Novo Nordisk (NOVOb.CO) announced on Wednesday that it will begin selling its weight-loss drug Wegovy at a discounted price of $499 per month for patients paying cash. The move comes as the company navigates increasing competition in the U.S. obesity drug market.
Competitive Pricing Pressure from Eli Lilly
The pricing adjustment follows rival Eli Lilly’s (LLY.N) recent decision to lower the price of its weight-loss drug Zepbound by $50 or more. Lilly has also expanded its direct-to-consumer offerings through LillyDirect, now selling vials of all but the two highest doses of Zepbound at prices starting at $349 per month.
In response, Novo Nordisk will offer its discounted Wegovy in all dosage strengths through its NovoCare Pharmacy program. The discount will apply to uninsured patients and eligible patients with commercial insurance that does not cover obesity treatments. Novo will also provide home delivery for Wegovy, which can otherwise cost over $1,000 per month without insurance coverage.
Following the announcement, U.S.-listed shares of Novo Nordisk rose 4.2% to $91.16 in morning trading.
Regulatory Crackdown on Compounded Weight-Loss Drugs
Meanwhile, compounding pharmacies that have been selling unapproved copies of Wegovy face increasing regulatory pressure. The U.S. Food and Drug Administration (FDA) removed Wegovy from its drug shortage list in February, requiring compounders to halt production of unauthorized versions in the coming months. The FDA had previously removed Zepbound from the shortage list in December.
“With both LillyDirect and NovoCare established, both Lilly and Novo look to cut out compounding pharmacies, which have taken some of their product’s sizable demand,” said BMO analyst Evan Seigerman.
Drug compounding companies, led by the Outsourcing Facilities Association, have challenged the FDA’s decision, suing the agency over its removal of Wegovy from the shortage list. A previous lawsuit was filed regarding Lilly’s tirzepatide-based drugs, including Zepbound.
The FDA has granted certain compounding pharmacies a temporary extension to sell compounded tirzepatide until the court rules on the earlier case, though it has not clarified whether the same extension applies to copies of Wegovy.
Market Reaction and Impact on Telehealth Providers
Shares of telehealth provider Hims & Hers, which sells compounded versions of Wegovy, fell 4.2% to $38.76 in morning trading. The company’s stock nearly tripled last year, reaching a market capitalization of $9 billion.
Rising Competition and Regulatory Challenges
Novo Nordisk’s price reduction for Wegovy highlights the intensifying competition in the obesity drug market, particularly against Eli Lilly. Meanwhile, regulatory moves targeting compounding pharmacies could shift market dynamics further, potentially consolidating control over the sector among major pharmaceutical companies.
