around 40% in Europe. (01:33:17) So in Europe there's a sanction of healthcare, there's a rationing of who gets access. So the latest innovations are not getting to my countrymen, but they are in most cases getting to the US. (01:33:32) So there's a different perspective in how you look at innovation. And when you look at the diseases we're talking about here, diabetes and obesity, these are very, very expensive diseases and we talk about the cost of the medicine, but typically in these diseases, the cost of the medicine is less than 10% of the total disease burden. (01:33:57) If you look at chronic kidney disease where we have shown in our data that for people living with type 2 diabetes and start using Ozempic, you reduce the risk of developing chronic kidney disease by 24%. And actually, a quarter of all Medicare cost goes to people living with kidney disease. (01:34:16) So using innovation is a really big opportunity for driving down the cost of the US healthcare system. And there is a general openness for that type of innovation in the US market, which is not always the case in Europe. That comes with a cost, but it also leads to significant benefits for the individual Americans but also for the healthcare system in saved cost for these chronic diseases.

I would anticipate that in European countries that don't have access to some of the life-saving products that are available here, that there would be a huge hue and cry on the part of the public saying, "Why can't we have these products?" (01:34:54) But those that are available in both places, I don't understand why the price should be different. If the French and the Germans and the Canadians honor our patents, would the companies not be free then to charge the same price there that they charge here? Why charge a lower price there than is charged here?

Senator, a great question. When we compare the prices, it's not able to apple to apple comparison. It's typically different prices that's being compared and it's typically the list price in the US, and in the US there's not one price. There are a number of different prices. (01:35:31) So when we sell our products in Medicaid, in VAs, we get a really, really low price. We even have support programs where we pay for the medicine for Americans. There are no other place where we give products away for free. That's only in the US. (01:35:48) When I look at the government, what the government pays for our insulins, that is now less than what many governments pay in Europe. But that's typically lost in the whole translation and referencing to list pricing, which is not the price we get. (01:36:04) So unfortunately, as also the Chairman said at the opening, it is a very complex market and very complex healthcare system that creates a lot of misunderstandings.

Yeah, I must admit, I agree. The complexity of our PBM system is such that it's very hard for us to figure out just exactly who's getting what and why. And I happen to believe that one of the reasons our healthcare cost is so expensive, particularly as it relates to pharmaceuticals, is the opaque nature of our pricing in this country. Thank you Mr. Jørgensen.

Senator Hickenlooper.

Thank you Mr. Thank you Mr. Jørgensen for taking the time and indulging us for all these questions. I think there's some unique histories in the United States in terms of government's ability to negotiate prices. We don't have to go into that now, but it is a part of it. (01:36:58) Certainly, we're seeing PBMs come here and they point the finger in one direction and the large pharmaceutical companies point their finger in the other direction. I think most Americans hear that as a hustle, as a rigged game. And they're pointing, "Get it out of here." (01:37:17) You look at diabetes diagnoses, they're expected to rise considerably over the coming decades. By 2030, they're saying 55 million Americans will have type 2 diabetes. We could see nearly 700% rise in the number of young people with type 2 diabetes in the next 40 years. (01:37:38) Obviously, this is a miracle drug and I think by any measure, we should recognize that right off the bat. And I think the point that the lower price, offering a lower price insulin made the access of that specific drug, Levemir or whichever ones it was, decrease by almost more than half. That should be frightening. (01:38:00) And at some point we might want to figure out how to get the PBMs representatives and the pharmaceutical companies here together and let both sides, in an open discussion, suggest solutions to this because it's not sustainable going forward. (01:38:16) One point I want to make, we have a company in Colorado called Virta Health that's leading the way to address some of the issues around weight management and long-term solutions to patients with type 2 diabetes. And in a recent study they provide coaches and help people navigate what they're eating and when they exercise, Virta found that patients with type 2 diabetes who stopped taking a GLP-1 and remained on a nutrient or a nutrition therapy program, did not regain weight after a year and had similar blood sugar control as those who were still in the drug. (01:38:51) Now obviously, many patients may have aggressive form of obesity. The appetites that... you can argue that the appetites in people has evolved. Over the 90% of the time in our evolutionary history, we were hunters and gatherers. So that's a very hard thing for many people to control. (01:39:11) But for those patients who can control it, a company like Virta Health can really provide benefits. Are you doing any studies to look at that as a combined therapy or an alternative therapy that people can move on to that's less expensive?

