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There's a looming fiscal crisis in America.
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It threatens to destabilize almost everything.
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In fact, it's going to bankrupt Medicare.
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Over a drug so revolutionary
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that it could solve a generation's
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worth of health problems.
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They're seeing a positive side effect
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of those weight loss drugs
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like Ozempic and Wegovy...
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and that's a diminished craving for alcohol.
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We're now learning they may have cardiovascular benefits,
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maybe mental health benefits,
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and now the latest is anti-cancer benefits.
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Let me show you something interesting.
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These are $50 bills.
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Here's how much a month of Ozempic costs in the U.K.
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And here's how much it costs in Denmark,
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where Novo Nordisk, the company behind it all,
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is headquartered.
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Now, here’s how much that same list price is in America.
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Its sister drug, Wegovy, has similar prices.
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So do all the GLP-1 drugs.
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And this disparity has massive repercussions.
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[Bernie Sanders]
If half of the adults in our country with obesity
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took Wegovy, and the other new weight loss drugs,
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it would cost us $411 billion every year.
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That is $5 billion more than what Americans spend
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on all prescription drugs at the pharmacy counter in 2022.
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[Eric]
The company behind this revolution is called
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Novo Nordisk, and this year,
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Novo became more valuable than the entire economy
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of its home country.
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We spoke to politicians, drug pricing experts
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and policy advocates to understand who is currently
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benefiting from this revolution and who's paying the price.
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We found a story of a miracle drug,
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its eye-watering price tag and the unlikely alliance
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trying to make it accessible for all Americans.
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[Dale Folwell]
Our office has never questioned
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the effectiveness of these drugs.
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We're simply questioning
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what we're having to pay for them.
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[Eric]
That's Dale Folwell.
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He's the State Treasurer of North Carolina.
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He oversees North Carolina’s public employee health plan,
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which covers almost 750,000 firefighters,
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teachers, and public servants.
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Our state health plan is under siege
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because of the high cost of these weight loss drugs.
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[Eric]
In 2021, 2,800 North Carolina public employees
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were prescribed GLP-1 drugs for weight loss.
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And then the drugs went viral.
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[Ozempic jingle]
Oh, oh, oh!
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Ozempic!
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Ozempic and Wegovy.
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Popular weight loss drug Wegovy.
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We were looking at potentially spending $170 million
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on this weight loss drug
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for about 25,000 users.
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So, I think it's really important for your viewers
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to think about the context of what $170 million is.
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[Eric]
Earlier this year, North Carolina
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gave 250,000 public retirees
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a one-time 4% bonus.
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The cost was roughly the same.
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In my tenure as the State Treasurer of North Carolina,
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I’ve never seen something come on this strong
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and this quickly in terms of the expense.
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North Carolina's crisis?
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It's a gold mine for Novo Nordisk.
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They have a patent, or a legal monopoly, on the drug,
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and being the only company
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that can sell a revolutionary drug,
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turned Novo from an afterthought into a global titan.
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Just look at these numbers.
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Ten years back,
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it had $4 billion in profit.
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Last year?
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Over $12 billion.
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Since launch, Novo has sold nearly
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$38 billion worth of the drugs,
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which has helped fund the same amount
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in dividends and stock buybacks for shareholders.
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It's estimated that last year,
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2.6% of the profits of this drug for Novo Nordisk
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came from our state health plan,
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not from our state—
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from our state health plan, specifically.
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[Eric]
Folwell tried to negotiate with Novo and the state’s
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pharmacy benefit manager around the price of the drugs.
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When you're trying to negotiate with someone
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who is consistently
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putting profits over patients,
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you can see how those negotiations
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can break down very quickly.
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And so the NC state health board made a tough decision.
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[News broadcast]
North Carolina is dropping its coverage for a popular
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diabetes and weight loss medication.
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We think that all states are under siege
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because of what I would call price gouging.
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This is not something that I think is
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particular to the state of North Carolina.
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So, I've been doing this kind of costing work for a decade,
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and unfortunately, 40,000 profit margins seem extreme,
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but they're not uncommon for patent medicines.
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That's Melissa Barber.
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She's a health economist at Yale University
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and an expert on how much it costs
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to manufacture pharmaceutical drugs.
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Earlier this year, she published a paper
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with Doctors Without Borders.
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Her paper estimated how much it would
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cost to manufacture various diabetes
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medicines with a reasonable profit margin.
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[Melissa]
The estimated costs for the semaglutide,
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which you might know as Ozempic,
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is $0.89 per month,
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and that's if you assume a 10% profit margin.
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So if you assume a 50% margin,
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it becomes about just under $5.
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[Eric]
Just a reminder,
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the list price for Americans isn't
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$5
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or even $50.
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It's about $1,000.
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So when we think about what a fair price
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for a medicine is, the manufacturing cost
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isn't the only thing to take into account,
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but it's certainly a key part of the discussion.
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Melissa’s study went viral...
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or about as viral
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as an academic study on generic manufacturing can go.
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In March, researchers at Yale found that
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blockbuster diabetes drug Ozempic
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can be manufactured for under $5 for a month's supply.
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And that's with the company still making a profit.
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I think it's also worth saying
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that this work is not exactly popular
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by industry.
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Shortly after her study was published,
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Novo’s CEO, Lars Jorgensen, addressed her study.
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I'm actually quite disturbed
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by a number like that because I don't think that’s
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a true representation of what it cost to produce medicine.
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I think it brings false hopes to patients
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that anyone can produce at that price.
