Novo, Lilly Slip as Biden Demands Price Cuts on Blockbusters

(Bloomberg) — Novo Nordisk A/S and Eli Lilly & Co. shares fell early Tuesday after US President Joe Biden demanded price cuts on their blockbuster drugs for diabetes and weight loss.
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The companies are charging “unconscionably high prices” that are above those paid in other countries, Biden said in an editorial with Vermont Senator Bernie Sanders published in USAToday. If “pharmaceutical companies refuse to substantially lower prescription drug prices in our country and end their greed, we will do everything within our power to end it for them.”
Novo fell as much as 3% in Copenhagen while Lilly lost 2.1% before US exchanges opened. Neither company responded immediately to requests for comment.
Analysts foresee an exploding market for the injected medicines, particularly in fighting obesity, which may reach $130 billion annually by the end of the decade. Companies including Pfizer Inc., AstraZeneca Plc and Amgen Inc., along with a host of small biotechs, are racing to get competing products to consumers.
Biden’s comments seem like “a last-ditch effort to appease certain voters,” according to a note from Mizuho’s Jared Holz. In view of the drugs’ benefits in diabetes, heart disease and other conditions, “the price of $1000/month for the injections actually seems very inexpensive.”
Novo has blamed the high list price of Ozempic and Wegovy in the US on systemic issues, saying in a letter to Sanders in May that it’s prepared to work with lawmakers to address them. Chief Executive Office Lars Fruergaard Jorgensen is set to testify before a Senate committee chaired by Sanders in September about the drugs’ prices.
Novo has said it expects discounts on both drugs to continue to rise, in particular as more insurers cover Wegovy. Lilly has evaded some of the scrutiny that Novo has been under so far.
Optimism over soaring sales of Novo’s Wegovy for obesity and its sister drug for diabetes, Ozempic, have seen its market capitalization surge beyond $600 billion this year, reinforcing its position as Europe’s most valuable listed company. The stock is up more than 80% in the past year and has more than quintupled since the start of 2020.
—With assistance from Madison Muller and Naomi Kresge.
(Adds background, analyst comment from fifth paragraph.)