There's a looming fiscal crisis in America. It threatens to destabilize almost everything. In fact, it's going to bankrupt Medicare.
Over a drug so revolutionary that it could solve a generation's worth of health problems. They're seeing a positive side effect of those weight loss drugs like Ozempic and Wegovy. .
. and that's a diminished craving for alcohol. We're now learning they may have cardiovascular benefits, maybe mental health benefits, and now the latest is anti-cancer benefits.
Let me show you something interesting. These are $50 bills. Here's how much a month of Ozempic costs in the U.
K. And here's how much it costs in Denmark, where Novo Nordisk, the company behind it all, is headquartered. Now, here’s how much that same list price is in America.
Its sister drug, Wegovy, has similar prices. So do all the GLP-1 drugs. And this disparity has massive repercussions.
[Bernie Sanders] If half of the adults in our country with obesity took Wegovy, and the other new weight loss drugs, it would cost us $411 billion every year. That is $5 billion more than what Americans spend on all prescription drugs at the pharmacy counter in 2022. [Eric] The company behind this revolution is called Novo Nordisk, and this year, Novo became more valuable than the entire economy of its home country.
We spoke to politicians, drug pricing experts and policy advocates to understand who is currently benefiting from this revolution and who's paying the price. We found a story of a miracle drug, its eye-watering price tag and the unlikely alliance trying to make it accessible for all Americans. [Dale Folwell] Our office has never questioned the effectiveness of these drugs.
We're simply questioning what we're having to pay for them. [Eric] That's Dale Folwell. He's the State Treasurer of North Carolina.
He oversees North Carolina’s public employee health plan, which covers almost 750,000 firefighters, teachers, and public servants. Our state health plan is under siege because of the high cost of these weight loss drugs. [Eric] In 2021, 2,800 North Carolina public employees were prescribed GLP-1 drugs for weight loss.
And then the drugs went viral. [Ozempic jingle] Oh, oh, oh! Ozempic!
Ozempic and Wegovy. Popular weight loss drug Wegovy. We were looking at potentially spending $170 million on this weight loss drug for about 25,000 users.
So, I think it's really important for your viewers to think about the context of what $170 million is. [Eric] Earlier this year, North Carolina gave 250,000 public retirees a one-time 4% bonus. The cost was roughly the same.
In my tenure as the State Treasurer of North Carolina, I’ve never seen something come on this strong and this quickly in terms of the expense. North Carolina's crisis? It's a gold mine for Novo Nordisk.
They have a patent, or a legal monopoly, on the drug, and being the only company that can sell a revolutionary drug, turned Novo from an afterthought into a global titan. Just look at these numbers. Ten years back, it had $4 billion in profit.
Last year? Over $12 billion. Since launch, Novo has sold nearly $38 billion worth of the drugs, which has helped fund the same amount in dividends and stock buybacks for shareholders.
It's estimated that last year, 2. 6% of the profits of this drug for Novo Nordisk came from our state health plan, not from our state— from our state health plan, specifically. [Eric] Folwell tried to negotiate with Novo and the state’s pharmacy benefit manager around the price of the drugs.
When you're trying to negotiate with someone who is consistently putting profits over patients, you can see how those negotiations can break down very quickly. And so the NC state health board made a tough decision. [News broadcast] North Carolina is dropping its coverage for a popular diabetes and weight loss medication.
We think that all states are under siege because of what I would call price gouging. This is not something that I think is particular to the state of North Carolina. So, I've been doing this kind of costing work for a decade, and unfortunately, 40,000 profit margins seem extreme, but they're not uncommon for patent medicines.
That's Melissa Barber. She's a health economist at Yale University and an expert on how much it costs to manufacture pharmaceutical drugs. Earlier this year, she published a paper with Doctors Without Borders.
Her paper estimated how much it would cost to manufacture various diabetes medicines with a reasonable profit margin. [Melissa] The estimated costs for the semaglutide, which you might know as Ozempic, is $0. 89 per month, and that's if you assume a 10% profit margin.
So if you assume a 50% margin, it becomes about just under $5. [Eric] Just a reminder, the list price for Americans isn't $5 or even $50. It's about $1,000.
So when we think about what a fair price for a medicine is, the manufacturing cost isn't the only thing to take into account, but it's certainly a key part of the discussion. Melissa’s study went viral. .
. or about as viral as an academic study on generic manufacturing can go. In March, researchers at Yale found that blockbuster diabetes drug Ozempic can be manufactured for under $5 for a month's supply.
And that's with the company still making a profit. I think it's also worth saying that this work is not exactly popular by industry. Shortly after her study was published, Novo’s CEO, Lars Jorgensen, addressed her study.
I'm actually quite disturbed by a number like that because I don't think that’s a true representation of what it cost to produce medicine. I think it brings false hopes to patients that anyone can produce at that price. But, here's the thing.