Yeah, thank you, Senator. I think you raised a really good point that also alludes to the... patients are different. We probably know of people who live with, say, an aggressive form of obesity, and no matter what they do, they put on weight, and most likely they'll have to be on really efficacious new innovations in the future to manage their weight. (01:39:46) But we might also get to know of patient segments where after efficacious treatment and perhaps with a coaching solution, they can change lifestyle to a degree that the coaching motivates them to reinforce that and they can do without medicine. (01:40:04) It's still a bit early days, and I think we have to acknowledge that for long we have looked at people with obesity and to some degree type 2 diabetes as a self-inflicted condition. So I think we should be careful about saying that if you just get a coach and get this digital support you're taken care of, because then I think we are letting patients down in need of significant help. (01:40:31) But I believe that there'll be a market for such a solution and it can coexist with our products and it can also help take the burden off the healthcare system all time. (01:40:43) So we don't want to move people on medicines and keep them on medicines they do not need. But I also note that many Americans will need to have help-

Of course.

... for a long time.

And I raised the question, I was specifically trying to make sure that there are different groups of people, and obviously the notion that everyone can control their appetites is ridiculous. And I think we have disadvantaged people that have differing genetic makeup and physiological character put them in unfair positions. (01:41:17) Let me go off on a different direction and talk a little bit about sugar and diabetes and then some of the other issues that can arise. Roughly almost three quarters of our food supply in the United States now is made of what we call ultra-processed foods. (01:41:38) Researchers have started studying the possible connection between these ultra-processed foods with higher rates of diabetes and then also dementia later in life. And certainly researchers are still working to understand the exact connection here. So I'm not saying this is thought or has been consequentially

Defined. But there is evidence that diabetes can lead to higher rate of inflammation as well as damaged blood vessels, which could impact cognitive functioning as we age. Can you speak on research that Novo Nordisk has done on testing the effectiveness of GLP-1's or GLP-like pharmaceuticals in reducing the risk of dementia, as has the company ... Have you guys got research on this connection that would be optimistic?

Yeah. Thank you Senator. You raise a really, really good point. And our GLP-1 medicine semaglutide works in an anti-inflammatory way, which has tremendous benefits for patients. It not only lowers weight, but it also reduces risk of cardiovascular disease because of these anti-inflammatory properties. And we're now also testing it out in Alzheimer's disease, where we hope we can show in data end of next year that being on this medicine can bring benefit for people with Alzheimer's disease. So this whole cardio metabolic disease state that is leading to a number of comorbidities is actually also leading cause of number of cancers. We aspire to show, in continued massive investments in R&D, that we can document these benefits and have them FDA approved.

Great, thank you. And I'll just end with, in terms of the whole tenor of the discussion, that Henry Ford was famous for coming in and actually dramatically reducing his prices so as to dramatically increased volume, and dramatically succeeded at a level that nobody really imagined. And I think with a miracle drug like this, you might have that same potential where actually lowering the price could dramatically change not only the success of the pharmaceutical but also the success of the business.

Senator Cassidy.

Thank you, Mr. Jorgensen. Thank you for being here. (01:44:05) Mr. Jorgensen had mentioned that, just to clarify for the record, that Ozempic would be available with a patient assistant program, a PAP, if they were insured but they had a high deductible. You did not mention that for Wegovy. So if a patient has a high deductible and/or has a health savings account and they're taking Wegovy for obesity, is there a patient assistant program for them, or some other assistance for them to be able to afford?

