In the graphic showing our insulin, NovoLog®, you’ll see the
difference between list price, which increases a lot after 2010, and
the net price. The list price increases after those negotiations and
concessions translated year-over-year to mid-single-digit net price
increases for all our insulins, even when you don’t account for
inflation. And when you do, those net prices were closer to the Consumer
Price Index – Urban, a common measure of the average price of goods.
So that probably prompts two questions: what does that mean for
patients? And, what’s the point of increasing the list price if the
drug maker is not necessarily realizing that profit?
For patients, the reality is that many of the insured may benefit
from the net prices payers negotiate (on average, insured patients pay
a co-pay for Novo Nordisk insulins between $1 - $1.40 per day) while
others may not. Uninsured patients or those in certain insurance plans
may be subject to list price. More on that below.
For Novo Nordisk, those price increases were our response to changes
in the healthcare system, including a greater focus on cost savings,
and trying to keep up with inflation. PBMs and payers have been asking
for greater savings – as they should. However, as the rebates,
discounts and price concessions got steeper, we were losing
considerable revenue – revenue we use for R&D, sales and
marketing, education, disease awareness activities and medical
information support. So, we would continue to increase the list in an
attempt to offset the increased rebates, discounts and price
concessions to maintain a profitable and sustainable business. We also
monitored market conditions to ensure our prices were competitive with
other medicines as part of our business model.
All in all, we’ve simply tried maintaining a profit margin that has
been dropping significantly since health policy changed in the US.
With that, we also need to work together to improve the system and
create more transparency.
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. We currently offer several options for eligible patients
including a Patient Assistance Program and co-pay cards to defray
costs. Patients can also get our human insulin – sold as ReliOn®
through Wal-Mart and as Novolin® in community pharmacies – which might
be an affordable option for some patients. However, new issues are
surfacing that require more solutions. For instance, there are a
growing number of people enrolling in high-deductible health plans
that are facing higher costs at the pharmacy counter. In our view,
high-deductible health plans are becoming a greater part of the
affordability issue requiring attention. That’s one of the reasons
why our third commitment is focused on reducing the burden of
out-of-pocket costs to patients.
As a leader in diabetes care, we recognize patients need more. We
are poised to do more, but can’t do it alone. We need a partnership
approach involving PBMs, insurance companies, employers, patient
organizations and policy makers – to help find sustainable solutions.
With these three tenets top-of-mind, we will work in collaboration to
support those who face affordability challenges.
We plan to talk more about these issues in the coming months.
Please stay in touch by connecting through @NovoNordiskUS if you’re
not following us already.