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Price Wars Are Good For Consumers
Anti-Obesity drugs are expensive. The typical monthly co-pay for a prescription is between $25 and $120. However, those whose insurance does not cover medication costs can exceed $1000 per month.
It is also a massive market. Several endocrinologists I spoke with in 2024 told me they were issuing 12-month prescriptions so that they could stretch the time between appointments for individual patients. That was the only way they could keep up with demand from new patients.
That created a bonanza for anti-obesity drug companies and particularly Novo Nordisk. The company pioneered the treatments and harvested the initial round of profits.
That encouraged others to pursue the market. Eli Lilly has been particularly successful in developing alternatives that are at least as effective, and in some cases more so, than Novo Nordisk’s products.
The competition has come from two vectors. The first is competitors have created more effective treatments that result is greater weight loss. The second is more effective delivery mechanisms that avoid needles.
This took Novo Nordisk by surprise and it has been slow to respond. The share collapsed.
The logical response is to speed up delivery of better products or to compete on price.
Novo Nordisk has invested considerable capital in building manufacturing capacity for GLP-1 medications. Now is the time to unleash as much inventory as possible to capture market share.
Today’s announcement that it has succeeded in supplanting Eli Lilly as CVS’s preferred treatment provider is a signal that this strategy is working.