[Senate Hearing 118-473]
[From the U.S. Government Publishing Office]
S. Hrg. 118-473
WHY IS NOVO NORDISK CHARGING
AMERICANS WITH DIABETES AND
OBESITY OUTRAGEOUSLY HIGH
PRICES FOR OZEMPIC AND WEGOVY?
=======================================================================
HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING NOVO NORDISK'S HIGH PRICES FOR OZEMPIC AND WEGOVY FOR
PATIENTS WITH DIABETES AND OBESITY
__________
SEPTEMBER 24, 2024
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
57-255 PDF WASHINGTON : 2025
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BERNIE SANDERS (I), Vermont, Chairman
PATTY MURRAY, Washington BILL CASSIDY, M.D., Louisiana,
ROBERT P. CASEY, JR., Pennsylvania Ranking Member
TAMMY BALDWIN, Wisconsin RAND PAUL, Kentucky
CHRISTOPHER S. MURPHY, Connecticut SUSAN M. COLLINS, Maine
TIM KAINE, Virginia LISA MURKOWSKI, Alaska
MAGGIE HASSAN, New Hampshire MIKE BRAUN, Indiana
TINA SMITH, Minnesota ROGER MARSHALL, M.D., Kansas
BEN RAY LUJAN, New Mexico MITT ROMNEY, Utah
JOHN HICKENLOOPER, Colorado TOMMY TUBERVILLE, Alabama
ED MARKEY, Massachusetts MARKWAYNE MULLIN, Oklahoma
TED BUDD, North Carolina
Warren Gunnels, Majority Staff Director
Bill Dauster, Majority Deputy Staff Director
Amanda Lincoln, Minority Staff Director
Danielle Janowski, Minority Deputy Staff Director
C O N T E N T S
----------
STATEMENTS
TUESDAY, SEPTEMBER 24, 2024
Page
Committee Members
Sanders, Hon. Bernie, Chairman, Committee on Health, Education,
Labor, and Pensions, Opening statement......................... 1
Cassidy, Hon. Bill, Ranking Member, U.S. Senator from the State
of Louisiana, Opening statement................................ 6
Witnesses
Jørgensen, Lars Fruergaard, President and Chief Executive
Officer, Novo Nordisk, Bagsværd, Denmark.................. 8
Prepared statement........................................... 11
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.
Sanders, Hon. Bernie:
CVS Health, Melissa Schulman................................. 62
Blue Cross Blue Shield Michigan, Daniel J. Loepp............. 64
United Health Group, Andrew Witty............................ 65
Cigna Group, Kristin Julason Damato.......................... 67
North Carolina State Health Plan, Dale R. Folwell............ 69
JAMA Network, Estimated Sustainable Cost-Based Prices for
Diabetes Medicines......................................... 74
Doctors for America, Undersigned by 253 Physicians & Health
Professionals.............................................. 87
Estimating the Lives That Could be Saved by Expanded Access
to Weight-Loss Drugs, Dr. Alison Galvani, Yale School of
Public Health.............................................. 116
GLP-1 Patient Stories........................................ 167
Budd, Hon. Ted:
Letter to Senator Budd from the Speaker North Carolina House
of Representatives, Tim Moore.............................. 132
Cassidy, Hon. Bill:
FTC Sues Pharmacy Insurance Managers, Alleging Unfair Drug
Prices, Daniel Gilbert..................................... 165
WHY IS NOVO NORDISK CHARGING
AMERICANS WITH DIABETES AND
OBESITY OUTRAGEOUSLY HIGH
PRICES FOR OZEMPIC AND WEGOVY?
----------
Tuesday, September 24, 2024
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m., in
room 562, Dirksen Senate Office Building, Hon. Bernard Sanders,
Chairman of the Committee, presiding.
Present: Senators Sanders [presiding], Casey, Baldwin,
Kaine, Hassan, Smith, Lujan, Hickenlooper, Markey, Cassidy,
Collins, Braun, Marshall, Romney, Tuberville, and Budd.
OPENING STATEMENT OF SENATOR SANDERS
The Chair. The Health, Education, Labor, and Pensions will
come to order. And I want to begin by thanking Mr. Lars
Jørgensen, the CEO of Nova Nordisk, for being with us
today for this important hearing.
The issue that we are discussing this morning is not
complicated. It has everything to do with the chart behind me,
which shows that Novo Nordisk's diabetes drug Ozempic is sold
in Canada for $155, in Denmark for $122, in France for $71, and
in Germany for $59. In the United States, Nova Nordisk charges
us $969, over 15 times more than they sell that product in
Germany.
Wegovy, Nova Nordisk weight loss drug is even more
expensive, as the chart behind me also shows. Wegovy is sold
for $265 in Canada, $186 in Denmark, $137 in Germany, and $92
in the United Kingdom. In the U.S., the list price for Wegovy
is $1,349 a month, nearly 15 times as much as it cost in the
United Kingdom.
What we are dealing with today is not just an issue of
economics, it is not just an issue of corporate greed. It is a
profound moral issue. Novo Nordisk has developed game changing
drugs, which if made affordable, can save the lives of tens of
thousands of Americans every year, and significantly improve
the quality of life of millions more if made affordable. If not
made affordable, Americans throughout this country will
needlessly die and suffer.
As representatives of the American people, we cannot allow
that to happen. And let's be clear, the outrageously high cost
of Ozempic, Wegovy, and other prescription drugs is directly
related to the broken, dysfunctional, and cruel healthcare
system in our Country. While the current system makes huge
profits for large drug companies like Novo Nordisk, huge
profits for insurance companies, and huge profits for PBMs. It
is failing the needs of ordinary Americans.
The United States today, we spend almost twice as much per
capita on healthcare than the people of any other country,
nearly $13,500 for every man, woman, and child over 17 percent
of our GDP. Yet, despite this huge and unsustainable
expenditure, we are the only major country on earth not to
guarantee healthcare to all people as a human right.
Further, despite all of that spending, our healthcare
outcomes are not particularly good. Today, over 85 million
Americans are uninsured or underinsured. Over 60,000 die each
year because they don't get to a doctor when they should, and
our life expectancy, which is actually declining in many parts
of the country, is far below most other wealthy countries. So,
what does all of this have to do with Mr. Jørgensen, Novo
Nordisk, and our hearing today? A lot.
The simple truth is that we pay by far the highest prices
in the world for prescription drugs, and that is a major factor
in the healthcare crisis we experience. How does that happen?
What's the connection? First, one out of four Americans are
unable to afford the prescription drugs that their doctors
prescribe. Insanely, that means that millions of Americans go
without the treatment that their doctors recommend. The result,
some will actually die, and others will become much sicker than
they should, and millions will unnecessarily end up in
emergency rooms or hospitals at great expense to our healthcare
system. How crazy is that?
Second, one of the reasons that hospital costs--it's not
just prescription drugs--hospital costs in this country are
rapidly rising, has to do with the very high cost of
prescription drugs. In my hospital in Burlington, Vermont, the
CEO there tells me that 20 percent of his budget goes to the
high cost of prescription drugs, and there are treatments now
that cost hundreds of thousands of dollars a year.
Third, a significant reason for the high cost of insurance
policies. If you're upset out there that you're paying very
high amounts of money for your insurance, it has to do to a
significant degree with the high cost of prescription drugs.
Yes, millions of Americans with decent health insurance pay
minimal amounts for their prescription drugs. That's the good
news. The bad news is that they're paying a fortune in
premiums, deductibles, and copayments for the insurance that
covers those drugs. I should also add that if you're a taxpayer
in this country, you're paying higher taxes than you should
because of the inflated cost that Medicare, Medicaid and other
public health programs pay for prescription drugs.
Now, that is the overview and why the issue that we are
discussing today is so important. It impacts every aspect of
our healthcare system, the Federal budget, private insurance.
Now, let's get to the particulars with regard to Novo Nordisk,
Ozempic, and Wegovy.
Ozempic and Wegovy are different brand names for the same
drug, Semaglutide. These drugs are transformative new
treatments for diabetes and obesity that help people control
their blood sugar and lose weight. Both are manufactured by
Novo Nordisk, and both are on track to be some of the
bestselling and most profitable drugs in the history of the
pharmaceutical industry. In fact, since 2018, Nova Nordisk has
made nearly $50 billion in sales off of these two drugs.
Importantly, for Members of this Committee, 72 percent of
that revenue comes from sales in the United States of America.
In other words, the United States is Novo Nordisk cash cow for
Ozempic and Wegovy. And given that these drugs will need to be
taken over the course of a lifetime, it's not a one-time drug.
You take it for your whole life. Novo Nordisk can expect to
receive tens of billions in sales and huge profits from these
drugs year after year after year.
Now, why does Novo Nordisk charge the American people such
outrageously high prices for Ozempic and Wegovy? Are they
acting illegally by charging us some such high prices? Are they
violating the law? No, they're not. What they're doing is
perfectly lawful. They are simply taking advantage of the fact
that until very recently, the United States has been the only
major country on earth not to negotiate the cost of
prescription drugs. In other words, Novo Nordisk, and other
drug companies, not just Novo Nordisk, can charge us as much as
the market can bear, and that is precisely what they are doing.
Now, in a few minutes, Mr. Jørgensen makes his
presentation. We look forward to hearing from him. I suspect
that he will tell us that the healthcare system here in the
United States is complex, and that there is a difference
between the list price and the net price as a result of the
rebates that PBMs receive.
This Committee has begun to do some serious work with
regard to PBMs. And if he says that he is correct. But even
factoring in all of the rebates that PBMs receive, the net
price for Ozempic is still nearly $600, over nine times as much
as it cost in Germany. And the estimated net price of Wegovy is
over $800, nearly four and a half times as much as it cost in
Denmark.
What must also be understood is that not everybody can take
advantage of the net price of these drugs. If you are
uninsured, you pay the fullest price. If you have a large
deductible, you pay the full list price. If you have co-
insurance, the percentage of the price you pay at the pharmacy
counter is based on the list price. And let's be clear, 75
percent of Americans, over 190 million people with insurance,
are unable to access Wegovy through their insurance policies.
Mr. Jørgensen may also tell us that Novo Nordisk is
afraid that if it substantially reduced the list price for
Ozempic and Wegovy, PBMs may limit coverage for these drugs.
Well, Mr. Jørgensen, let me ease your concerns. I'm
delighted to announce today that I have received commitments in
writing from all of the major PBMs that if Novo Nordisk
substantially reduced the list price for Ozempic and Wegovy,
they would not limit coverage.
