Eli Lilly Novo Nordisk stock fall on Trump GLP-1 price comments

The pharmaceutical industry has been abuzz with news of potential price reductions for brand-name GLP-1 weight loss drugs. Recently, President Donald Trump announced that his administration aims to cut the cost of these medications to $150 per month, a significant decrease from their current list price. This move has sent shockwaves through the market, with shares of Eli Lilly and Novo Nordisk, two major manufacturers of GLP-1 weight loss drugs, dropping on Friday.

During a recent event at the White House, Trump highlighted the disparity in drug prices between the United States and other countries. He cited the example of a drug that costs $1,300 in New York but can be purchased for $130 in London. When asked to specify which drug he was referring to, Trump mentioned Ozempic, a popular weight loss medication. However, Centers for Medicare and Medicaid Administrator Dr. Mehmet Oz clarified that the administration has not yet negotiated price reductions with drugmakers.

Impact on Pharmaceutical Companies

The potential price reduction has significant implications for pharmaceutical companies. Eli Lilly and Novo Nordisk, which manufacture Ozempic and other GLP-1 weight loss drugs, saw their shares fall by 2% and 3%, respectively, on Friday. In contrast, shares of Hims & Hers Health, a company that sells compounded GLP-1s at a lower price point, plummeted by over 15%. This decline suggests that the market is responding to the potential disruption in the pricing of weight loss medications.

The Trump administration has been actively engaged in efforts to reduce drug prices, with 17 major pharmaceutical companies receiving letters demanding that they bring U.S. prices in line with those in other developed nations. Pfizer and AstraZeneca have already signed on to the president’s initiative, striking drug pricing deals with the administration. The recent comments from Trump and Oz indicate that the administration is now focusing on getting weight loss drugmakers on board with the pricing initiative.

Implications for Consumers and Employers

The demand for weight loss drugs has been growing, but high prices have remained a significant obstacle for consumers and employers. According to a survey by the Kaiser Family Foundation, only about one in five large employers currently offers GLP-1s for weight loss, and two-thirds of those who do report that the high cost of these medications has had a significant impact on their prescription drug spending. Workers who do not have coverage through health insurance have been turning to the cash market to purchase these drugs, often at a lower price point than what is offered through traditional channels.

If the administration is successful in bringing the cash price of popular weight loss drugs like Lilly’s Zepbound and Novo Nordisk’s Wegovy down to $150, it could have a major impact on the current cash market. This price point would be competitive with compounded options, which are currently offered by telehealth providers like Hims & Hers for between $130 and $200 per month. The potential price reduction could increase access to these medications for consumers and employers, potentially disrupting the market for weight loss drugs.