Novo expects more pricing pressure for diabetes drugs
- Novo Nordisk said it expects net prices on its drugs to fall in 2019, warning investors on a second quarter earnings call that pricing pressures in diabetes will likely continue next year.
- The Danish drugmaker's North American business saw sales fall 10% in the first six months, although, in local currencies, growth was flat. Declines in long-acting insulin were offset by increases in market share for Tresiba and the recent launch of the once-weekly GLP-1 drug Ozempic. International operations grew 8% in local currency, mainly driven by insulin sales.
- Shares closed down roughly 6% in both American and Danish markets.
Over the last few years, the insulin market has seen falling net prices, driven by both branded and biosimilar competition as well as pushback from pharmacy benefit mangers. Long-acting basal insulins such as Levemir (insulin detemir) have been particularly impacted.
And judging from the earnings call, it appears things aren't going to change anytime soon.
Novo said it remains in formulary negotiation with PBMs and managed care organizations for 2019. Yet CEO Lars Fruergaard Jørgensen said 2019 prices are expected to be lower "predominantly due to basal insulin pricing and changed Medicare Part D coverage gap legislation."
The company does not expect any significant price decreases in other product groups, including GLP-1 and short-acting insulin.
"The declining insulin sales were mainly driven by 11% decline in basal insulin, reflecting lower realized prices and 2017 rebate adjustments for Tresiba," Fruergaard Jørgensen said.
However, Novo Nordisk's list price increases have puzzled analysts. Martin Parkhøi of Danske Bank questioned the two list price increases of Tresiba (insulin degludec) and Levemir (insulin detemir) in 2018, during a period where net prices were going down.
"[We] have a market structure where we can agree that it's not working with the gross to net … business model. But that is now how the market works … so, we have to compete in the market structure as it is," Fruergaard Jørgensen said. "And when we have to give rebates … on a yearly basis, the option we have is to work with list pricing. [The] price and list price changes are similar across the industry, and this is how the market works."
Insulin manufacturers, including Novo Nordisk, were hit last year by investigations over pricing and trade practices from a number of state attorneys general, and by complaints from the Type 1 Diabetes Defense Foundation. This followed reports of increases in insulin prices of 450% over inflation between 1996 and 2016, which left patients with higher out-of-pocket costs.
Follow Suzanne Elvidge on Twitter