Yeah, so first to clarify what we have on Ozempic. If you have an income less than 400% of the national poverty line, you can qualify for free Ozempic. If you have a high deductible plan, unfortunately when you're inside insurance, if you actually got it, say, a product for free from Novo Nordisk, or you bought it at say a cash program, the insurance company would not count that against your deductible. So it wouldn't help you.

Wait a second though. If I have a high-deductible health plan with a health savings account, and say the drug is whatever it is, $900, and I've got a deductible of 2000, let me make sure I understand this. One, that your patient assistant program would not assist them, and you're saying it's because, yes, our net price is whatever it is, $600. We'd be willing to make it more affordable, but that the patient would not benefit ... I lost you there. I lost you there.

Yeah, so when you are in the deductible space, we have still given the rebate to the PBM but it's not shared with the patient, and if you went out and bought say a lower-priced product, because we also have a cash program, that spend would not count against your deductible because you have to spend that within, say, insurance, so it wouldn't help the patient. And that's a function of insurance scheme design. That's not something we control.

No, it actually would help the patient on the other hand because if she would be paying much less, but now she's paying $900. But I think I'm hearing from you in the contractual relationship that you have with the PBM, that actually seems to be what is first being and considered is contractual relationship between your company and the PBM and not the bottom line for the patient, because the bottom line for the patient she's paying 900 bucks instead of nothing. Is that a fair statement? So let's assume that she has less than 400% of federal poverty, so she's less than 400% of federal poverty and she's got a high deductible plan and/or a high deductible HSA. So she would not qualify for the patient assistant program.

She would not, but even if she did, she would still have the deductible. So-

I get that. But she would use that for another thing. She'd use that for an urgent care visit as opposed to the drug benefit.

Yeah, that's true. We feel it's not appropriate to have deductible plans for patients living with chronic diseases that on an ongoing basis needs to have access to the healthcare. So when they come-

But that is a value judgment on the basis of the company for the patient. I'll just say that, because oftentimes those policies are otherwise more affordable. Let me ask, if the patient is uninsured, if the patient is uninsured, would she qualify for this less than 400% of federal poverty being able to get the patient assistant program?

Yes, for the diabetes product. We have not yet established it for the obesity program. We have a cash offering at approximately half the price that patients can use. We feel that right now, where we are building say insurance coverage and also negotiating access to Medicaid, that's our focus, and that's what we're giving priority to now in terms of supporting patients.

Let me move on. One of the tensions here that I mentioned is innovation versus the ability to afford. And I just want to echo what Marshall and Romney said. The fact that y'all and others are doing research on the impact of these drugs to prevent Alzheimer's is fantastic. This could possibly be part of what makes Alzheimer's less of a scourge, and that takes money. So when someone says they can produce it for $5, yeah, they can produce it for $5 but they're not going to produce the $30 billion worth of research that would find another indication for how we go forward. So I think we need to acknowledge there is that. (01:48:58) But it is my impression that the United States is paying for this research and that the other countries are not. I'm sure that ... Chairman Sanders asked if you're making money in Germany. Of course you're making money in Germany. You're making money on the margin, but I don't think ... It's my impression, if you will, that it's not the Germans who are paying for the ongoing research as to another indication. Now, I say that, you don't have to respond to it, but I'm going to surmise that to be the case. (01:49:27) The Trump administration proposed international reference pricing in which you took a market basket of developed countries, Germany, Japan, Great Britain, whomever, and you put them as a market basket and the US would pay some multiple. Now from my mind, that would force your company and others to go back to the Europeans and say, "Wait a second, no longer is the United States going to pay full freight for the research. You also have to contribute. They may pay a little bit more, but nonetheless you have to pay a little bit more." What thoughts do you have about the international reference pricing that was proposed by the Trump administration?