In fact, all of them told me they would be able to expand
coverage for these drugs if the list price was reduced. I ask
unanimous consent to insert the letters I received from the
PBMs making this commitment into the record.
[The following information can be found on page 62 in
Additional Material:]
The Chair. Now, let me share with the Committee some other
important information that we have uncovered as part of our
investigation. Last week, I received a letter from over 250
doctors urging us to do everything that we can to substantially
lower the price of these drugs.
This should come as no surprise. What these doctors are
telling us is that if the price of Ozempic and Wegovy is not
substantially reduced, many of their patients who have diabetes
and obesity, especially lower income Americans, often minority
Americans, will be unable to afford these drugs. Some of these
patients will unnecessarily die, and others will suffer a
significant decline in their quality of life. I ask unanimous
consent to enter that letter into the record.
[The following information can be found on page 87 in
Additional Material:]
The Chair. Earlier this year, Dr. Allison Galvani, an
epidemiologist at Yale University, conducted a study on Wegovy.
And what she found, and I hope Mr. Jørgensen pays
attention to this, is that over 40,000 lives a year could be
saved if Wegovy were made widely available and at an affordable
price to Americans who need the drug. 40,000 lives. I ask
anonymous consent to insert that study into the record.
[The following information can be found on page 116 in
Additional Material:]
The Chair. A few months ago, Dr. Melissa Barbara, a
healthcare economist at Yale University, conducted a study on
the cost of manufacturing Ozempic. And what she found is that
Ozempic can be profitably manufactured for less than $5 a
month.
We all know the cost of production is not the only expense
by far for a drug company. Pharmaceutical companies spend great
sums of money on research and development to find new
treatments with many of these products not coming to market. We
all understand that. But it is important to know that this drug
can be manufactured profitably for a few dollars a month.
We may hear from Mr. Jørgensen that Novo Nordisk spent
$21 billion on research and development since 2018, and I take
his word on that. What he may not tell you is that Novo Nordisk
spent $44 billion on stock buybacks and dividends over that
same time period. In other words, since Ozempic came onto the
market in 2018, Novo Nordisk spent over twice as much on stock
buybacks and dividends than it spent on research and
development.
Let's be clear, outrage over the high cost of Ozempic and
other prescription drugs is not a partisan political issue, as
I expect every person on this Committee understands. It's not a
Democratic issue, it's not a Republican issue. I'm an
Independent, not an Independent issue. The vast majority of the
American people are sick and tired of paying outrageously high
prices for prescription drugs.
For example, Dale Folwell, the Republican Treasurer of the
State of North Carolina, has told us that if he did not
discontinue covering Wegovy for some 20,000 state workers in
North Carolina, he would've been forced to double health
insurance premiums for teachers, firefighters, and police
officers in his state. Regardless, if this drug was needed or
not, he would've had to double health insurance premiums in
North Carolina. Blue Cross Blue Shield of Michigan also
announced they would have to discontinue covering Wegovy
because it was too expensive.
When we talk about differing political views, I will tell
you that Elon Musk, not one of my great political allies,
recently posted on Twitter, and I quote, ``Solving obesity
greatly reduces risk of other diseases, especially diabetes,
and improves quality of life. We do need to find a way to make
appetite inhibitors available to anyone who wants them.'' And
Mr. Musk is right.
Further, not only must we be concerned about lack of access
to these drugs, we have also got to take a serious look at the
financial implications of what happens if the prices of these
drugs are not substantially reduced. Bottom line, if just half
of the adults in our Country with obesity took weight loss
drugs like Wegovy at current prices, the cost would be
astronomical and would have a devastating financial impact on
our Country, and on Federal, and state budgets.
Best estimate that I have seen suggests that if half the
adults in our Country took these weight loss drugs, it would
cost $411 billion a year. $411 billion. And that is more than
what Americans spent on all prescription drugs at the pharmacy
counter in 2020 or 2022. In other words, the outrageously high
prices of these drugs could bankrupt Medicare, and radically
increase premiums to absolutely unaffordable rates. This does
not have to happen. It does not have to happen.
Over the last several months, I and my staff have been
talking to a number of major generic pharmaceutical companies.
These are large companies that supply hundreds of millions of
prescriptions to many millions of Americans. And what these
CEOs have told me is of enormous consequence. They have studied
the matter and they have told me that they can sell a generic
version of Ozempic, the exact same drug that Novo Nordisk is
manufacturing to Americans for less than $100 dollars a month.
$100 dollars a month.
Novo Nordisk charges us $969 a month for Ozempic. These
generics can sell it to us for less than $100 dollars. Let's be
clear, nobody here is asking Novo Nordisk to provide charity to
the American people. Novo Nordisk has already made billions of
dollars in profit, off of these products, and in the coming
years will make billions more. All we are saying, Mr.
Jørgensen, is treat the American people the same way that
you treat people all over the world. Stop ripping us off.
A few months ago, President Biden and I wrote an op-ed
which appeared in USA Today, and here's what the President and
I said. ``If Novo Nordisk and other pharmaceutical companies
refuse to substantially lower prescription drug prices in our
Country and end their greed, we will do everything within our
power to end it for them. Novo Nordisk must substantially
reduce the price of Ozempic and Wegovy. As Americans, we must
not rest until every person in our Country can afford the
prescription drugs they need to lead healthy, happy, and
productive lives.'' From the op-ed from the President and
myself.
That's what President Biden and I wrote a few months ago,
and that's what I believe. Prescription drugs in this country
must be affordable, and we must not be forced to pay far higher
prices than people in other countries for the same exact
product. This is especially true when we face a national
emergency in terms of the twin epidemics of diabetes and
obesity, which if not addressed with lower cost drugs, could
cost us tens of thousands of lives and an unimaginable amount
of money. Congress and the Administration have a moral
responsibility to act now, act boldly, and to protect the
American people.
Senator Cassidy, you are now recognized for an opening
statement.
OPENING STATEMENT OF SENATOR CASSIDY
Senator Cassidy. Thank you, Chair Sanders. Nearly 1 in 3
Americans live with obesity. Nearly 1 in 10 have type 2
diabetes. I'm a physician. I'm very aware of the implications
of that. There are so many complications. Obesity leads to more
chronic disease than any other condition, taking lives and
causing almost $173 billion in healthcare spending a year.
It's almost impossible to bring down healthcare costs
unless we effectively address obesity. Now we have GLP-1s. They
have the promise to address both obesity and the complications
that result. They're expensive. Now, we can argue about the net
versus the list, but they're expensive. But let me say, without
a profit motive, without something in return, it's unclear that
these drugs are--any drug is going to be developed. There is a
tension. A tension between the need to incentivize innovation
and the ability to afford that innovation. And we are here
struggling with that balance.
Now, if anyone thinks going after big pharma is the silver
bullet, that if you do that, boom, healthcare costs and drug
costs go down, then they don't understand what happens with
pricing a drug. There is no silver bullet. But as my friend
Angus King says, there is silver buckshot. You do a little bit
here and a little bit there, and it adds up. So, the drugs
become more affordable given that we still have to preserve the
profit incentive for the creativity, for drug companies to
invest in order to develop the drugs that are going to
positively affect the burden of disease in our society.
This is a simple example I've used before. When I was in
medical school, one of the most common surgeries was removing a
portion of someone's stomach because of peptic ulcer disease.
And then a drug called cimetidine came out, Tagamet. And within
6 months, that surgery was rarely performed. Tagamet is so
simple, it's now sold over-the-counter, but it has saved so
many people having disabling surgery.
Now that is an example, but now we're speaking about
Alzheimer's, and cancer, and obesity, and the complications
from obesity. And I think we have to be realistic. It is a
profit motive that incentivizes creative people with capital to
go in and find that cure. So as this Committee examines the
affordability of GLPs, we have to also examine how do we
preserve that incentive for the innovation that is the tension.
How do we preserve? Because, by the way, if we stop
developing new drugs, Alzheimer's won't be cured, cancer won't
be cured, and better drugs to address obesity and the
complications of the metabolic syndrome will not either.
Back to this hearing. There are serious questions that need
to be asked. What has contributed to the high price of Ozempic
and Wegovy? What are American patients actually paying for
these drugs at the pharmacy counter? Frankly, what are Germans
actually paying? They may pay some money at the counter, but I
suspect that the health plan is also paying something. So, what
is the true cost relative to the true cost to us?
By the way, I'm particularly concerned with folks with
health savings accounts because the Chair is right, if there is
a list price, which is really high, and they have a drug
benefit tied to their HSA, then that begins to drain their HSA.
And I have always been an advocate of how do we make that
health savings account more useful? But if it's being drained
for a high list price, it is less useful. I'm about that. So,
what can we do to make sure that Americans have access to an
affordable cost, and at the same time, we have adequate
incentive so that someone out there with an incurable disease
knows that there might be hope along the way?
I appreciate, Mr. Jørgensen, for attending the
hearing. I look forward to your answers. Now, it's important to
note that while drug manufacturers play a significant role in
determining the cost of a drug, the problem's greater. It's
more complex than the actions of any one industry. So, we need
to make a serious effort to navigate the network of perverse
incentives throughout our healthcare system, including taking a
substantive look at health insurance benefit designs, price,
transparency, regulatory barriers, and the perverse effects of
government discount programs have on prices that Americans pay
at the commercial market.
This Committee has a long history of engaging in real
bipartisan efforts to lower the cost of healthcare. Last year,
Chair Sanders and I worked on the PBM Reform Act to address
misaligned incentives affecting PBMs to lower the price
patients pay for their prescriptions. The Committee passed this
legislation with overwhelming bipartisan support. By the way,
we need to get this across the finish line and signed into law.
And this is the kind of bipartisan work needed to tackle the
high costs patients face for GLP and for all drugs.
Thanks again for coming today, Mr. Jørgensen. I look
forward to you explaining how to balance this tension between
innovation and affordability.
With that, I yield.
The Chair. Thank you, Senator Cassidy. We will now turn to
our witness panel. For the awareness of all Senators and the
witness, Ranking Member Cassidy and I have reached an agreement
where we will both have an equal amount of time to ask the
witness questions, and all other Members will have 7 minutes to
ask the witness questions.
Our sole witness today is Mr. Lars Jørgensen. Mr.
Jørgensen has been with Novo Nordisk since 1991, and was
appointed President and CEO of the company in January, 2017.
Mr. Jørgensen, thank you very much for being with us. You
may proceed with your testimony.
