Diabetes drug Ozempic can be produced for as little as $5, new study shows

The popular diabetes drug Ozempic can be produced for less than $5 a month, against its current price tag of $1000 for a month’s dose, a new study showed. 

The research, conducted by researchers at Yale University and King’s College Hospital in London, alongside Doctors Without Borders, sparked outrage over the cost of the type 2 diabetes medication manufactured by Novo Nordisk. 

The study pinpointed the expensive disposable injection pens as the primary reason behind the inflated price. Patient affordability is a major issue with Ozempic as insurers increasingly exclude the drug from their coverage due to its high cost. 

“There were an estimated 537 million people living with diabetes worldwide in 2021, 90% of whom live in low- and middle-income countries. Health expenditures directly related to diabetes have tripled in the past 15 years,” the report stated. 

The highest prices for all insulins was observed in the US, while the lowest prices were seen in China, France, the Philippines, and South Africa.

Semaglutide, the active ingredient in Ozempic, costs a mere $0.029 to produce for a month’s supply. However, the disposable pens used for injection are estimated to cost around $2.83 per month.

The study, published in JAMA Network Open, an open access medical journal published by the American Medical Association, reveals that Ozempic could be produced for significantly less than some forms of insulin, a lifesaving medication for diabetics. 

Researchers estimated a month’s supply could cost between 89 cents and $4.73 to manufacture, including a profit margin and taxes.

This finding directly contradicts Novo Nordisk’s pricing as the Danish healthcare company lists a monthly package of Ozempic at a staggering $935.77 before factoring in insurance or rebates.

Although the company mentioned in its annual report, earlier this year, that they do issue discounts and sales rebates in the US, and that these amounted to 74% of the gross sales in 2023, as opposed to 75% in 2022 and 2021. 

“Three companies (Novo Nordisk, Eli Lilly, and Sanofi; considered the Big 3) control more than 90% of the global insulin market and 83% of the low and middle-income countries market. It has been recognized for years that this oligopoly poses a major barrier to entry for new manufacturers and is a key factor in the lack of access to insulin in many world regions,” the report stated. 

Adding another layer of complexity is the growing popularity of Ozempic for weight loss, despite it not being officially approved for that purpose. 

This off-label use further strains affordability for patients with type 2 diabetes who rely on the drug for treatment..

The high cost of Ozempic not only impacts patients but also translates to significant profits for Novo Nordisk as it reported a stellar performance in 2023.

Sales grew by 36% at constant exchange rates, reaching $33.71 billion. Operating profit also saw a significant jump, increasing by 44% at constant exchange rates to $9.5 billion.

The company in their year end report projected sales growth of 18% to 26% in 2024 due to the continued popularity of its weight loss drug Wegovy and Ozempic, which share the same active ingredient. 

The company is currently valued at $571.80 billion.