So Senator, thanks for bringing that up. I think again, we need to really get into what is then the price we're talking about because if you-

Okay, now I will accept that you have to design it correctly, but I'm asking more about the concept. Frankly, I think the Trump administration had kind of ... There were some flaws with it, but if you could address those flaws, what about the concept, that there should be a market basket, and if the US is not going to pay for all of the R&D, maybe more but not all, and that in effect this may force the companies to negotiate a little bit harder with the Europeans, conceptually, what do you think about that?

I think it should be fair in who pays for innovation. I mentioned also before that a significant of the innovation never is launched in Europe. So a number of the breakthrough therapies only make it to Americans. So Americans benefit from-

I accept that, but I'm going to come back to the concept. Let's assume that we could imagine a way in which some of the flaws of the previous proposal were addressed. What about the concept of yes, there'd be a market basket of developed countries that typically are paying full freight. It wouldn't be the PEPFAR program in Africa paying pennies on the dollar and that the US would pay some multiple, but it would be a lower multiple than we're currently paying.

We'll be happy to look at that. I think we'll find that the perceived multiple is much lower than we actually think. I just mentioned the example of insulin today. The US government pays less for insulin than typical European governments, yet we talk about insulin being more expensive in the US than in is Europe. That's not the case for the manufacturer. So we need to decompose the complexity to get to what is the real price and I'll be happy to contribute, to-

I accept that. I also want to point out there's been a lot of faith being placed in PBMs saying that they would pass through a lower price. But I do want to point out on the 20th, the Washington Post had an article speaking about how the Federal Trade Commission has indicted the three largest PBMs for manipulating the price of insulin, and one of them said, "Rebates is our sweet drink," or something like that. So I'm hoping that they would be sincere on that, but I will know, and by the way, they dispute that. PBMs are disputing this, but there was this file by the FTC, and with the chairman's permission, I'll submit that for the record.

[inaudible 01:52:45]

Then my last question before I move on, before I let others go ... I'll stop there. I may have a second round, but I'll stop there.

Senator King.

Thank you Mr. chair. And I want to pick up right there. I am very proud of the work that this committee and congress has done on the prescription drug pricing issues, the Inflation Reduction Act capping, insulin capping, and then progressively reducing out-of-pocket costs for folks under Medicare part D. Negotiated pricing, supported all of those things. The great thing about the IRA, it passed by one vote, so I tell everybody I was the deciding vote on all of these matters. We were all the deciding vote, all of us who voted yes, and some of those provisions weren't loved by the pharmaceutical companies, but I've voted for them and I'm proud of them. (01:53:40) But I have come to conclude along with a number of my colleagues that the focus on pharmaceutical companies is something I support. We're letting PBMs get away scot-free. One company, one industry researches, one doesn't. One industry produces life-saving treatments, one doesn't. One industry is super-duper profitable and another one profitable, though the one that's the super-duper profitable is the one that's not doing any research and not producing any life-saving innovations. One industry is under fairly intense scrutiny by this committee in Congress, and one isn't, and it's the one that's the super-duper profitable one that is not researching and not producing products that is getting away Scot-free. In May of 2023, we passed a great bill out of this committee. I think it was actually four bills. And if I remember, by memory, I think the votes were 18-3, 18-3, 19-2, and 20-1, overwhelming bipartisan bills finally to regulate PBMs. And I'm disappointed that those bills haven't gone anywhere. I turn on my TV and I see the PBMs running all kinds of ads against Congress, telling Congress not to vote for the scary PBM reform bill. If we're going to bring prescription drug prices down even more, we shouldn't let up on having Mr. Jorgensen and other CEOs here impressing them. But we got to get serious about the PBM reform piece of it. (01:55:14) Mr. Jorgensen, you were here, I'm just going to go into this. You were here in May of 2023 and I asked you a question about the connection between list price and formulary placement. And I will say, Chairman Sanders, this was the single best hearing I've attended in 12 years in the Senate. The hearing where you had both the PBMs and the pharmacy CEOs together, because you're familiar with the phenomenon and everybody blames the party that's not in the room. We had them all at the same table. You and your two CEO colleagues testified that PBMs prefer the drug with the higher list price, and it's difficult if not impossible to get a formulary placement for a drug with a lower list price. And that's because they often make a profit on the discount or rebate, they can negotiate off a list price. And this perverse incentive artificially keeps drug prices too high. (01:56:07) So then I followed up and asked this question to the PBM witnesses, and I asked about this, and as you might expect they were not direct in their answer. I asked one witness, quote, "So you do not have any fee structure in your company where you collect a fee based on the percentage of the list price." The response I received after a long pause, "We certainly may have a few in our client base." Everybody in the room knew that answer was a complete dodge, and that was over a year ago. Senators Marshall Tester and I have been working for over a year on a bill that would address this issue. The drug act would de-link the list price of a drug from PBM profits in favor of a flat fee. We had hoped that might have been included in the markup this Thursday. I'm sorry that it won't be, but we're going to continue to make it happen. Color me skeptical that an industry that is now giving us pie in the sky statements about what they're willing to do, but that's also buying advertisements on TV trying to attack Congress for doing PBM reform, color me skeptical that they're going to come to the table and suddenly have a conversion experience and start doing the right thing. But I guess one evidence of whether they're doing the right thing is since you were here in May of 2023, have PBMs changed their practices, or are they continuing to favor higher priced drugs on the formulary and make it difficult to put lower priced drugs on the formulary?