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But, here's the thing.
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Melissa's research
isn't just some wild guess.
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Sanofi, one of the largest insulin manufacturers,
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told Congress that its production cost is $1.42 per vial.
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Melissa's previous work had estimated it between
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$1.16 and about five bucks.
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And it gets more interesting.
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Just a few months ago,
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a rival pharmaceutical company
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cited Melissa's study as a reliable method
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for estimating drug production cost.
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When you saw Novartis was citing you,
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what level of vindication did you feel there?
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I think I just felt sad for whoever cited it
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because it's just some scientist
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who doesn't really understand
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that, you know, he's going to get a call
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from someone in public relations later
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and it's not going to go well for him.
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The public is just wildly disadvantaged
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when it comes to drug price negotiations, right?
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One side knows real costs and the other side doesn't.
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So, this study is just one piece
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of a much broader body of work
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where I'm trying to even the scales just a little bit.
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It’s not enough just to point out something is wrong.
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Eventually, somebody has to fix it.
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[Eric]
In July, Folwell wrote a letter
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to the U.S. Department of Health and Human Services.
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He asked the federal government
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to enter negotiations with Novo Nordisk
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to open up patents to generic manufacturers.
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This would end the company's monopoly,
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increase drug access
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and lower prices through competition.
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He told Bloomberg
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it would also help solve the budget crisis.
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If they will lower this price and charge us
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what they're charging people in their home country,
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as the State Treasurer of North Carolina,
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I think we can budget our way through this.
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It also puts Folwell, who is a Republican,
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seemingly on the same side
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as Bernie Sanders,
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America's highest ranking Democratic socialist.
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American people, in my view,
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no matter what your political view may be,
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are sick and tired of being ripped off by drug companies
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and paying the highest prices in the world
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for prescription drugs,
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including Ozempic.
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Are you sure you're not a socialist here?
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Well, I'm absolutely sure I'm not a socialist.
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As I said to Senator Sanders,
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we've lost the meaning of these words.
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I think I'm doing the conservative thing,
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and that is trying to figure out
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how to get more out of less.
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So, I wouldn't exactly describe this
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as a radical or a bold proposal,
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although I was glad to see it.
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He's essentially asking that the federal government
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ask these companies very, very nicely
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to pretty pretty please
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license out their intellectual property
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so we can increase global supply and lower costs.
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The government can ask,
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but the manufacturer still has the right to refuse.
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The government does have more tools in its toolbox.
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Our government, the president,
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federal agencies, under existing law,
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have the power to authorize
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affordable generic competition
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at any time with expensive patented products.
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That's Peter Maybarduk.
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He's the director of Public Citizen’s
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access to medicines group.
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There's a simple provision of law that we call section 1498.
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When the government wants to use a patented
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invention to support public purposes,
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the rights of the patent holder are to a reasonable royalty.
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Right now, those public purposes are pretty dire.
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Right now, there's a huge risk
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that the influx of these medicines
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is going to break the bank of our federal and state
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health programs, and they'll no longer be able to pay
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for all the health services that our families need.
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So, if Novo or its competitor, like Eli Lilly, refuses to license
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the patent to generic competitors,
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it doesn't matter.
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The government can open up the patent
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while paying them a royalty.
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There's no question that the government can use patented
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inventions for its own purposes, and it does so all the time
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for defense technologies,
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for things like night vision goggles.
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But the thing is, even the threat of action could be enough
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to lower the price, because it's been done before.
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Another day of germ warfare and still no sign
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the worst case of bioterrorism
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in this country is close to being solved.
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One company, Bayer,
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held a patent on the treatment,
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and the government was looking to stockpile it.
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Bayer both didn't have the supply
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and was charging way too much.
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So the government said, “We're considering using 1498.”
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And sometimes the history is miswritten,
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I've seen it miswritten in articles before—they said
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they invoked 1498.
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They never even had to use the power.
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They just said, "We've been thinking about it."
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And that was enough to kind of halve the price.
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But there’s also other options.
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The really low-hanging fruit is
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just negotiating a better price,
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something that, until very recently,
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Medicare was legally not allowed to do.
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[Eric]
That's the main reason why Ozempic costs
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thousands of dollars in America,
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but a fraction abroad.
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Governments in nearly every other rich country
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negotiate prices with pharmaceutical companies.
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Why not America?
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The administration that pressured Bayer
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into lowering the cost of anthrax medication
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also made it illegal for Medicare to negotiate drug prices.
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We made a video about it.
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You should check it out.
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But the Biden administration reversed that...
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a bit.
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Thanks to the Democrats’ Inflation Reduction Act,
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each year, Medicare can negotiate
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the price of a handful of drugs,
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but there are some restrictions.
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The drugs need to be on the market for seven years.
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And wouldn't you know it?
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The FDA approved Ozempic in December 2017,
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The FDA approved Ozempic in December 2017,
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making it eligible for the next round of negotiations.
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So again, I think that what I lose sleep about
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is that the situation is so dire
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and political pressure is so high.
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The issue is that political pressure
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has to dissipate somehow.
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The question is, is it going to dissipate meaningfully?
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Are you going to be able to go to the pharamacy
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and afford your drug?
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I have always thanked Novo Nordisk
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for being an employer and taxpayer in our community.
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And I've never questioned the efficacy of these drugs.
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I'm simply questioning
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what those that teach, protect and serve
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are having to pay for them.
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It's not time to be pointing fingers at anyone.
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It's time to actually try to solve the problem.
