Facing questioning by the U.S Senate, how long can Novo Nordisk A/S Sponsored ADR Class B (NVO.US) maintain the high price of their weight loss drug?

tice that Ozempic and Wegovy have earned huge profits for Novo Nordisk A/S Sponsored ADR Class B (NVO.US) company, their cumulative sales will soon exceed the pharmaceutical company's total research and development budget for the past 30 years. The U.S. Senate will hold a hearing on September 24th to examine whether Novo Nordisk A/S Sponsored ADR Class B is pricing its glucagon-like peptide products Ozempic and Wegovy too high for diabetic and obese patients. According to analysis of regulatory filings and analyst estimates, sales of these two drugs used to treat diabetes and obesity have approached $50 billion as of the second quarter, and are expected to reach $65 billion by the end of this year. Adjusted for inflation, this figure will surpass Novo Nordisk A/S Sponsored ADR Class B's investment of $68 billion since the mid-1990s in researching drugs of this kind. Novo Nordisk A/S Sponsored ADR Class B CEO Lars Fruergaard Jorgensen will face questions about drug pricing at a hearing hosted by Senator Bernie Sanders in Vermont on Tuesday. With a surge in demand for weight loss drugs, the Danish company is facing increasing pressure to lower drug prices, as unstable insurance coverage forces many patients to pay out of pocket. The pharmaceutical industry has long believed that they need to make significant unexpected profits from successful drugs to offset the costs of many experimental treatments that fail in the testing process. Investigations suggest this argument has lost its power for Novo Nordisk A/S Sponsored ADR Class B's popular products. Novo Nordisk A/S Sponsored ADR Class B disputes this claim, stating that it has spent over $10 billion in the past 30 years developing Ozempic and similar drugs, and its investment in obesity drugs only started to become profitable in the past two years. Since the beginning of last year, Novo Nordisk A/S Sponsored ADR Class B has also committed to investing over $30 billion to expand its manufacturing capacity. Ozempic was approved for diabetes treatment in the U.S. at the end of 2017, but its strong effect on weight loss led to a significant amount of off-label use. Wegovy, a higher-dose version of the same drug, was approved for obesity treatment in 2021. It is priced at $1,349.02 per month. Sanders stated last week that, according to his conversations with generic drug manufacturers, the cost of producing Ozempic is less than $100 per month, significantly lower than its price of $968.52. A study suggests that the production cost of this drug could even be lower than $5 per month. It is rare for a drug aimed at a broad patient population to be priced so high. According to 3 Axis Advisors pricing data, Lipitor, Pfizer Inc.'s cholesterol-lowering drug, has been one of the best-selling drugs globally for many years. Just before losing patent protection in 2011, the drug's monthly price was around $150, equivalent to about $215 today. However, Novo Nordisk A/S Sponsored ADR Class B's drugs, as well as similar drugs produced by Eli Lilly, have the potential to change the treatment of obesity and prevent many related complications. Over 40% of American adults are obese, but only a small fraction of them are taking these drugs, in part due to insurance restrictions and costs. According to the health policy organization KFF, U.S. government spending on purchasing Ozempic and similar drugs for Medicare patients has skyrocketed in recent years. A senior executive at Novo Nordisk A/S Sponsored ADR Class B stated last week that Ozempic is "likely" to be one of the target drugs for price reductions in the next round of Medicare negotiations. In a letter to Sanders in May, Novo Nordisk A/S Sponsored ADR Class B stated that after deducting rebates and fees paid to intermediaries in the U.S. drug supply chain, it retains around 60% of the list prices of these two drugs, and expects these behind-the-scenes discounts to increase. The company stated that since Ozempic was launched in the U.S., its net price has decreased by 40%, and Wegovy is following a similar trajectory. For analysis, sales of Ozempic and Wegovy were compared to the company's total research and development expenditure adjusted for inflation in the five calendar years leading up to the approval of the drugs, as well as sales of six other drugs that have been through price negotiations. None of the other six drugs were able to recoup research and development costs faster than Ozempic; many companies have still not recovered their costs. Novo Nordisk A/S Sponsored ADR Class B's research expenditure has been lower than that of many large pharmaceutical companies. Over the past five years, the company's investment in research and development has averaged 13% of sales annually, while its biggest competitor in the weight loss market, Eli Lilly, has a ratio of around 25%. Novo Nordisk A/S Sponsored ADR Class B states that its research spending has more than doubled from 2020 to 2023, as the company conducts large clinical trials and expands experimental projects in more disease areas.Unlike most other pharmaceutical companies, Novo Nordisk A/S Sponsored ADR Class B is controlled by a large foundation - the Novo Nordisk A/S Sponsored ADR Class B Foundation. The company donates up to 30% of its profits in the US to this foundation, which heavily funds basic research on diabetes and obesity in Denmark.Copenhagen Business School associate professor Christoph Houman Ellersgaard said earlier this year in an interview that the foundation actually provided funding for Novo Nordisk A/S Sponsored ADR Class B, serving as an "expanded research and development department." He stated that the research and startup companies supported by it may benefit the company in the future.