Thank you Senator, for the question. We have not seen a wide uptake of the influence where we lowered the price. They can always find special formularies where they're present, but we have reduced access to those influence compared to other influence. So like you, I'm also a bit skeptical, but I'm willing to explore the opportunity of what we can do together, all of us to benefit patients living with these diseases.

As a general matter, you might think if the PBM saw the help committee vote of bill out to the floor that was going to put some significant regulation on it by an overwhelming bipartisan margin, they would think, " Man, maybe we better improve a little bit." I see no evidence of improvement. I see ads on TV attacking Congress and telling them not to PBM reform. So I want to get the balance right here. I'm going to continue to vote with this committee, to focus on pharmaceutical companies and bring down prices, and if the pharmaceutical companies don't want to negotiate for prescription drug pricing under Medicare, I stand with those who think negotiation is a good idea. But we're letting a huge part of this problem that afflicts the everyday American who's trying to afford prescription drugs, we're letting them go scot-free. And we've got a good bill on the floor right now that I think with some improvement could do a great job and I hope we'll take it up and I hope we'll devote the same attention and focus to the PBMs as we do to the pharma companies. (01:59:22) With that Mr. Chair, I yield back.

Senator Braun.

Thank you Mr. Chairman. We've had so many discussions like this, and I wish I had a big something to hold up, but I want to just talk about this. It has nothing to do with pharma. It has everything to do with a system that's broken with no transparency, no competition, barriers to entry, and by the way, a consumer who doesn't have the tools to really measure what the best value is. This is a case in California that impacted a sophisticated self-insured plan, and it had a psychiatric underpinning to it. But how that could ever end up being $4 million, that's what the company paid for that case. A self-insured company that's going to be a lot more sophisticated than any individual would be. Cigna, the insurance company, got 2.5 million of what the company paid. (02:00:27) Another multi-plan TPA got about 700,000. The provider that actually provided the service, in other words, to affect the cure or the remedy, got 875,000. They are suing the insurance company because they think they didn't get paid enough, and who got screwed was the company and the patient, when it was a $4 million claim and the provider that provided all the services charged only 875 and they made a profit. So that means the claim was probably 10 times the amount of the underlying cost of the service. That's one side of healthcare. (02:01:15) Hospitals used to be about one-third of the healthcare dollar. Practitioners, nurses, and doctors, maybe independent pharmacists, throw them in there, at about one-third. And then pharma and insurance splitting the other third. So the whole thing has gotten convoluted. And then we're talking today about your industry. I come from the world of distribution, and in any other industry there's full transparency competition. The consumer drives the dynamic. That's why you don't get by with all the stuff we're talking about. Your business is largely one of heavy fixed costs, is that correct?

