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Submission: On May 29 via manual from US — Scanned from US
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LOGIN SUBSCRIBE * Premium * Co.Design * Tech * Work Life * News * Impact * Podcasts * Video * INNOVATION FESTIVAL 360IF360 | FastCo Works * Capital One * IBM * SAP advertisement 03-29-2024NEWS YOUR $1,000-PER-MONTH OZEMPIC COSTS $5 TO MAKE, SAYS STUDY Researchers from Yale University, King’s College Hospital in London, and Doctors Without Borders have estimated a production cost between 89 cents and $4.73 for a one-month supply, and that’s including ‘a profit margin with an allowance for tax.’ [Photo: Carsten Snejbjerg/Bloomberg via Getty Images] * * * * * * * * BY Clint Rainey3 minute read Diabetes-turned-obesity drug Ozempic could be sold for $5 a pen and still make Novo Nordisk a profit, says a new study that simply did a cost analysis for making the popular medicine. Alongside Wegovy, its more-potent sister medication (also made by Novo), Ozempic has become a coveted weight-loss medication touted by everybody from Elon Musk to Tracy Morgan, helping transform Novo Nordisk into a pharmaceutical behemoth in the process. (It recently overtook LVMH—the luxury goods brand owned by the world’s richest person, Bernard Arnault—as Europe’s most valuable publicly listed company.) The pair of drugs are enjoying such a prescription heyday that their sales accounted for a majority of the economic growth in Denmark, Novo’s home base, for 2022. But Wednesday’s study, which was published in the journal JAMA Network Open by a team of researchers from Yale University, King’s College Hospital in London, and Doctors Without Borders, estimated that the cost to produce a one-month supply of Ozempic runs between 89 cents and $4.73. That estimate includes “a profit margin with an allowance for tax,” the authors wrote. One Ozempic pen, which lasts most users a month, carries a current U.S. list price of $968.52. Their math isn’t really being debated: They simply added together the cost of the ingredients, the packaging, then the logistics to distribute the drug. Their conclusion was that Ozempic could retail for as little as 89 cents a month, yet still clear a profit. In fact, a one-month supply of the active ingredient—semaglutide, a so-called glucagon-like peptide-1 receptor agonist—likely costs Novo around 29 cents. The researchers estimated that other chemical ingredients add another 15 cents worth of supply costs, and the other production for the pen are another 20 cents. Novo hasn’t confirmed its math yet to the media but has declined in the past to release production costs for Ozempic and Wegovy, which costs even more: about $1,300 a month. In a statement, the company argued it’s working to ensure everyone can access these drugs, noting that 75% of gross earnings go back into rebates and other discounts to help patients afford products. There are also reports, such as this one last year by the American Enterprise Institute (AEI), that question if the high prices are entirely what they seem, at least regarding the amount Novo can take to the bank. Retail list prices, or what you’d pay out of pocket to buy the drug yourself, often exceed drugs’ “net prices”—the sort of negotiated compromise that drugmakers charge insurers and pharmacy benefit managers, which isn’t publicly revealed. The AEI report said the net price for a monthly dose of Ozempic looks to be around $300, and for Wegovy it’s around $700. Both are about $650 below the list price. It has been a bonanza, regardless, for Novo, which apparently didn’t have Ozempic’s breakthrough success on its bingo card, either. “Had we predicted this, we would have prepared differently,” CEO Lars Fruergaard Jørgensen told Fast Company in December. Both drugs have seen shortages in the U.S., and it’s estimated that nearly 2% of American adults who saw a doctor in the past year were, incredibly, prescribed one of these two medications. Their popularity translated into more than $10 billion in sales in the third quarter of 2023, accounting for more than half of Novo’s revenue. It’s