STATEMENT OF LARS FRUERGAARD JORGENSEN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, NOVO NORDISK, BAGSVAERD, DENMARK
Mr. Jorgensen. Chairman Sanders, Ranking Member Cassidy----
The Chair. Sorry. Make sure the mic is on there.
Mr. Jorgensen. It is on. Maybe I'll move this. Can you hear
me now?
The Chair. Yes. Much better.
Mr. Jorgensen. Chairman Sanders, Ranking Member Cassidy,
Senators, thank you for the opportunity to speak again before
the Health, Education, Labor, and Pension Committee on behalf
of Novo Nordisk. Last year, I was asked to testify about
patients living with diabetes and insulin affordability. This
year I volunteered to appear before the Committee on policy
solutions for patients living with obesity and the challenges
they face navigating the complex U.S. healthcare system. I
appreciate the opportunity to engage here today.
For decades, our public discourse about obesity and to some
extent, too, diabetes, was based on misinformation and blame.
These conditions were treated as a personal choice, a failure
of willpower. No one was talking about how these are chronic
diseases and treatable diseases.
With the discovery of Semaglutide and the development of
Ozempic and Wegovy, our collective understanding of these
diseases fundamentally changed. But this shift was not a
forgone conclusion. This was a long and winding road. It began
more than 100 years ago when our company was formed. Novo was
founded on the mission to not only treat but defeat diabetes to
1 day find a cure. And it was built on the idea that our
success must be measured by looking at more than our financial
sustainability, but also our societal and environmental
sustainability.
To this day, Novo maintains its unique ownership structure
that protects its mission. The Novo Foundation is among the top
three largest foundations in the world, rivaling the Gates
Foundation, and it serves as our controlling shareholder. For
over 100 years, the foundation has supported initiatives that
improve health and sustainability of the planet. This ensures
that our time and resources are focused on unlocking cures for
chronic diseases.
Senator Cassidy. Mr. Jørgensen, can you push--pull
that microphone a little bit closer to you?
Mr. Jorgensen. Yes. Sorry about that. It's better now?
Senator Cassidy. Can you work on a medicine for bad
hearing? Okay. That be next----
[Laughter.]
Mr. Jorgensen. It's not really our expertise, but maybe one
day. This ensures that our time and resources are focused on
unlocking cures for chronic diseases, not on daily stock
fluctuations. And our focus on this mission is how Ozempic and
Wegovy we came about.
In the early 1990's, Novo Nordick's scientist, Dr. Lotte
Bjerre Knudsen, then a junior researcher in our labs set out to
take a hormone that naturally decays in the body within
minutes, and to make it last long enough to become a medicine
to combat diabetes. It took years before she and her team
evolved and solved that puzzle, and more than a decade longer
to turn the research into Liraglutide, our pioneering once-
daily GLP-1 medicine.
After this discovery, many believed that innovating beyond
Liraglutide was, at best, unnecessary, and at worst impossible,
including most of our competitors. However, another tenacious
team of Novo scientist refused to give in. In November, 2004,
these scientists created 12 milligrams of Semaglutide, an even
more potent molecule to combat diabetes. Even after that, it
was still 14 years more in the making until Ozempic was finally
approved. And another 4 years after that until Wegovy was
approved.
We didn't stop there. In 2017, we launched the largest
clinical trial in the history of the company, enrolling more
than 17,000 patients across 41 countries. We demonstrated
Semaglutide dramatic reduction in mortality for those suffering
from cardiovascular disease and living with obesity. And
because of our commitment to health discovery, we can now say
that Liraglutide is the only weekly GLP-1 on the market that is
FDA approved to reduce the risk of a major adverse
cardiovascular events, which is the No. 1 cause of death in
America today. We are also conducting even more clinical trials
to understand how Semaglutide may affect and treat chronic
kidney disease, liver disease, and Alzheimer's disease.
But we know these discoveries are only effective if
patients can access them. So along with the scoring
revolutionary medicines, we have committed to expanding
manufacturing capacity. It took over 50 years to advance our
science and manufacturing capacity for insulin production to
meet demand. Today, we can provide insulin to nearly 30 million
patients.
But patients living with type 2 diabetes and obesity can't
wait another 50 years. That is why since the beginning of last
year, we have committed over $30 billion to expand
manufacturing capacity. To put the $30 billion in perspective,
this is 20 percent more than the entire U.S. Space Program, is
also four times the amount that Congress has set aside for
National Electrical Vehicle Charging Network.
Our commitment includes $4 billion in new investments to
expand our facility in North Carolina, on top of the $5 billion
we have already invested there creating thousands of
construction jobs and manufacturing jobs in the state. We spent
these resources because we can't afford not to. Type 2 diabetes
has cost U.S. approximately $413 billion every year, and
obesity cost the U.S. $1.7 trillion, and we all know the
physical and emotional toll these diseases make.
You have said that our amazing medicines can't help
patients if they can't afford them. That is true. It's also
true that the full value of Ozempic and Wegovy can only be
realized if patients can access them. Patients need both
affordability and access. That's why we afford to secure public
and private insurance coverage for patients with type 2
diabetes and patients with obesity.
We are pleased to say that Ozempic is covered by 99 percent
of all commercial plans by Medicare and by Medicaid in 50
states. And while Wegovy, it was only recently approved by the
FDA in 2021, today, it's covered by half of the commercial
plans, as well as over 20 state Medicaid plans, the Department
of Veterans Affairs, the military, the Indian Health Service,
and for all Federal employees. And hopefully soon, for seniors.
With that said, it's clear that patients too often struggle
to navigate the complex U.S. healthcare system. It's also clear
that no single company alone controls such vast and complicated
policy changes. So, what I can promise is that Novo will remain
engaged and work with this Committee on policy solutions
through addressing the structural issues that harm patients and
drive up cost.
I can also commit that we'll never stop driving chains to
defeat serious chronic diseases like diabetes and obesity. I
appreciate the Committee's focus on ensuring patients living
with chronic diseases can have affordable access to the
medications they need, and look forward to your questions.
Thank you very much.
[The prepared statement of Mr. Jørgensen follows:]
prepared statement of lars jørgensen
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chair. Thank you very much, Mr. Jørgensen.
Mr. Jørgensen, this Committee, and you and others have
talked a lot about list prices. You make the point that we have
a complicated system and you're certainly right.
We talked about list prices, we've talked about rebates,
we've talked about net prices. But at the end of the day, under
your best-case scenario, the price you are charging Americans
for Ozempic is still nearly $600. That's with all of the
rebates and all of the discounts, that's over nine times as
much as people in Germany pay for the product. And the price
you are charging for Wegovy to Americans is over $800, nearly
four and a half times as much as it cost in Denmark.
Very briefly, and number of people going to be asking you
questions, please tell me why you think it is appropriate to
charge Americans nine times more for the same exact product
that you sell in Germany. And by the way, correct me if I am
wrong here, but I assume that when you sell Ozempic for $59 a
month in Germany, you are making a profit there. Am I correct
on that?
Mr. Jorgensen. Senator, let me start by acknowledging and
sharing your wish to have affordable medicines for Americans.
And there's been a number of numbers mentioned here. And I
think it's important to say that these are not comparable data.
When I mentioned that it's really important for us to secure
access to patients and affordability, we are hard at work in
making sure that patients have access via the insurance
schemes. And today, 80 percent of all Americans with insurance
have access to these medicines at $25 or less for a month's
supply. So, it's a price point at the pharmacy counter we have
to talk about.
The Chair. Let me just interrupt you, if I might. You are
correct that many people pay $25 a month for Ozempic. But what
you're forgetting to mention is that many of those people are
paying outrageously high prices for the insurance that covers
Ozempic and other drugs. So simply this is a pass due to the
insurance companies. Bottom line is you are charging the
American people substantially more for the same exact drug than
you are charging people in other countries. And my question is
why?
Mr. Jorgensen. Senator, I appreciate the question. Let me
try to explain how I see it. We launched Ozempic in 2018. We
have had it on the market for some years. During those years,
our price has declined by 40 percent. I mentioned that patients
with insurance have access to the $25 or less for 80 percent of
the cases. And if you look in this period in Medicare where
there's broad coverage premiums have not gone up in the same
period. The insurance companies and their PBMs, the big
conglomerate of illegal entities, they have more than doubled,
actually close to tripled their profit.
The fact that we can actually secure that 99 percent of
people with insurance have access, that there's a copay at the
pharmacy of $25 or less without premiums going up in Medicare
while profit goes up for, for the middlemen, I think is a
concerning data point.
The Chair. Well, I would simply say that most Americans
would be surprised to learn that insurance rates are not going
up in my state. They're going up by 14 percent. But once again,
you are not answering my question. It's a very simple question.
In Germany, they're paying $59 for Ozempic. In the United
States, we pay $969. And again, even with all of the discounts,
we are still paying very substantially more than the people of
any other country. And you are selling--as I understand, 72
percent of your revenue comes from the United States. That
right, roughly?
Mr. Jorgensen. If it's based on our accounts, you're right.
I don't have the number from the top of my head.
The Chair. Okay. So, you're making huge amounts of money in
this country and you're charging us far more. And you haven't
given me an answer as to why. Let me ask you another question.
A recent study from Yale University has estimated, as I
mentioned earlier, that 40,000 lives in America could be saved
each and every year if Novo Nordisk substantially reduced the
price of Wegovy and made it available to everyone who needs
this drug at an affordable price. From a moral perspective,
does it bother you knowing that keeping the price of Ozempic
and Wegovy so high in the United States could lead to the
preventable deaths of tens of thousands of Americans?
Mr. Jorgensen. Senator, we are very committed to make sure
that Americans have access at an affordable price point for our
medicines. There's nothing we would rather see happen. We have
just announced $30 billion investments to increase capacity to
serve these patients. There is a market we have to operate in
and we negotiate hard to make sure that Americans have access.
We negotiate against the PPMs and give them significant rebate
discounts and fees.
The Chair. Mr. Jørgensen, you're not answering the
question. And look, as you may know, I'm a great respecter of
the people of Denmark. I think you have a social system, which
is very progressive. But I'm asking you a simple question as a
decent human being.
What studies tell us is that because of the very high price
of your products, 40,000 people a year may die in America and
you have not increased production is fine. But what I am asking
you is if you don't act, 40,000 people a year could die, is
this acceptable to you?
Mr. Jorgensen. Any prospects of patients not getting access
to the medicine they need, I think, is terrifying. And we have
to solve this challenge together. I mentioned in my opening
that I don't think any one company can solve that alone. I wish
there were more at the table today so we could have discussion
about how we do that together.