Yes, that's correct. And research-

Yes, which that'd be part of it. Research, anything. What are your variable costs generally on a drug like this?

So the role-

As a percentage of whatever you're selling it for.

That's perhaps 20%.

So it's very low. Are you making a profit on your Ozempic product when you're selling it to Australia for $87 and you're selling it to the US for 936? Are you making a profit at $87?

Yes we are. And the price you mentioned in the US is not what we get. That's the list price.

So what are you getting in the US? What price?

So I mentioned that on the average for our products, we give 74% in rebates to PBMs and-

And that was a chart that Senator Marshall held up that PBMs are making 74% and you're getting 26.

Yeah.

So you've got a screwed up industry. Number one, when I've talked to other pharma folks, they regret that PBMs ever came into it. It would seem like since you make the product that you could disassemble them or do something that would go around it if in fact this place won't do something about it. Have you ever thought of that?

It's very difficult, Senator, because they control what insurance is put in front of patients. So they have integrated themselves with insurance companies and we negotiate against the PBMs, but they're owned by the insurance companies. So no matter what we do, they decide what products patients-

Okay, and I think that's kind of the conundrum. But you're making a profit at $87, and of the 936 it would be the list price. Is that total being split between you and the PBM? I know you give big discounts to the PBM. Why do you give them such large discounts for them to make that much money?

On this, we have a high list price and give them rebates. We are not making it on to the insurance formulary. So they make a fee based on the list price. So you mentioned distribution, they don't get a flat fee for the distribution. They get-

So after you give the discounts and you do everything, what is your revenue on Ozempic roughly?

So I don't have that number from the top of my head. So on every-

That'd be something I think it ought to be on the top of your head because most of us would want to see that so you can make the case against PBMs. And that basic lack of transparency, that to me comes from the top, that cloaks the system in general, is what is impacting the future of why in our own country it's 18% of our GDP. And from Canada to Europe it's 10 to 12% of our GDP. Eastern Europe is six to 7%. And yes, rationing is maybe going to be one of the results, but it should never be to where something's going to cost that much more here versus there when you're making a profit on it. And until you figure that out, everyone's going to think your industry is screwed up.

So I'm not sure if it was a question, but I just want to say that since we launched a product like Ozempic in '18, the price we get has gone down by 40%. So there's a-

And that's good, and it looks like Lilly has got something similar.

Yes.

And they sense competition, and theirs has gone down by 40 to 50%, and that's what we need more of. And until you put it out there, expose the PBMs in terms of what they're getting, and you get consumers engaged in it, you're not going to solve the problem. You're going to end up having government as your business partner. Because when you operate like an unregulated utility, you're going to get government regulating you. And I think there's a strong interest in that happening. And unless you, hospitals, insurance, take the bull by the horns, you're going to increasingly be in more conversations like this. And I want to end on this. (02:06:36) So why should the Europeans and everyone else be taking advantage of the fact that we do the R&D? Why don't you charge them more to where there's at least not a 10 to one differential, to where you share the costs across the world, not put it on the burden of a place that's now borrowing 30 cents on every dollar for whatever's provided through government, and to where you're jabbing it through the private insurance side. Now, why is there that kind of difference? Why don't you charge them more in Europe?

So Senator, we might also do that in the future, but actually the price differential you mentioned is not the real price differential. I think that's part of the problem, that we are not charging as much in the US as you-

I think you're hiding behind your opaqueness and you need to promote transparency for your own good. It'd be easier to understand. Thank you Mr. Chairman.

Thank you Senator Braun, and thank you Mr. Jorgensen. Let me just make a few remarks. (02:07:43) Senator Braun and I come from different perspectives, but occasionally we agree that the system is broken. Senator Braun said the industry is screwed up. Is that the right quote? I don't agree that it's screwed up. It's enormously profitable. This is a company that makes huge profits, top 10 pharmaceutical companies, made over 100 billion dollars in profit last year. It's not screwed up. They're making huge amounts of money. And I think Mr. Jorgensen, you were not quite correct when you talk about 79% rebates on Ozempic and McGovey. That may be in general. My understanding, it's a 40% rebate. I believe that I have heard that, that in fact the product that after all of the rebates from the PBMs, your product is about ... For Ozempic, about $600.

