Trump Promises Lower Ozempic Prices, Shares of Drug Makers Plummet
Shares of pharmaceutical giants Novo Nordisk and Eli Lilly experienced significant declines following remarks made by former President Donald Trump regarding the pricing of Ozempic, a medication developed by Novo Nordisk. During a press conference on Thursday, Trump stated that the cost of Ozempic, which he termed “the fat loss drug,” should be “much lower,” potentially indicating a price reduction to around $150 out of pocket.
Trump’s comments came as part of a broader announcement about a deal with Merck KGaA aimed at reducing prices for fertility treatments. In his statement, he highlighted the current monthly list price for Ozempic, as well as similar medications, Mounjaro and Zepbound, which is approximately $1,000.
The immediate market reaction was notable; shares of Novo Nordisk fell about 6% in pre-market trading, while Eli Lilly’s shares dropped by as much as 5.1%. Although Novo Nordisk’s stock recovered slightly to trade down 3.5% shortly after market opening, Eli Lilly was down 2.6%.
During the conference, Mehmet Oz, Administrator of the Centers for Medicare and Medicaid Services (CMS), clarified that negotiations regarding the pricing of Ozempic and other drugs within the GLP-1 category are ongoing. He emphasized, “The GLP-1 category of drugs, which includes Ozempic, have not been negotiated yet,” adding that these discussions would be rolled out over time.
Analysts are interpreting Trump’s remarks as indicative of “aggressive posturing” in drug price negotiations. Evan Seigerman, an analyst at BMO Capital Markets, noted that while potential new pricing may influence perceptions, it is unlikely to alter Novo Nordisk’s business significantly. He highlighted that health insurers already negotiate discounts of 60% to 70% off the list price of Ozempic.
Additionally, ongoing talks under the Inflation Reduction Act, enacted by former President Joe Biden, are set to lower prices for Ozempic and another Novo Nordisk product, Wegovy. The deadline for these negotiations is approaching on November 1, 2023, with reductions expected to take effect in 2027.
In July, the Trump administration had communicated with 17 major drug manufacturers, including Novo Nordisk and Eli Lilly, demanding a price reduction for prescription drugs in the U.S. to align with the lowest prices offered in other developed nations, known as the most-favored-nation price.
As the dynamics of drug pricing continue to evolve, the impact of political statements and negotiations will likely play a crucial role in shaping the future of the pharmaceutical market.
