Novo Nordisk A/S has pledged to limit price increases in the
U.S. for its drugs, acknowledging that many diabetes patients
struggle to afford its products.
Jakob Riis, Novo's U.S. chief, said the company would limit
future increases in list prices of its drugs to no more than
single-digit percentages annually. He made the pledge in an article
posted on the company's website last week.
The move underlines the pressure the pharmaceutical industry is
under, amid public outrage over sky-high drug prices. The price of
insulin, which accounts for about half of Novo's revenue, has drawn
particular ire because many people depend on it for their
survival.
Denmark-based Novo Nordisk makes insulin and other drugs for
diabetes, as well as some treatments for hemophilia.
Insulin, a hormone produced by the pancreas, converts sugar to a
form that can be stored for future use. People with Type-1 diabetes
can't produce insulin, while those with Type-2 diabetes don't
produce enough.
More than six million Americans use insulin, according to the
Centers for Disease Control and Prevention.
Novo's pledge, which followed a similar promise in September
from Allergan PLC, is likely to have only a limited effect on the
price that most patients pay for its drugs because of the
convoluted system through which prices are set in the U.S.
List prices tend not to reflect the actual price paid because
pharmaceutical companies offer discounts to pharmacy-benefit
managers who negotiate drug prices on behalf of insurers and
employers.
That means that although Novo Nordisk and other rival insulin
makers Sanofi SA and Eli Lilly Co. have sharply boosted list prices
in recent years, the amount they receive for the medicines after
discounts, or the net price, has risen more gradually. In some
limited cases, however, net prices have fallen of late, a trend
that has forced both Novo Nordisk and Sanofi to warn that revenue
growth from insulin will slow.
Mr. Riis wrote that Novo had repeatedly raised its list prices
in the past to offset increased rebates, discounts and price
concessions offered to pharmacy-benefit managers, and it admitted
that some patients were disadvantaged by the way in which drug
prices were set.
"While we can debate who pays what in different scenarios, it
doesn't change the fact that many patients simply can't afford the
medicine they need," he said.
Despite such discounts from Novo and its rivals, the average
price that diabetes patients pay for insulin has soared in recent
years to $736.09 a year in 2013 from $231.48 in 2002, according to
research published in the medical journal JAMA in April.
What's more, some patients are more exposed to price increases
than others and are being forced to make trade-offs. Paul Laak,
from Wenatchee, Wash., recently faced a $500 bill for a two-month
supply of insulin and blood-sugar testing equipment. Mr. Laak, who
has Type-1 diabetes, instead switched to an older version of
insulin that is much cheaper, but more difficult to use.
Irl Hirsch, a diabetologist at the University of Washington
Medical Center, said around one in seven of his patients were using
this older version of insulin, known as human insulin. Five years
ago, that number was virtually zero, he said.
Dr. Hirsch said that while human insulin is more difficult to
use than the newer forms, the alternative—cutting back on insulin
or not taking it at all—would be worse. "The bottom line is, we
have no choice," he said.
Such stories have made insulin prices a hot-button political
issue. Sen. Bernie Sanders (D., Vt.) and Rep. Elijah Cummings (D.,
Md.) recently called for a federal investigation into rising in
insulin prices, and the American Diabetes Association has asked for
government action to ensure insulin is affordable.
While Novo's list-price pledge won't necessarily stop insulin
prices from rising, it does signal the company is willing to tackle
the issue.
Mr. Riis acknowledged that for insulin to be affordable for more
patients, the system by which drug prices are set needs a big
overhaul. To do so, he said, would need the cooperation of
drugmakers, pharmacy-benefit managers, insurance companies,
employers, patient organizations and policy makers. "We are poised
to do more, but can't do it alone," he said.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
December 06, 2016 15:25 ET (20:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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