Novo Nordisk slashes Ozempic price to secure subsidy amid rising healthcare costs in Denmark

In late April, without prior notice or extensive explanation, Novo Nordisk unexpectedly slashed the price of its diabetes medication Ozempic by over one-third, bringing it to its lowest point ever. Internal documents exchanged between Novo Nordisk and the Danish Medicines Agency reveal that this price drop was not an act of sudden generosity but rather part of an agreement where Novo Nordisk reduced the drug’s price in exchange for maintaining public subsidies that were at risk of being cut.

Novo Nordisk indicated in a letter dated March 12, 2024, from CEO Jeppe Theisen, that they would only lower the price if the subsidy was retained. Following this arrangement, the price of Ozempic fell from 1,313 kroner to 873 kroner on April 29, and just two days later, the Medicines Agency confirmed that the subsidy would remain, contrary to the recommendation of the Medicines Subsidy Council.

Experts have raised concerns about the implications of this arrangement, suggesting it highlights a broader issue regarding pharmaceutical pricing and subsidies. Professor Karsten Juhl Jørgensen from Cochrane Denmark remarked that the situation challenges the industry’s narrative that drug prices reflect development and manufacturing costs.

The subsidy for Ozempic, which has gained immense popularity among Danish diabetes patients, has led to skyrocketing costs for the Danish health system, rising from 641 million kroner in 2022 to an estimated 1.4 billion kroner in 2023. As a result, the Danish regions were forced to cut costs, with substantial implications for healthcare services.

Changes in the subsidy rules mean that nearly 49,000 diabetes patients may need to switch medications due to an updated assessment protocol requiring doctors to consider cheaper alternatives. The Danish Medicines Agency has clarified that there were no negotiations over the exact price reduction, stating that the decision to maintain the general subsidy was made after Novo Nordisk announced the price drop.