We don't decide the price for patients. That's set by the
insurance companies. I do acknowledge that there are patients
who have poor insurance or no insurance. And if you in the U.S.
do not have insurance, if you have a low income, we actually
have support programs to help those patients. I'm proud about
those.
But they are not a real solution because patients should
have access to medicines via insurance. Because if you live
with a chronic disease like type 2 diabetes, obesity, these are
complex diseases that requires access to physicians. They're
comorbidities you need to have treatment for. So, I strongly
believe we need to solve this within insurance. And when you
are in insurance, there is access to our medicine.
The Chair. Well, Mr. Jørgensen, this Committee has
heard from insurance companies, we've heard from PBMs, we've
heard from everybody in the world and everyone blames everybody
else. But you still have not answered my question. It's a very
simple question. Why Nova Nordisk is charging Americans
substantially higher prices for these drugs than the people in
other countries?
Let me get to another issue. Mr. Jørgensen, you have
told this Committee that you are concerned that if you
substantially lowered the list prices of Ozempic and Wegovy in
the United States, PBMs may take these drugs off of their
formularies and deny access to the patients who need these
drugs. I think you used insulin as an example even.
However, I have received commitments in writing from the
major PBMs that if Novo Nordisk lowered its list price, they
would not limit access to Ozempic and Wegovy, and would not
take these drugs off of their formularies. Given this fact,
will you commit today that Novo Nordisk will substantially
reduce the list price of these drugs in the United States so
that the American people are not paying higher prices, far
higher prices for these drugs than the people in Europe and
Canada?
Mr. Jorgensen. Thank you, Senator, for that information.
That's new information for me. Anything that will help patients
get access to affordable medicine we'll be happy to look into.
I'd just like to make a comment also that the experience as you
also allude to yourself from insulin is one of when we had a
discussion last year in the hearing on insulin. We actually
lowered insulin pricing. That had a consequence.
When we dropped some of the insulin prices, we had our
products dropped from formulary coverage. So, less patients got
access to those insulins. So, I have a bit of concern how this
could play out, but anything that can help patients get access
to the medicines they need at affordable price point, we'll be
happy to collaborate around that.
The Chair. All right. Are you prepared to have Novo Nordisk
sit down with the PBMs who have made that commitment to me that
they will not take your products off of the formulary, sit in a
room with us and work on an agreement?
Mr. Jorgensen. I'll be happy to. As I said, do anything
that helps patients. And I don't know under which conditions
such a promise comes. I haven't seen any of that.
The Chair. Okay. I will get you the--they're in writing,
and I'll get you the letters. All right. That's it for me right
now. Senator Cassidy, do you want to ask?
Senator Cassidy. I defer to Senator Collins for her 7
minutes of questions.
Senator Collins. Thank you very much, Senator Cassidy. Mr.
Jørgensen, you testified that the net price of what your
company is actually paid for Ozempic has declined by about 40
percent since its introduction. Is that correct?
Mr. Jorgensen. Yes, that's correct.
Senator Collins. But the question remains, how do we get
relief to patients at the pharmacy counter? As Senator Cassidy
mentioned, this Committee's examined the role of the middlemen,
the PBMs, in inflating costs. And more than a year ago in May
2023, our Committee reported a comprehensive bill that reformed
PBM practices. And the whole purpose of that bill was to ensure
that consumers got relief at the pharmacy counter.
Unfortunately, the Senate Majority Leader and the Chairman
have not brought that bill to the Senate floor in more than a
year. Could you give us some indication of what the impact on
cost to consumers would be on prices if we had enacted that PBM
reform bill?
Mr. Jorgensen. Yes. Thank you, Senator, for that question.
If we look at it today, PBMs and their insurance companies, or
I think typical insurance companies that own PBMs, a number of
legal entities set up to extract fees from the U.S. system,
they are rewarded based on list price. So, they get a fee based
on list price. So, the higher list price, the more fee they get
for the same job. Which means that, in our experience, products
that comes with a low list price get less coverage. It's less
attractive.
That becomes troublesome for patients because patients who
do not have insurance or have high deductible plans are then
asked to pay the list price. We pay on average 74 percent in
rebates, discounts, and fees, and even more when we are into
Medicaid 340B, ET cetera. So, if we did our business based on
net price instead of list price, that would mean that our
products would be much more affordable for patients. And if we
simply paid the PBMs a small fee for the limited risk and
contribution they make, I think patients would be significantly
better off.
Senator Collins. For every dollar that you sell in
medicine, how much of that dollar goes to rebates, fees, and
discounts that largely do not get passed on to the patient?
Mr. Jorgensen. Yes, for every dollar we make we give 74
cents to the PBMs insurance companies.
Senator Collins. 74 cents of every dollar. Let me switch to
another issue just to make sure that I understood. In your
opening statement, you seem to say that your largest
shareholder is a nonprofit charity foundation. Is that correct?
Mr. Jorgensen. Yes, that's correct.
Senator Collins. Let me turn to another issue. Recently,
your company discontinued production of Levemir, and that is a
popular, long-lasting basal insulin. Ironically, just yesterday
I heard from a mother from Denmark, Maine, whose daughter takes
Levemir and feels that it has unique benefits for her clinical
situation. So, making a sudden switch or change in her
medication is very much of concern to this mother, what led to
this discontinuation?
Mr. Jorgensen. Yes. Thank you, Senator. Any decision to
stop supplying any medicine is a very difficult decision
because we acknowledge that different patients have different
needs. In the case of Levemir, we actually lowered the list
price in the U.S. by 65 percent last year. Just realized that
after we dropped the price of Levemir, the PBMs dropped
coverage. So, it went from being on 90 percent of insurance
schemes to being only on some 35 percent. So, we see a dramatic
lowering of volumes.
As I mentioned in my opening, we serve 30 million people
living with type 1 diabetes in need of insulin. And it's
difficult for us to run high volume manufacturing lines with
small products because it prohibits us from actually serving
all those patients. So, it was a difficult choice we had to
make to make sure that we could sustainably supply enough
insulin for all people with type 1 diabetes. But I do
acknowledge that it comes with some stress for individual
patients, unfortunately.
Senator Collins. Well, I hope that you will be giving
guidance to these families because for some of them, this is a
real blow and they're very concerned about the impact. I want
to go back to the cost issue, which is critically important.
How does your company help individuals who are part of low-
income families, do not have insurance, and simply cannot
afford your drugs?
Mr. Jorgensen. Yes. Thank you, Senator. It's important for
us that we also try to help the most vulnerable patients. So,
we have worked hard to make sure that's coverage in Medicaid
for our medicines. And we also have patient support programs.
For instance, if you live with type 2 diabetes and you are
in need of a product like Ozempic, you can contact Novo
Nordisk. And if you make less than 400 percent of the national
poverty line, which as illustration is $120,000 as a household
income, you can get free Ozempic from Novo Nordisk. And I
believe we're the only company having such a support program.
Senator Collins. If your household makes less than
$120,000, you can participate in your patient assistance
program?
Mr. Jorgensen. Yes. And I don't think it's an ideal
situation because, honestly, patients should have access to
insurance. Because if you live with type 2 diabetes, you're
also at risk of having cardiovascular disease, kidney disease.
So, you need a range of medical support. So, I think we should
have, as a shared objective, we really make sure that people
have access to proper insurance. And when they have that, we
can work with different mechanisms to make sure that when
they're at the pharmacy counter, they can pick up our medicines
for $25 or less in most cases. But that's difficult when you
don't have insurance.
Senator Collins. My time has expired. Thank you.
The Chair. Senator Lujan.
Senator Lujan. Thank you, Mr. Chairman. Mr. Jørgensen,
thank you for being here, sir. In your opening statement, you
said, ``Patients need both affordability and access.'' I very
much appreciate you saying that. Now, Wegovy and Ozempic are
groundbreaking drugs that are making a huge difference in
people's lives. The ability to quiet food, noise, and
successfully manage their weight after so many failed attempts
is truly a life-changing innovation.
But to make a positive difference in people's lives, they
have to be able to afford it as well. I've heard from New
Mexicans about unaffordability. I'll share a story that I heard
from Bernadette. She's a mother of three in Albuquerque, New
Mexico. In October of 2023, Bernadette was prescribed Wegovy
for diabetes and a liver condition. Her insurance denied
coverage of Wegovy three times. Bernadette's Wegovy
prescription would've cost about $1,000 after a $300 discount.
Her doctor then prescribed Ozempic. After two appeals,
Bernadette's health insurance company approved her
prescription. Even with health insurance, Bernadette's Ozempic
prescription would've cost around $1,000 a month. Bernadette
made the difficult decision to not pay $12,000 annually for
either Wegovy or Ozempic, both prescriptions prescribed by her
doctors. She now goes without.
According to JAMA, the adult Hispanic population in the
United States has 45.6 percent obesity incidents. Black and
Hispanic people are more predisposed to having type 2 diabetes,
a condition related to obesity. The median household income in
New Mexico is $62,268, or $5,189 a month. The median household
income for Hispanic families across the United States is
$65,540, or $5,461 a month.
Even with a 40 percent reduction in the list price, the
cost of these drugs represent a huge part of the monthly income
of new Mexicans and Hispanic Americans. I also heard through
your testimony, the coupons or things of that nature that are
included from the list price. Why don't you just sell the drug
at the coupon price if you're willing to give people a coupon
that can afford it instead of that list price that we see on
that board?
Mr. Jorgensen. Thank you, Senator, for bringing up that
question and also addressing this, the needs of Hispanic and
Black populations. I think that's really, really important. It
is not our intention that anyone should pay the list price. The
list price is the starting point for our negotiation against
the PBMs and insurance companies in bringing coverage of our
medicines to patients. And in particular, those you mentioned
here in having a bigger need.
We see that when there is insurance company coverage, there
is a price point of the $25 I mentioned for 80 percent of
patients. And you can say, what about the remaining 20 percent?
The price point is $50 or less for 90 percent of the cases. And
then there are remaining 10 percent where there are either a
situation without insurance, or you can say low quality
insurance where insurance schemes have high deductibles or
certain restrictions on use of the products.
It's important for me to say we don't set the price for
those patients. That's a function of the insurance scheme. But
for those who fall outside of insurance and actually including
the income level you mentioned, we have a support program where
we try to help them.
Senator Lujan. Well, and Mr. Chairman, if I may, Mr.
