The Trump Administration recently announced it had negotiated lower prices for popular weight-loss drugs. Pharmaceutical giants Novo Nordisk and later Eli Lilly agreed to sell GLP-1 drugs for prices far lower than last year. Patients will pay about $350 for a month’s supply on the TrumpRx direct purchase platform once it is up and running. Over the next two years prices will fall to $250 a month for those paying out of pocket. Meanwhile, Medicare patients will be able to access weight-loss drugs for cost-sharing of about $50 a month. Only a year ago list GLP-1 prices were nearly $1,000 a month and $1,200 or more in 2023.
While the Trump Administration takes a victory lap celebrating its latest strong-arm negotiating, that does not tell the whole story. Drugmakers would rather not have Trump as an enemy, but no company gives away tens of billions of dollars annually if they do not have to. The reason drugmakers agreed to deep price concessions is due to growing competition in the GLP-1 weight-loss market. Writing in the Washington Examiner, Sally Pipes of the Pacific Research Institute explains, “Competition, not price controls, just slashed GLP-1 prices,” saying:
Why slash prices on blockbuster drugs? One word: competition. Its biggest rival in the GLP-1 market, Eli Lilly, has been seizing market share. Novo is looking to win customers back. Cutting prices is the most obvious way to achieve that goal.
Eli Lilly presumably later agreed to lower the price of Zepbound, because Novo Nordisk lowered the price of Wegovy. In addition, Lilly has a new, improved GLP-1 drug (retatrutide) currently completing clinical trials. So far it has worked far better than the older GLP-1 drugs. After 48 weeks overweight patients on retatrutide lost about 24% of their body weight. It is common to discount an earlier product just before a newer, higher priced one comes to market.
There are other factors that likely increased competition and contributed to lower prices. Drugmakers are competing against generic (compounded) versions of their own patented drugs. When there was a shortage of GLP-1 drugs, compounding pharmacies were allowed to make copies to fill the shortfall. There is no longer a shortage, but some compounders have seemingly ignored patents and continue to produce cheaper, unapproved generic versions. The FDA and drugmakers are trying to stop them but it has become a game of whack a mole. An Internet search yields numerous advertisements for weight-loss telemedicine practices displaying what appears to be vials of generic, compounded GLP-1s. Prices are as low as $139 a month, with $199 a relatively common. It is difficult for drugmakers to charge $1,000 a month when dozens of competitors are selling generic versions of their products for 80% less. The FDA is warning consumers not to use compounded GLP-1s, such as those from research peptide websites. Research peptides include compounded versions of GLP-1 drugs that are manufactured only for research. However, they are sometimes used by consumers unwilling to pay much higher prices for the FDA-approved, name brands. I have even seen retatrutide for sale on a research peptide website, before it was FDA approved.
Another factor that encourages price competition for GLP-1 drugs is because Medicare, Medicaid and health plans can refuse to cover them. Excess weight is not a disease, although it can lead to diseases. As a result, many overweight people do not have insurance that covers weight loss drugs. Consumers are price sensitive. Few people can afford to pay $1,000 a month to lose weight. Drugmakers may realize they need to ratchet prices down to a level millions of consumers paying out of pocket can afford.
The GLP-1 weight-loss market is huge and growing. The global market is expected to surpass $150 billion USD annually by 2030. GLP-1 weight-loss drugs were originally developed as diabetes therapies. However, drugmakers noticed an odd side effect: patients were not as hungry and lost weight, which also helped their diabetes. A class of drugs intended to treat a condition affecting 11% of the population suddenly had a potential market of 75% of the population. It makes perfect sense for drugmakers to lower prices to boost market share, especially if they are competing against unauthorized generic competitors. It makes even more sense to compete for the estimated 250 million Americans fighting the Battle of the Bulge, by offering prices they can afford.
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