Eli Lilly and Novo Nordisk Agree to Reduce Obesity Drug Prices

Eli Lilly & Co. and Novo Nordisk A/S have reached agreements with the Trump administration to significantly lower the prices of their popular weight-loss medications, including Zepbound and Wegovy. This decision, announced during a White House event on March 15, 2024, is aimed at increasing access to these drugs for Medicare beneficiaries, the federal health program for older Americans.

The agreements will provide a three-year reprieve from new tariffs on pharmaceutical imports, allowing both companies to offer their medications at reduced prices while expanding their reach within the Medicare framework. President Donald Trump hailed the initiative as a victory for American patients, stating, “It’s a triumph for American patients that will save lives and improve the health of millions.”

Historically, Medicare has not covered medications prescribed solely for weight loss. However, beginning in 2025, a broader category of patients, including those classified as overweight with prediabetes, will be eligible to purchase these drugs. The new cost for Lilly’s Zepbound and Novo’s Wegovy will be $245 per month, with the co-pay for Medicare patients set at $50 monthly. This marks a significant decrease from current list prices that exceed $1,000 per month.

Impact on Patients and the Pharmaceutical Landscape

The White House event drew attention to the collaboration between the two pharmaceutical giants, both of which are reshaping the landscape of obesity treatment. CEOs Mike Doustdar of Novo and Dave Ricks of Lilly emphasized the importance of making these life-altering medications accessible to all. “Access to life-changing medicine should not be a privilege,” Doustdar remarked, while Ricks noted that “medicine only is effective when people can access and afford it, and that’s what today’s announcement delivers.”

Currently, between 8 million and 9 million Americans use these GLP-1 medications. The inclusion of Medicare coverage could potentially open the door for an additional 40 million patients. Ricks pointed out that this move might also encourage more commercial insurers to provide coverage for these treatments.

As part of the agreement, Lilly will receive expedited review for its upcoming weight-loss pill, orforglipron, while Novo will benefit from a faster review process for a higher-dose injection version of Wegovy. The fast-track approval could potentially reduce the review timeline from a year to just a few weeks, with the new pill anticipated to be available by March 2024 at a cost of $149 per month.

Strategic Partnerships and Market Dynamics

This strategic decision aligns with similar actions taken by other pharmaceutical companies, including Pfizer Inc. and AstraZeneca Plc, to mitigate stricter regulations and respond to criticism from the Trump administration. In the summer of 2023, Trump had communicated demands to 17 drugmakers, including Lilly and Novo, urging them to lower prices for Medicaid and to ensure that medications are priced comparably in the U.S. and other developed countries.

Ricks has been prominent in discussions with the administration, having interacted with Trump and senior officials on multiple occasions. During the recent event, Trump commended both Doustdar and Ricks, highlighting their roles in the discussions.

Lilly has also been proactive in expanding its U.S. manufacturing capabilities, recently announcing a significant investment in production facilities. This initiative is part of a broader strategy to enhance the availability of Zepbound and Mounjaro, its top-selling products in the obesity and diabetes markets. Novo Nordisk is also investing heavily, with a reported $4.1 billion factory expansion in North Carolina aimed at boosting its competitiveness in the U.S. market.

The agreements between Eli Lilly and Novo Nordisk represent a pivotal moment in the pharmaceutical sector, particularly in addressing the growing obesity epidemic and improving access to effective treatments for millions of individuals across the United States.