Jørgensen, Bernadette had insurance. Couldn't afford it.
No. So, I appreciate the statistics and the numbers. She's a
real person, mother of three. There's a problem here. I've not
quite understood the notion of list prices with pharmaceutical
companies and then the price that they're willing to sell the
drug at so they can still make a profit. It sounds like a game
to me and a game that I don't understand. But a game I
certainly open a bipartisan way that we can get to the bottom
of.
I very much appreciate Senator Collins' line of questioning
at the opening as well, legislation that's moved out of this
Committee deserves to be heard on the floor. And I certainly
hope we can get there.
I'm going to move on. Before I do, while I appreciate very
much that the Indian House Service and the VA include coverage
for obesity and for other reasons of this drug, it's still
high. It's still a high cost. And when we look at those
programs as a whole, I'm still very concerned as to what's
happening in that space. But I look forward to visiting with
your team more about that into the future.
Mr. Jørgensen because of the work that was done with
the Inflation Reduction Act, Medicare can finally negotiate the
price that seniors pay for prescription drugs and Medicare. In
your written testimony, you have acknowledged that Ozempic may
be listed in the negotiations due to its high cost. Despite
these contentions that Medicare negotiation will resolve the
price, Novo Nordisk has attempted to block the law when
Medicare sought to negotiate the prices of insulins. These
insulins, by the way, had the list prices of almost $6,000
annually.
Now, as we both know, the court rejected that as well. My
question for you, Mr. Jørgensen, when you mentioned in
your written testimony that you expect Ozempic, your diabetes
product will be included in Medicare's list of drugs for
negotiations, yes or no, should Ozempic be selected for
negotiation, will you commit to not initiating legal action to
stop it?
Mr. Jorgensen. Senator, thank you for bringing up that
question. So, we share the objective of making products
accessible and affordable for patients. No doubt about that. On
the IRA negotiation, we have had some concerns that if it's a
real negotiation, I support that. But if it's a price setting,
I think it'll have unintended negative consequences to access
to patients for innovation.
It's been described as a negotiation, but it's actually a
setting of a maximum price. So, I don't know what price will
end up having for our insulins. I don't know if the PBMs will
include it on formulary at all because of that lower price and
impact on rebating.
I have nothing against negotiating pricing with the
objective of improving affordability for patients. But if it's
not a fair negotiation, but actually price setting, I think
it'll have negative consequences on the innovation being
brought to Americans.
Senator Lujan. Mr. Chairman, as I close, my time has
expired. I would remind you, Mr. Jørgensen, of those words
that you used in your opening statement again, ``Patients need
both affordability and access.'' I certainly hope that rings
true. And I would encourage you to sit down with Chairman
Sanders and the Committee staff associated with that PBM letter
to find a place where you will lower those prices, and do the
right thing, and send the message to everyone. Because your
drugs will save people's lives. 40,000 more people that can't
get them today, many in the community that don't get them
today, and I certainly hope we can get to that place. Thank
you, Mr. Chairman.
The Chair. Thank you.
Senator Cassidy.
Senator Cassidy. I'll defer to Senator Budd.
Senator Budd. Thank you, Ranking Member. Thank you, Chair.
Mr. Jørgensen, thank you for being here.
According to reports, the North Carolina State Healthcare
Plan attempted to limit coverage of one type of obesity drug,
the GLP-1 that we're talking about today for enrollees to avoid
raising premiums. Now, however, CVS Caremark, the state
healthcare plans, PBM informed them that they would lose $54
million in discounts if coverage was limited. So, Mr.
Jørgensen, do you know if these allegations are true?
Mr. Jorgensen. I have to admit, I don't know all the
details of the specifics of North Carolina, but I don't think
we stopped paying these rebates.
Senator Budd. I received a letter from North Carolina
Speaker of the House, Tim Moore, and it includes data on the
State Health Plan's Board of Trustees blaming the Inflation
Reduction Act, not drug spending on the plan's shortfalls. So,
I ask unanimous consent to enter the letter into the record,
Mr. Chairman.
The Chair. Without objection.
[The following information can be found on page 132 in
Additional Material:]
Senator Budd. Thank you.
Mr. Jørgensen, could you describe in as simple terms
as possible how Federal programs like the 340B Drug Discount
Program and reimbursement for prescription drugs through
Medicare Part B actually lead to higher prices, and I would
say, higher list prices?
Mr. Jorgensen. Well, when we set a list price, we have to
take into consideration what are the rebates we have to pay,
because unless we pay rebates into the system too, when we
negotiate against the PBMs, we're not getting access to the
formulary. So, a high list price is more likely to lead to more
access to patients. And on top of that comes additional
payments we have to give when we are in Medicaid, when we are
in 340B programs, ET cetera, where there are additional
payments, we have to make to make products affordable.
It leads to higher prices for those patients who then do
not have access via insurance or some of these programs because
they're faced with a list price. And really nobody should pay
the list price, because that's not how we intend to do
business. But we don't control the price set for the patients
that's done by the insurance schemes. We only negotiate against
the PBMs to make sure that we can move products to patients.
But whether patients get insurance coverage and what price they
pay, we have no impact on.
Senator Budd. It seems like an industry with a lot of
strange incentives. Last November The Wall Street Journal
reported that PBMs often favor drugs with higher list prices.
And I appreciate my colleague, Senator Collins line of
questioning. But the favoring drugs with higher list prices is
because PBMs are reimbursed based on a percentage of the drugs
list price.
As I understand it, that means PBMs are going to make more
money if they cover the higher priced drugs. So, here's for an
example, insulin. One type of insulin had a list price of $274,
while an unbranded version of the same insulin had a list price
of $25. And even though the unbranded version was $250 cheaper,
the PBM didn't cover the cheaper version. So, and my
understanding is only half of Americans have insurance coverage
for that cheaper insulin.
This is a direct result of PBMs facing or favoring the more
expensive type of insulin. So, I understand, and I appreciate
your statement earlier that whatever's best for patients, and I
believe that you and the many great team members that you have
at Novo. So, Mr. Jørgensen, are there ways to reduce these
perverse incentives? And we're asking for suggestions here, and
perhaps this will come in ongoing discussions with the
Committee. But in your time here, do you have some suggestions
to reduce these perverse incentives to deliver savings and
value to the patients in need?
Mr. Jorgensen. Thank you, Senator. We should really unite
around what help patients and if you have the industry making
big risks in R&D, making big commitments into manufacturing,
and then we have to negotiate against PBMs and their insurance
companies not taking much risk and yet benefiting from a
significant deal to the list price. I think that's absurd. So,
if we could stop linking their income to a list price, I think
that would create an incentive that is not as absurd as it is
today.
I would prefer doing business on the net price where I
compete against competitors based on what is the real price for
our medicine and what is the value of the medicine. And these
are medicines that are addressing societal challenges that are
paramount. And we talk about the cost of the medicine, but it's
really the cost of the diseases that's breaking the system.
We have to find a way where we transact in a way where it
becomes much more transparent. What is the real price of the
medicine to really adopt the medicine and mitigate the societal
cost that diabetes and obesity is putting on the U.S.
healthcare system and economy?
Senator Budd. As you observe, kind of outside looking in,
what changes would you suggest that we consider to move from a
list price scenario? So, where you could, and other companies
and competitors even could compete on a net price scenario? And
do you believe that would be better for patients?
Mr. Jorgensen. Yes. If we passed on the rebates we pay to
the PBM, and the insurance companies, and group purchasing
organization, whatever they're called, if we pass that on to
patients then they are faced with the net price at the pharmacy
counter. I think that would dramatically change it to a much
more affordable system where it's the value of the medicine for
the patient, the prescriber that determines what products is
being used, not who gives the highest rebate.
Anything that opens up transparency and make it, really
competitive in a free-market context where you compete on price
and value of medicines, I think, would be a great benefit for
American citizens.
Senator Budd. Thank you, Mr. Chairman.
The Chair. Senator Baldwin.
Senator Baldwin. Thank you, Mr. Chairman. Thank you for
holding this important hearing about outrageous prices that
Americans pay for prescription drugs compared to the rest of
the world. I remain deeply concerned that pharmaceutical
companies continue to put profits over patients. Patients
deserve access to affordable prescription drugs. We have taken
meaningful steps to lower prescription drug costs. For example,
working with Chairman Sanders and other Members of this
Committee, we secured commitments from three companies to cap
the cost of asthma inhalers at no more than $35 per month out
of pocket.
Moreover, by allowing Medicare to negotiate drug prices for
the first time ever, 150,000 Wisconsinites will soon see
significant savings on 10 of the most widely used and costly
medications. Insulin is now capped at $35 per month for
Medicare patients, and next year, out-of-pocket costs will be
capped at $2,000. But there is much more work to be done, and
I'm committed to working with my colleagues to find more ways
to lower the cost of prescription drugs and hold pharmaceutical
manufacturers accountable for outrageous prices.
Today, I would like to begin by discussing patient access
to medications. Mr. Jørgensen, your company was originally
founded to provide insulin to patients with diabetes. For
diabetic patients, the inability to access insulin can be life
threatening. Without access to their prescribed medications,
patients would be left to scramble to find alternatives, or
they would be faced with rationing their supplies.
Mr. Jørgensen, you and your company have attributed
shortages of your products, including GLP-1 and insulin to
manufacturing capacity. You have noted in your testimony that
the overwhelming majority of your company's recent
manufacturing investment is to expand production of GLP-1
medications. However, there have been reports of looming
discontinuation of insulin products and ongoing shortages of
insulin products. So, is Novo Nordisk shifting manufacturing
capacity away from insulin to prioritize manufacturing of GLP-1
drugs?
Mr. Jorgensen. Thank you, Senator, for raising these
important questions. And you're right, we have 100-year history
in diabetes. We are committed as ever to diabetes. We are one
of very few companies who are still doing research in insulin.
We actually have, I would, say a breakthrough insulin being
reviewed by the FDA, and we hope to launch that in the U.S.
market in a couple of years. So, we are as committed to insulin
as we have always been.
When there's been challenges in supply it's not because we
are taking capacity away. There is a market now where insulin
pricing is going down dramatically. I am concerned about the
long-term supply of insulin because we have 100-year commitment
to that, and we will keep producing insulin. But I think it's
becoming difficult for new companies to get in. I think it's
very difficult for biosimilar manufacturers to get into this
market because they can simply not get on formulary.
