US President Joe Biden and Senator Bernie Sanders have called on pharmaceutical giants Novo Nordisk and Eli Lilly to lower prices for diabetes and weight loss drugs, including Ozempic. They accused the companies of 'price gouging' and highlighted the significant price disparities between the United States and other countries. A one-month supply of Ozempic in the US last year cost $936, compared to $169 in Canada and $103 in Germany. Biden and Sanders emphasized that US patients pay several times more for these drugs than patients in other countries such as Canada, Germany, and Denmark. Novo Nordisk and Eli Lilly responded, stating that they take patient access and affordability seriously and that the issue is complex. The high prices of prescription drugs have long been a concern in the US, and Biden has made lowering healthcare costs a key focus of his reelection campaign.
Ozempic, a diabetes medication that has also gained popularity as a weight loss drug, has become a powerful growth engine for Novo Nordisk, with worldwide sales increasing by over 60% in the past year alone. The Danish company's net profit more than doubled between 2019 and 2023, making it the largest company in Europe. Nearly 1 out of every 5 Danish jobs created last year was at Novo, and nearly half of all private-sector nonfarm jobs created in Denmark can be traced back to the company. However, the dominance of Novo Nordisk in the Danish economy raises concerns about the risks of relying on one giant company. Economists warn that Denmark may suffer from Dutch disease, where a spike in global demand for a currency harms other sectors of the economy. Denmark's central bank has kept interest rates low to offset the strengthening effect on the krone caused by Novo's sales. The case of Nokia in Finland serves as a cautionary tale, as the company's downfall led to a decline in Finland's economy. While it's unlikely that Novo will suffer a similar collapse, stricter price controls and the expiration of patents on Ozempic could hamper its future growth.
In the United States, Ozempic is leading the charge in the weight loss drug market, with 1 in 8 Americans having tried such medications. The use of these drugs can improve health and reduce social stigma associated with obesity. However, U.S. health insurance plans generally do not cover weight loss drugs, which can limit access for many patients. Goldman Sachs estimates that widespread adoption of weight loss drugs could lead to a 0.4% increase in U.S. GDP, potentially adding up to a trillion dollars over four years. The OECD forecasts that 8.4% of national health budgets will be spent on obesity-related conditions from 2020 to 2050. Interestingly, households with weight loss drug users have been reported to cut grocery spending by 6%. The World Obesity Federation predicts that healthier populations could contribute 0.6% of global GDP by 2035 and 1.6% by 2050. Despite these potential economic benefits, concerns exist that reliance on medication may reduce physical exercise and overall health outcomes. To avoid the 'Nokia trap,' Denmark needs other companies to grow and generate more value. Danish policymakers are monitoring the economy for signs of underlying weaknesses and are aware of the risks of relying too heavily on Novo Nordisk's success. [8efa92b4][bf772df1]