Can I clarify that?

Please.

So our price has gone down by 40% since launch, and already when we launched it there was a significant rebate. So the rebate has gone up by 40% since launch on top of launch rebate.

All right. My understanding is that factoring in, and we all agree it is a complicated and broken system. I would point out, and you correct me if I'm wrong, Mr. Jorgensen, that in your beautiful country, Denmark, anybody can walk into a doctor's office, go to the hospital. How much do they pay out-of-pocket?

In Denmark we have, say, a healthcare system that is tax paid.

Yes. How much does an individual pay ... If I'm in the hospital two weeks in Denmark, how much do I pay out-of-pocket?

To go to the hospital?

Yeah.

Zero.

Zero. You go to any doctor, zero. And you are spending a little bit more than half as much per capita as we are. So they provide quality care for all of your people at almost half of what we do. All right, that's a simple system that in my mind makes sense. We have a complicated system, not only in healthcare but in prescription drugs as well. (02:09:50) But the point that I want to make is that factoring in all of the rebates, we heard a lot about rebates. I agree with much of the criticism. Factoring in all of the rebates that PBMs receive, the net price of Ozempic is still nearly $600, over nine times as much as it costs in Germany. And the estimated net price of Wegovy is over $800, nearly four and a half times as much as it costs in Denmark. And I know Senator Romney, others said, "Well how is that so? Why is it so much less expensive in Europe? And the answer is obvious. In the United States of America, we are the only major country on earth that has not negotiated prices. So you can charge us any price that you want, other drug companies can charge us any price that they want, as much as the market will bear, and that's what you do. Understandably, you charge us far more than other countries because they negotiate and regulate prices. (02:10:52) Now the good news, and I share the concerns and the skepticism about PBMs, but we have, as I've mentioned you, and we'll share with you statements, from the three major PBMs that they would not penalize Novo Nordisk in terms of formula placement if you substantially lowered list prices. And I look forward to sitting down with you, your representatives, and the three PBMs to make sure that that happens. (02:11:23) Senator Cassidy, your closing remarks?

Yes. Mr. Jorgensen, again, thank you for coming here. I'm sure it's like getting your eye teeth pulled. We spoke though about those patients who have high deductible plans or health savings accounts, and often they them because that is what is affordable and works best for them. And it's been my concern that it seems as if the system has been set up to drain those in order to subsidize other actors within the system. Knowing that your current negotiations with PBMs offer no relief for them, I would say that if we are truly concerned about people who are trying to purchase insurance, trying to do the best thing for their family, and then they have a system which manipulates that process to drain their savings in order to pay for a drug, as great as your drug is, that's wrong. (02:12:20) If you look demographically, the people who have the greatest incidence of high BMI, of obesity, are going to be folks who are probably the lowest two to three quintiles of the American population. Those who might be more likely to have that high deductible policy because that is what's more affordable to them. So there's just this train wreck of those who are trying to do the right thing by their family, by their own health, are the ones who have no allowance made for them in these negotiations between pharma and between PBMs. That is separate from needing the profits, which I thoroughly agree, to drive innovation. Because I'm all about that innovation, but I'm all about that family. So as y'all go forward on that, that would be something I think would relieve tension between policymakers and companies such as yours and the PBMs, if more consideration we're given to them. With that, I close.

Thank you, Senator Cassidy. That is the end of our hearing today. I want to thank Mr. Jorgensen for his participation. For any senators who wish to ask additional questions, questions for the record will be due in 10 business days, Tuesday, October 8th at 5:00 P.M. I ask your unanimous consent to enter the record. 10 statements from patients, doctors, and others concerned about the high cost of Ozempic and Wegovy. The committee stands adjourned.