Right now, entry and pricing is declining still by 10, 20
percent year over year. If this market structure continues,
it'll be challenging to supply insulin. And this is in dire
contrast to the public narrative around in insulin price going
up. So, if it's dramatically going down for manufacturers,
biosimilars are not willing to start producing insulin and cost
goes up for patients. I think that's a good example of how this
system is not working.
But to answer your question, we will keep producing
insulin. We are committed to patients in need of insulin.
Senator Baldwin. How will your company ensure that the
manufacturing capacity for critical insulin products remains
stable within your company? I know you were talking a lot about
other companies, but how will you ensure that manufacturing
capacity within Novo Nordisk remains stable?
Mr. Jorgensen. That's a commitment we have made a priority,
we have made in the company. And I mentioned the
discontinuation of Levemir as a difficult choice to make,
because when a product is going down significantly in volume,
it actually ends up, you can say, destroying the ability to
produce enough on the line. Because every time you have to
produce a different product, you lose a capacity. So, we focus
our manufacturing to make sure that we can still supply the 30
million people around the world who need insulin from an
onwards.
We continue to do research and development to make sure
that people with type 1 diabetes, who I agree with what has
been mentioned today, probably live the most difficult life of
all in terms of having a lifesaving medicine they rely on each
and every day, and they need a company they can trust for
supplying high quality products that live up to FDA
requirements, ET cetera. And we are committed to do that.
Senator Baldwin. I have your commitment that
notwithstanding the manufacturing capacity that you're creating
for GLP-1, that you will continue to have a focus on providing
critical insulin, you will not reduce your manufacturing
capacity in that area?
Mr. Jorgensen. The world market for insulin is actually
declining, so there's less demand, but we are committed to
supply to the patient that has been using our insulin for years
also into the future. And we'll keep investing in innovation
because using insulin is probably the most difficult
pharmaceutical intervention patient does.
Staying in range is difficult. And we have a major
innovation in weekly insulin coming, something most physicians
would say would be impossible to do. Yet, our committed
researchers cracked the code and we hope we are approved for
that in the U.S. in the coming years' time. And that will
simplify how people who rely on insulin can dose their insulin
and take some of the fear away.
Senator Baldwin. Thank you.
The Chair. Senator Cassidy.
Senator Cassidy. I will defer to Senator Marshall.
Senator Marshall. Thank you, Dr. Cassidy. And thank you,
Chairman Sanders. Mr. Jørgensen, welcome and thank you for
attending this hearing.
Look, Novo Nordisk is not the villain in this story. Novo
Nordisk is not the villain in this story. They're a hero. We
should be here celebrating this miracle innovation that's
responding to this diabetic epidemic we have in this country.
It's a miracle drug. 38 million Americans with diabetes that
we're helping out. This nation is spending $250, maybe $350
billion a year treating diabetes, not to mention the loss of
work. And here's a drug that's going to help us treat the
problem.
We all agree on this Committee, across the Senate, that the
cost of healthcare is too much and that prescription drugs are
too high, especially the out-of-pocket expenses. But we need to
figure out who the villain is, who is the real culprit here?
Who's making the money?
On this particular poster, you've said it once, you've said
it twice, everybody up here said the same thing. Whatever the
cost is, whichever number we want to use, Novo Nordisk keeps 24
percent of it, and the PBMs extract 74 percent. 26, and 74
percent. So really, the PBMs are making the bank here.
Let's talk about PBMs for a second here. The real, the real
culprit in this room, in this story. So, these three big parent
companies, the three big PBMs control 80, 85 percent of the
industry. Their gross revenue last year was $800 billion. Their
parent companies' gross revenue, $800 billion.
This Committee's worked so hard on PBM reform. We've not
passed our delinking bill. And I would ask the Chairman to
consider bringing the delinking bill back to the Committee, and
let us mark it up as well. In that linking Bill, PBMs would
receive a flat fee for their efforts as opposed to a percentage
of the sale. So, we go to a flat fee model number, and there
just can't possibly be enough transparency on this issue.
I came to Congress to save Medicare. The people of Kansas
sent me here to save Medicare. I cannot save Medicare without a
miracle drug for Alzheimer's. We're spending, I think, way over
$200 billion on Alzheimer's disease. So, if we thwart the
innovation that this type of company does, it tells people to
stop researching drugs that are going to solve Alzheimer's.
Mr. Jørgensen, let's talk about research and
development for a second. How many years have you been
researching diabetes? And then eventually, probably decades
ago, you started going down this Ozempic path, and how many
other rabbit holes have you-all been down?
Mr. Jorgensen. Yes, thank you, Senator, for the question.
We have 100-year research effort in diabetes. And the past
three decades we have been researching the GLP-1s in starting
in diabetes, and then in obesity. And when we started the
obesity research efforts, everybody thought it was a stupid
idea----
Senator Marshall. Sorry to get through this. So, you've
spent three decades specifically on the GLP-1 model, and I'm
sure that there was lots of molecules that didn't work out. And
at the end of the day, you've spent in excess of $10 billion of
research. And then how much money are you going to spend on
research this year, approximately?
Mr. Jorgensen. We are spending approximately 14 percent of
our turnover on research.
Senator Marshall. Okay. I want to make a quick point here,
that companies like yours benefit from the Trump tax cut, the
research and development dollars. The tax cut on that expired.
Is that true that doing research in this country, you benefited
from that tax cut?
Mr. Jorgensen. We have no, say, funding support from the
NIH whatsoever in our research efforts. We benefit from tax
benefits in different situations.
Senator Marshall. The R&D, I would write the R&D off over a
year as opposed to 5 or 10 years, would be a significant--would
prevent you from--or decrease your reinvestment opportunities.
Mr. Jorgensen. Yes, perhaps. I don't know the specific data
in terms of how much we benefited from it.
Senator Marshall. The one thing I am disappointed in your
company, all big pharma, is the marketing that they do. I think
that the marketing is very influential. I really think that
Congress needs to go back and revisit that as well. I think
that the marketing is so good. There's people on this drug that
shouldn't be on it and are being taken advantage of. And so, I
do think we need to go back and look at that.
Again, instead of coming after the hero of this story, we
need to look in a mirror. America needs to look in a mirror.
That nutrition is a big problem in this country and lack of
activity. The Chairman, Ranking Member, all of us have worked
on Community Health Center Fund, the center of funding. I think
that's where the opportunities to work on the nutrition
problems remains.
It's frustrating to me that Congress can spend $1 trillion
dollars on the military. Medicare can spend $1 trillion
dollars, but we can't spend $3 billion on primary care, $3
billion to address the primary care needs of this country,
which I think would have a big impact on driving down the need
for these types of expensive drugs.
America, I said it for 20 years as a physician, that
America suddenly wants to drive through healthcare, and we want
to drive through a fast-food service that gives me gives
medicine to fix our problem rather than addressing the real
challenges before us, which is our nutrition in this country is
horrible. So, I think that's something we need to continue to
work on.
The other thing we can still work on is bringing
competition, promoting competition to you. We'll bring this
price down. We've passed legislation, the President signed
legislation that helps drive biosimilars and generics to market
more efficiently. There's several in the hopper, so to speak,
but still, the FDA remains very inefficient. Very inefficient.
The FDA should focus on the safety of the drugs, and then let
the physicians and the patient decide if they're right for
them. And that type of a model will drive down that process by
years.
I'll just close, one more time, emphasizing that this
Committee needs to demand that the leader bring our PBM reform
to the floor, but we need to include that delinking bill. There
are other opportunities to drive this price down. Again, Novo
Nordick is not the villain in this story.
Thank you. I yield back.
The Chair. Thank you.
Senator Hassan.
Senator Hassan. Thanks, Mr. Chair, and to you and Senator
Cassidy for this hearing. Mr. Jørgensen, this year, Novo
Nordic abruptly discontinued the drug Levemir. And I know
Senator Collins raised this with you, but I want to follow-up
on it a bit. Levemir is a critical insulin product, and one of
the few long-acting insulins approved for use during pregnancy.
By discontinuing Levemir in January 2024, Novo Nordisk
interrupted the diabetes care plans of millions of Americans
with only a few weeks' notice. Will Novo Nordisk agree to
provide any interested company with the necessary information
and drug formulation to make Levemir?
Mr. Jorgensen. Senator, thank you for the question. Any
decision to take a product off the market is a very, very
difficult decision. And I have to explain why we had to do
that. We last year reduced the price for Levemir. We dropped
the price yet to find that PBMs dropped access to Levemir. So
much less patients have access to it.
Senator Hassan. I understand that, but my question is, now
that you're not making it and there are still patients who need
it, will you provide necessary information and drug formulation
to other pharmaceutical companies that decide they want to make
it?
Mr. Jorgensen. We have given a year's notice. More than the
weeks you mentioned.
Senator Hassan. Sir, my question is a direct one, please
answer it or tell me you're not going to.
Mr. Jorgensen. We have collaborated and followed-up with
all those that were brought forward as potential manufacturers,
but we have not found anyone interested in manufacturing it.
And if there is a company interested in manufacturing it, or
the government wants to manufacture it, we'll be happy to
collaborate. The reality is that the market is disappearing for
Levemir because of how it's contracted. And I don't make a
decision like that and an easy decision.
Senator Hassan. I understand. And have you worked actively
to find a manufacturer to take on Levemir? It sounds like
you've had some conversations, but are you continuing the
outreach, because there are some patients who really need this
medication?
Mr. Jorgensen. Yes. The companies we know of have not shown
interest. All the companies that have been mentioned as
potential partners on this, we have discussed with and none
have come forward as being interested.
Senator Hassan. I will follow-up with you in writing to ask
for specific steps that you'll continue to take over the next,
let's say, 3 months to find a manufacturer for this drug.
Senator Hassan. I'd like to move on, if I can, because in
response to a question from Senator Lujan about your pricing of
Ozempic and Wegovy, you said if you drop the price of these
obesity drugs, PBMs would take them off their formularies. But
here's what the PBMs say. Cigna, Express Scripts, the question
they were asked is, if Novo Nordisk lowered the list price for
Ozempic and Wegovy tomorrow, and the net cost stayed the same
or went down, would your PBM limit access?
Here's what Cigna Express Scripts said. ``No. If Novo
Nordisk lowered their list price for Ozempic and Wegovy
tomorrow to a price that was the same or lower than current net
cost, that change by itself would not result in less favorable
formulary placement. To support this claim, the company
provided an example. It did not disfavor a competing weight
loss product, Eli Lilly's Zepbound, even as it launched at a
list price 20 percent lower than Wegovy.
Here's what UnitedHealth Group, Optum RX, said. ``No.
