Novo Nordisk’s GLP-1 price cut: Why employers’ net costs may not actually drop

Novo Nordisk, the manufacturer of Ozempic (semaglutide approved for diabetes) and Wegovy (semaglutide approved for obesity and other indications) has reduced its list price of $675 for each of these effective January 1, 2027. The list price is down by half for Wegovy and one-third for Ozempic. If prices for this type of drug go down, it would be good news. GLP-1 medications are very effective at helping people lose weight and improving heart, kidney and liver health.

But this news means less than it might seem.

Rebates and discounts already make GLP-1 medications cheaper than Wegovy’s new list price, according to the Institute of Clinical Effectiveness Research (ICER). ICER uses net price data calculated by SSR Health. ICER says that the annual cost of Wegovy is now $6,830 annually, or $569 monthly. As a result, the real impact of the list price cut depends on what happens to rebates. The company has said, “we do not expect the reduction in list price to impact net price.” If Novo’s net revenue per dose remains unchanged, employer health plans would likely see no reduction in overall spending.

However, members in high-deductible health plans or those with coinsurance may pay less out-of-pocket because their cost sharing is tied to the list price. In that case, you could end up paying a larger share of the total cost. Paradoxically, if coverage remains unchanged, a lower list price could increase your spending.

Several factors are putting downward pressure on GLP-1 prices. More companies will likely introduce competing products. The manufacturers are offering lower prices direct-to-consumer (DTC). Compounded medications with lower prices continue to be available. Some vendors now allow you to subsidize employees’ purchases at DTC prices. However, those payments generally can't be applied to deductibles or out-of-pocket maximums.

Because the list price cut doesn't guarantee lower net costs, it's unlikely to materially expand coverage of GLP-1 drugs for obesity. At current net prices, each quality-adjusted life year gained with GLP-1 therapy costs about $66,000.

This places these drugs within the range of cost effectiveness of other services regularly covered by employer-sponsored plans, like mammography and colonoscopy. This also makes them more cost-effective than some newer high-priced oncology medications. There are no brand-name medicines that lower total medical costs over a population. Health economists believe that drugs that cost less than $100,000 or $150,000 per quality-adjusted life-year are “high value.”

Bottom line for employers

• The net cost of GLP-1 drugs is already just 42% of the list price, so a 50% list price cut might not lead to savings
• Creative ways to use DTC pricing could lower acquisition costs
• The net cost of GLP-1 medications is likely to fall over the next 1–2 years, although they aren't likely to be cost-saving until generics are available

The many prices of injectable semaglutide

Sources: Novo press release, cms.gov, Institute for Clinical Effectiveness Research, ro.com

Author

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Jeff Levin-Scherz, MD, MBA

Population Health Leader

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