hardly unusual for pharmaceutical companies to slap eyebrow-raising prices onto drugs, often citing the billions required to bring them to market when they do. But a list price that is 200 to 1,000 times higher than the production cost is less common. When a large chunk of America seemed outraged at “pharma bro” Martin Shkreli for jacking up the list price of antiparasitic medication Daraprim, that was for a 40-fold increase, from $13.50 to $750 per pill. Recognize your brand’s excellence by applying to this year’s Brands That Matter Awards before the final deadline, June 7. Sign up for Brands That Matter notifications here. The latest innovations in design brought to you every weekday. * This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. SIGN UP This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Privacy Policy -------------------------------------------------------------------------------- ABOUT THE AUTHOR Clint Rainey is a Fast Company contributor based in New York who reports on business, often food brands. He has covered the anti-ESG movement, rumors of a Big Meat psyop against plant-based proteins, Chick-fil-A's quest to walk the narrow path to growth, as well as Starbucks's pivot from a progressive brand—into one that's far more Chinese. More -------------------------------------------------------------------------------- EXPLORE TOPICS advertisement Featured Video Martin Scorsese and Chanel just revealed exactly how Timothée Chalamet smells Chanel's new luxury fragrance ad is one part entertaining and one part pretentious. Fast Company's Brand Hit or Miss of the Week takes the smell test. More Videos 0 seconds of 0 secondsVolume 0% Press shift question mark to access a list of keyboard shortcuts Keyboard ShortcutsEnabledDisabled Shortcuts Open/Close/ or ? Play/PauseSPACE Increase Volume↑ Decrease Volume↓ Seek Forward→ Seek Backward← Captions On/Offc Fullscreen/Exit Fullscreenf Mute/Unmutem Decrease Caption Size- Increase Caption Size+ or = Seek %0-9 Next Up Giada de Laurentiis wants to be your personal guide to Italy 02:25 Settings OffBrand Hit 052424 V3 Mkl Font Color White Font Opacity 100% Font Size 100% Font Family Arial Character Edge None Background Color Black Background Opacity 50% Window Color Black Window Opacity 0% Reset WhiteBlackRedGreenBlueYellowMagentaCyan 100%75%50%25% 200%175%150%125%100%75%50% ArialCourierGeorgiaImpactLucida ConsoleTahomaTimes New RomanTrebuchet MSVerdana NoneRaisedDepressedUniformDrop Shadow WhiteBlackRedGreenBlueYellowMagentaCyan 100%75%50%25%0% WhiteBlackRedGreenBlueYellowMagentaCyan 100%75%50%25%0% Live 00:00 01:48 01:48 MARTIN SCORSESE AND CHANEL JUST REVEALED EXACTLY HOW TIMOTHÉE CHALAMET SMELLS advertisement Tech * TechResearchers are working on a new mRNA vaccine—this time for bird flu * TechTikTok ban: U.S. court to consider legal challenges in September * TechRobot to remove melted nuclear fuel debris from Japan’s Fukushima reactor News * NewsAdam Neumann ‘shut out’ of WeWork buyback after company accepts a bid from Masa and former Softbank pals * NewsManhattanhenge 2024: Did NYC’s city grid designers predict the phenomenal sunset? * NewsT-Mobile keeps getting bigger: Now it’s buying U.S. Cellular to beef up service in rural areas Co.Design * Co.DesignNo-buy challenge tips: Know your vulnerabilities and be careful on social media, experts say * Co.DesignTarget’s chief food, essentials, and beauty officer says pace of trends is getting faster * Co.DesignThis simple idea can transform an office from a collection of cubicles into an actual community Work Life * Work LifeTech firm settles after worker posts ‘whites-only’ job listing * Work LifeIt’s time to admit that Gen Z is right about sleep * Work LifeWhy are Gen Z and millennial workers descending the corporate ladder? * * * * * Fast Company & Inc © 2024 Mansueto Ventures, LLC * * Advertise * Careers * Privacy Policy * * Terms * Do Not Sell My Data * Notice of Collection * * Permissions * Help Center * About Us * Site Map Fastcompany.com adheres to NewsGuard’s nine standards of credibility and transparency. 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