Assuming the net price remains the same or lower, lowering the
medicine's list price would not lead to less favorable
formulary placement by Optum Rx, particularly for high-demand
drugs like Ozempic and Wegovy. To be clear, lower list prices
and lower net prices support formulary placement and access''
CVS Caremark said something similar. It said, ``This simple
answer is no. In fact, we can point to recent history as a
proof point when Novo Nordisk drastically reduced the price of
their insulin NovoLog in 2023. It did not result in a less
favorable formulary placement with Caremark.''
They were also asked if Ozempic and Wegovy were available
for $100 per month or less, what impact do you expect that it
would have on coverage and access? Cigna Express says, ``If
Novo Nordisk lowered the price for plan sponsors to $100 or
less per patient per month, we would expect the vast majority
of our clients to expand coverage and access to these products
for diabetes and weight loss assuming clinical evidence
continues to support efficacy and safety.''
CVS said, ``Lower list prices would open up access for
obesity treatment.'' In particular UnitedHealth Group Optum RX
said, ``Given the significant price differential for these
products across borders, a decision by Novo Nordisk to align
U.S. pricing more closely with those in other countries would
meaningfully increase access for U.S. patients.
With that in mind, would you please commit to lowering the
list price of these drugs?
Mr. Jorgensen. Senator, allow me to share a few points
before I answer your question----
Senator Hassan. Yes.
Mr. Jorgensen [continuing]. Is that Okay? So, the
experience we have is one of losing access when we lower price.
I know you can always find specific plans that did include
insulin with a lower price, but the broad totality is that less
patients have access to our medicines when we have lowered the
price. I understand that perhaps the PBMs have changed their
mind, and I'll be happy to collaborate with them on this
because anything that helps patients to get access and
affordability, we are supportive of.
The rebates that were shown, before we hand those out,
they're not in our books. So, if we can go through a de-linking
model or any model where we do business based on net price,
I'll be more than happy for that. But it's not how history has
told us.
Senator Hassan. Well, but you've now got these companies
publicly committing to continuing access and increasing access
if the list prices are lowered. So, I would strongly recommend
that with these companies on the record, they represent a huge
amount of the covered patient population in the United States,
that you consider strongly lowering the list price.
Lastly, I just want to note that one way of reducing drug
prices is encouraging the entry of generic and biosimilar
medications, which can provide lower cost options for patients.
So, I will follow-up with you to, I hope, get a commitment that
Novo Nordisk will not stand in the way of other companies
coming up with lower cost versions of these drugs if the
companies currently have them in development.
Senator Hassan. Thank you, Mr. Chair.
The Chair. Well, I just want to pick up on Senator Hassan's
important point. We have in writing, and we will certainly
share it with you, commitments from the three major PBMs that
if you substantially lower your list price, they would not
limit coverage.
Now, what I'm hearing from you is that you are prepared, if
an audit is prepared, to sit down and work with those three
companies. I am prepared to negotiate that work with you. Do I
get your commitment that you will sit down do with the three
companies to make sure that they keep that commitment?
Mr. Jorgensen. Yes. Anything that can help patients get
access, I'm supportive of, and that also includes collaborating
and negotiating with anyone who can help that.
The Chair. All right. But picking up on Senator Hassan's
point, if in fact they keep their commitment, are you then
prepared to substantially lower the list prices in the United
States?
Mr. Jorgensen. I have to understand what this entails
because when I hear statements that PBMs would accept a low
list price product, it needs to go all the way to patients. So,
it means that they talk about insurance companies being their
clients, it's actually their owners. So, it needs to get to
insurance schemes, and it needs to get to the patients
because----
The Chair. I am aware of that. But I'm asking you, again,
will you work with this Committee and the PBMs?
Mr. Jorgensen. Yes.
The Chair. No. 2, if in fact they keep their word, I
understand that it's complicated, will you in fact
substantially lower list prices in this country?
Mr. Jorgensen. If it works in a way where patients get
access to a more affordable medicine, and we have certainty
that it actually happens and not like when we load list price
prior rounds around that less people got access to our
medicines.
The Chair. Right. I understand that. We will be positive
toward that. We will be in touch with you and the PBMs to work
on this. And I want to thank Senator Hassan for that line of
questioning.
Senator Cassidy.
Senator Cassidy. I'll defer to Senator Romney.
Senator Romney. My goodness. Senator Cassidy, thank you
very much. Appreciate that.
Mr. Chairman and Ranking Member, appreciate the chance to
have this witness here. Appreciate your willingness to be here.
I don't know whether it's voluntary or not, but given the
nature of our hearing, so which are mostly opportunities for us
to talk and you to listen. I appreciate your willingness to be
here.
I guess there were a couple of models that one could have
for developing new drugs. One was the idea of a patent, which
we'd say we want the private sector to invest massive amounts
of money to developing new products, new innovations. And then
if one works, to have a patent to allow you to charge whatever
you want to recoup a return on investment and make potentially
enormous profit. That's one model.
The other model is to say, no, we, the government are going
to develop drugs, and we're going to spend our money and keep
the price down. Sometimes we live in a fantasy land, which is
we want you to invest and the industry generally to invest
massive amounts of money, but then we want you to keep the
prices low. Like, that's fantasy land. That's not real. That's
not reality.
You, under our system, are able to charge whatever you
believe the market will bear and get as big a profit as you
could possibly get. I presume that's--you have taken--you're a
fiduciary for your shareholders. You're trying to maximize your
profit. Is that right?
Mr. Jorgensen. Senator, I agree with you that I'm not aware
of any government that has developed a product. So, it's
typically done in the private sector. And that can only happen
if there's patent protection. I don't think we set our price in
a way where we just look at our shareholders because we have
also an obligation to set a price that it's available and
affordable for patients.
Senator Romney. Yes. There's no question long-term. Your
profit is going to be enhanced if people believe that you are
good guys, not bad guys. And so, there are a number of
considerations in considering what's the best return. But there
are a number of folks that would like you to invest a lot, but
then to limit what you can get back and somehow ascribe
malevolent intent if you charge a high price. It's like that's
the system we have. There are alternative systems which is, no,
no, we're going to limit how much you can get back in.
I look around the world, I don't recall a lot of drugs
coming from China, and Russia, and North Korea, and Iran. We
don't see a lot of innovation coming from there. But yes, I
would love a setting where you invested massive money, but then
you gave us the products cheap. I mean, that's just not
reality. And I mean, I wish there were a way of that to happen,
but I don't see how that happens.
I very greatly appreciate the innovations that have been
made by the industry. I do wonder what the reason is for the
differences in price between what's available here in this
country and what's available in some other countries. And I'm
not now just talking about Wegovy and Ozempic. And I don't know
the pricing differences to the extent they exist around the
world, but we in this country often talk about how products are
much cheaper in Canada, and the UK, and France, and Germany
than they are here. Why is that? Why are we so out of line with
the rest of the world in terms of the pricing that comes from
the industry, not necessarily your own company, but the
industry at large?
Mr. Jorgensen. Yes. I think there are Senator a number of
differences when if you, for instance, compare U.S. and
European market. And if you look at all the innovation that's
made, a lot of it is made in this country. So, the economic
activity taking place here, all of those innovative products in
80 percent, 85 percent of the cases get to the market in the
U.S. It's only around 40 percent in Europe.
In Europe, there's a sanction of healthcare. There's a
rationing of who gets access. So, the latest innovations are
not getting to my countrymen, but they are in most cases
getting to the U.S. So, there's a different perspective in how
you look at innovation. And when you look at the diseases we're
talking about here, diabetes and obesity, these are very, very
expensive diseases. And we talk about the cost of the medicine,
but typically in these diseases, the cost of the medicine is
less than 10 percent of the total disease burden.
If you look at chronic kidney disease where we have shown
in our data that for people living with type 2 diabetes and
start using Ozempic, you reduce the risk of developing chronic
kidney disease by 24 percent. And actually, a quarter of all
Medicare costs goes to people living with kidney disease.
Using innovation is a really big opportunity for driving
down the cost of the U.S. healthcare system. And there is a
general openness for that type of innovation in the U.S.
market, which is not always the case in Europe. That comes with
a cost, but it also leads to significant benefits for the
individual Americans, but also for the healthcare system in
saved cost for these chronic diseases.
Senator Romney. I would anticipate that in European
countries that don't have access to some of the lifesaving
products that are available here, that there would be a huge
hue and cry on the part of the public saying why can't we have
these products? But those that are available in both places, I
don't understand why the price should be different. If the
French, and the Germans, and the Canadians honor our patents,
would the companies not be free then to charge the same price
there that they charge here? Why charge a lower price there
than is charged here?
Mr. Jorgensen. Senator, that's a great question. When we
compare the prices, it's not unable to comparison. It's
typically different prices that's being compared, and it's
typically the list price in the U.S. And in the U.S., there's
not one price, there are a number of different prices.
When we sell our products in Medicaid, in VAs, we get a
really, really low price. We even have support programs where
we pay for the medicine for Americans. There are no other place
where we give products away for free. That's only in the U.S.
When I look at the government, what the government pays for our
insulins, that is now less than what many governments pay in
Europe. But that's typically lost in the whole translation and
referencing to list pricing, which is not the price we get. So,
unfortunately, as also the Chairman said at the opening, it is
a very complex market and very complex healthcare system that
creates a lot of misunderstandings.
Senator Romney. Yes. I must admit, I agree. The complexity
of our PBM system is such that it's very hard for us to figure
out just exactly who's getting what and why. And I happen to
believe that one of the reasons our healthcare cost is so
expensive, particularly as it relates to pharmaceuticals, is
the opaque nature of our pricing in this country. Thank you,
Mr. Jørgensen.
The Chair. Senator Hickenlooper.
Senator Hickenlooper. Thank you, Mr. Chair. Thank you, Mr.
Jørgensen, for taking the time and indulging us for all
these questions. I think there's some unique histories in the
United States in terms of government's ability to negotiate
prices. We don't have to go into that now, but it is a part of
it. Certainly, we're seeing PBMs come here and they point the
finger in one direction, and the large pharmaceutical companies
point their finger in the other direction. I think most
Americans hear that as a hustle, as a rigged game. And they're
pointing, get it out of here.
You look at diabetes diagnoses, they're expected to rise
considerably over the coming decades. By 2030, they're saying
55 million Americans will have type 2 diabetes. We could see a
nearly 700 percent rise in the number of young people with type
2 diabetes in the next 40 years.