Melissa's research isn't just some wild guess. Sanofi, one of the largest insulin manufacturers, told Congress that its production cost is $1. 42 per vial.
Melissa's previous work had estimated it between $1. 16 and about five bucks. And it gets more interesting.
Just a few months ago, a rival pharmaceutical company cited Melissa's study as a reliable method for estimating drug production cost. When you saw Novartis was citing you, what level of vindication did you feel there? I think I just felt sad for whoever cited it because it's just some scientist who doesn't really understand that, you know, he's going to get a call from someone in public relations later and it's not going to go well for him.
The public is just wildly disadvantaged when it comes to drug price negotiations, right? One side knows real costs and the other side doesn't. So, this study is just one piece of a much broader body of work where I'm trying to even the scales just a little bit.
It’s not enough just to point out something is wrong. Eventually, somebody has to fix it. [Eric] In July, Folwell wrote a letter to the U.
S. Department of Health and Human Services. He asked the federal government to enter negotiations with Novo Nordisk to open up patents to generic manufacturers.
This would end the company's monopoly, increase drug access and lower prices through competition. He told Bloomberg it would also help solve the budget crisis. If they will lower this price and charge us what they're charging people in their home country, as the State Treasurer of North Carolina, I think we can budget our way through this.
It also puts Folwell, who is a Republican, seemingly on the same side as Bernie Sanders, America's highest ranking Democratic socialist. American people, in my view, no matter what your political view may be, are sick and tired of being ripped off by drug companies and paying the highest prices in the world for prescription drugs, including Ozempic. Are you sure you're not a socialist here?
Well, I'm absolutely sure I'm not a socialist. As I said to Senator Sanders, we've lost the meaning of these words. I think I'm doing the conservative thing, and that is trying to figure out how to get more out of less.
So, I wouldn't exactly describe this as a radical or a bold proposal, although I was glad to see it. He's essentially asking that the federal government ask these companies very, very nicely to pretty pretty please license out their intellectual property so we can increase global supply and lower costs. The government can ask, but the manufacturer still has the right to refuse.
The government does have more tools in its toolbox. Our government, the president, federal agencies, under existing law, have the power to authorize affordable generic competition at any time with expensive patented products. That's Peter Maybarduk.
He's the director of Public Citizen’s access to medicines group. There's a simple provision of law that we call section 1498. When the government wants to use a patented invention to support public purposes, the rights of the patent holder are to a reasonable royalty.
Right now, those public purposes are pretty dire. Right now, there's a huge risk that the influx of these medicines is going to break the bank of our federal and state health programs, and they'll no longer be able to pay for all the health services that our families need. So, if Novo or its competitor, like Eli Lilly, refuses to license the patent to generic competitors, it doesn't matter.
The government can open up the patent while paying them a royalty. There's no question that the government can use patented inventions for its own purposes, and it does so all the time for defense technologies, for things like night vision goggles. But the thing is, even the threat of action could be enough to lower the price, because it's been done before.
Another day of germ warfare and still no sign the worst case of bioterrorism in this country is close to being solved. One company, Bayer, held a patent on the treatment, and the government was looking to stockpile it. Bayer both didn't have the supply and was charging way too much.
So the government said, “We're considering using 1498. ” And sometimes the history is miswritten, I've seen it miswritten in articles before—they said they invoked 1498. They never even had to use the power.
They just said, "We've been thinking about it. " And that was enough to kind of halve the price. But there’s also other options.
The really low-hanging fruit is just negotiating a better price, something that, until very recently, Medicare was legally not allowed to do. [Eric] That's the main reason why Ozempic costs thousands of dollars in America, but a fraction abroad. Governments in nearly every other rich country negotiate prices with pharmaceutical companies.
Why not America? The administration that pressured Bayer into lowering the cost of anthrax medication also made it illegal for Medicare to negotiate drug prices. We made a video about it.
You should check it out. But the Biden administration reversed that. .
. a bit. Thanks to the Democrats’ Inflation Reduction Act, each year, Medicare can negotiate the price of a handful of drugs, but there are some restrictions.
The drugs need to be on the market for seven years. And wouldn't you know it? The FDA approved Ozempic in December 2017, The FDA approved Ozempic in December 2017, making it eligible for the next round of negotiations.
So again, I think that what I lose sleep about is that the situation is so dire and political pressure is so high. The issue is that political pressure has to dissipate somehow. The question is, is it going to dissipate meaningfully?
Are you going to be able to go to the pharamacy and afford your drug? I have always thanked Novo Nordisk for being an employer and taxpayer in our community. And I've never questioned the efficacy of these drugs.
I'm simply questioning what those that teach, protect and serve are having to pay for them. It's not time to be pointing fingers at anyone. It's time to actually try to solve the problem.