Obviously, this is a miracle drug, and I think by any
measure, we should recognize that right off the bat. And I
think the point that the lower price--offering a lower price
insulin made the axis of that specific drug Levemir, whichever
one it was, decrease by almost more than half. That should be
frightening. And at some point, we might want to figure out how
to get the PBMs representatives and the pharmaceutical
companies here together, and let both sides in an open
discussion suggest solutions to this because it's not
sustainable going forward.
One point I want to make, we have a company in Colorado
calledHealth that's leading the way to address some of the
issues around weight management and long-term solutions to
patients with type 2 diabetes. And in a recent study, they
provide coaches and help people navigate what they're eating
and when they exercise.
found that patients with type 2 diabetes who stopped taking
a GLP-1 and remained on a nutrient or a nutrition therapy
program, did not regain weight after a year and had similar
blood sugar control as those who are still on the drug.
Now, obviously, many patients may have an aggressive form
of obesity, the appetites that--I don't know, you can argue
that the appetites in people have evolved over 90 percent of
the time in our evolutionary history. We were hunters and
gatherers. So that's a very hard thing for many people to
control. But for those patients who can control it, a company
like Virta Health can really provide benefits. Are you doing
any studies to look at that as a kind of a combined therapy or
an alternative therapy that people can move on to that's less
expensive?
Mr. Jorgensen. Yes. Thank you Senator. I think you raise a
really good point that also alludes to that patients are
different. We probably know of people who live with say, an
aggressive form of obesity. And no matter what they do, they
put on weight. And most likely, they'll have to be on really
efficacious new innovations in the future to manage their
weight.
But we might also get to know of patient segments where
after efficacious treatment and perhaps with a coaching
solution, they can change lifestyle to a degree that the
coaching motivates them to reinforce that. And they can do
without medicine. It's still a bit early days. And I think we
have to acknowledge that for long we have looked at people with
obesity, and to some degree, type 2 diabetes as a self-
inflicted condition.
I think we should be careful about saying that if you just
get a coach and get this digital report, you're taking care
of--because then I think we are letting patients down in need
of significant help. But I believe that there'll be a market
for such a solution and it can coexist with our products, and
it can also help take the burden off the healthcare system over
time. So, we don't want to move people on medicines and keep
them on medicines they do not need. But I also note that many
Americans will need to have help, of course, for a long time.
Senator Hickenlooper. I raised the question. I was
specifically trying to make sure that there are different
groups of people, and obviously, the notion that we everyone
can control their appetites is ridiculous. And I think we have
disadvantaged people that have differing genetic makeup and
physiological character. We put them in unfair positions.
Let me go off on a different direction and talk a little
bit about sugar, and diabetes, and then some of the other
issues that can arise. Roughly, almost three quarters of our
food supply in the United States now is made of what we call
ultra processed foods. Researchers have started studying the
possible connection between these ultra processed foods with
higher rates of diabetes and then also dementia later in life.
Certainly, researchers are still working to understand the
exact connection here. So, I'm not saying this is thought or
has been consequentially defined, but there is evidence that
diabetes can lead to higher rate of inflammation as well as
damaged blood vessels, which could impact cognitive functioning
as we age.
Can you speak on research that Novo Nordisk has done on
testing the effectiveness of GLP-1s or GLP-like pharmaceuticals
in reducing the risk of dementia. As the company, have you guys
got research on this connection that would be optimistic?
Mr. Jorgensen. Yes. Thank you, Senator. You raise a really
good point. And our GLP-1 medicine, Semaglutide, works in an
anti-inflammatory way, which has tremendous benefits for
patients. It not only lowers weight, but it also reduces risk
of cardiovascular disease because of these anti-inflammatory
properties.
We are now also testing it out in Alzheimer's disease where
we hope we can show in data, end of next year, that being on
this medicine can bring benefit for people with Alzheimer's
disease. So, this whole cardiometabolic disease state that is
leading to a number of comorbidities is actually also a leading
cause of number of cancers. We aspire to show in continued
massive investments in R&D that we can document these benefits
and have them FDA-approved.
Senator Hickenlooper. Great. Thank you. And I'll just end
with in terms of the whole tenor of the discussion that Henry
Ford was famous for coming in and actually dramatically
reducing his prices so as to dramatically increased volume and
dramatically succeeded in a level that nobody really imagined.
And I think you, with a miracle drug like this, you might have
that same potential where actually lowering the price could
dramatically change not only the success of the pharmaceutical,
but also the success of the business.
The Chair. Senator Cassidy.
Senator Cassidy. Thank you, Mr. Jørgensen, thank you
for being here. Mr. Jørgensen, you had mentioned that--
just to clarify for the record, that Ozempic would be available
with a patient assistant program, a PAP, if they were insured
but they had a high deductible. You did not mention that for
Wegovy. So, if a patient has a high deductible and or has a
health savings account and they're taking Wegovy for obesity,
is there a patient assistant program for them? Is there some
other assistance for them to be able to afford?
Mr. Jorgensen. Yes. So first to clarify what we have on
Ozempic. If you have an income less than 400 percent of the
national poverty line, you can qualify for free Ozempic if you
have a high deductible plan. Unfortunately, when you're inside
insurance, if you actually got, say, a product for free from
Novo Nordisk, or you bought it at, say, a cash program, the
insurance company would not count that against your deductible.
So, it wouldn't help you.
Senator Cassidy. Wait a second though. If I have a high
deductible health plan with a health savings account and say
the drug is whatever it is, $900, and I've got a deductible of
$2,000--let me make sure I understand this one--that your
patient assistant program would not assist them. And you're
saying it's because our net price is whatever it is, $600,
would be willing to make it more affordable, but that this
would not--the patient would not benefit. I lost you there. I
lost you there.
Mr. Jorgensen. Yes. So, if you instead--so when you're in
the deductible space, we have still given the rebate to the
PBM, but it's not shared with the patient. And if you went out
and bought, say, a lower price product, because we also have a
cash program, that spend would not count against your
deductible because you have to spend that within, say,
insurance. So, it wouldn't help the patient. And that's a
function of insurance scheme design. That's not something we
control.
Senator Cassidy. No, it actually would help the patient on
the other hand, because she'd be paying much less, but now
she's paying $900. But I think I'm hearing from you, in the
contractual relationship that you have with the PBM, that
actually seems to be what is first being considered is
contractual relationship between your company and the PBM and
not the bottom line for the patient. Because the bottom line
for the patient, she's paying $900 instead of nothing. Is that
a fair statement? So, let's assume that she has less than 400
percent of Federal poverty. So, she's less than 400 percent of
Federal poverty and she's got a high deductible plan and/or a
high deductible HSA. So, she would not qualify for the patient
assistant program.
Mr. Jorgensen. She would not, but even if she did, she
would still have the deductible.
Senator Cassidy. I get that, but she would use that for
another thing. She'd use that for an Urgent Care visit as
opposed to the drug benefit.
Mr. Jorgensen. Yes, that's true. We feel it's not
appropriate to have deductible plans for patients living with
chronic diseases that on an ongoing basis needs to have access
to the healthcare. So, when they come to the beginning----
Senator Cassidy. That was a value judgment on the basis of
the company for the patient. I'll just say that because
oftentimes those policies are otherwise more affordable. Let me
ask, if the patient is uninsured, would she qualify for this
less than 400 percent of Federal poverty being able to get the
patient assistant program?
Mr. Jorgensen. Yes, for the diabetes product. We have not
yet established it for the obesity program. We have a cash
offering at approximately half the price that patients can use.
We feel that right now, where we are building, say, insurance
coverage and also negotiating access to Medicaid, that's our
focus. And that's where we're giving priority to now in terms
of supporting patients.
Senator Cassidy. Let me move on. One of the tensions here
that I mentioned is innovation versus the ability to afford.
And I just want to echo what Marshall and Romney said. The fact
that you-all and others are doing research on the impact of
these drugs to prevent Alzheimer's is fantastic. I mean, this
could possibly be part of what makes Alzheimer's less of a
scourge. And that takes money.
When someone says they can produce it for $5, but they're
not going to produce the $30 billion-worth of research, that
would find another indication for how we go forward. So, I
think we need to acknowledge there is that, but it is my
impression that the United States is paying for this research
and that the other countries are not.
I'm sure that Chairman Sanders asked, if you're making
money in Germany, of course you're making money in Germany,
you're making money on the margin. But I don't think I--it's my
impression, if you will, that it's not the Germans who are
paying for the ongoing research as to another indication.
Now, I say that you don't have to respond to it, but I'm
going to surmise that to be the case. The Trump administration
proposed international reference pricing in which you took a
market basket of developed countries; Germany, Japan, Great
Britain, whomever, and you put them as a market basket. And the
U.S. would pay some multiple. Now, from my mind, that would
force your company and others to go back to the Europeans and
say, wait a second, no longer is the United States going to pay
full freight for the research. You also have to contribute.
They may pay a little bit more, but nonetheless, you have to
pay a little bit more.
What thoughts do you have about the international reference
pricing that was proposed by the Trump administration?
Mr. Jorgensen. Senator, thanks for bringing that up. I
think, again, we need to really get into what is then the price
we're talking about, because if you----
Senator Cassidy. Okay. Now, I will accept that you have to
design it correctly, but I'm asking more about the concept.
Frankly, I think the Trump administration had kind of a--there
were some flaws with it, but if you could address those flaws,
what about the concept that there should be a market basket,
and if the U.S. is not going to pay for all of the R&D, maybe
more, but not all, and that in effect, this may force the
companies to negotiate a little bit harder with the Europeans.
Conceptually, what do you think about that?
Mr. Jorgensen. I think it should be fair in who pays for
innovation. I mentioned also before that a significant of the
innovation never is launched in Europe. So, a number of the
breakthrough therapies only make it to Americans. So, Americans
benefit from the----
Senator Cassidy. I accept that. But I'm going to come back
to the concept. Let's assume that we could imagine a way in
which some of the flaws of the previous proposal were
addressed. What about the concept of yes, there'll be a market
basket of developed countries that typically are paying full
freight. It wouldn't be the PEPFAR Program in Africa paying
pennies on the dollar, and that the U.S. would pay some
multiple, but it would be a lower multiple than we're currently
paying.
Mr. Jorgensen. We'll be happy to look at that. I think
we'll find that the perceived multiple is much lower than we
actually think. I just mentioned the example of insulin. Today,
the U.S. Government pays less for insulin than typical European
governments. Yet, we talk about insulin being more expensive in
the U.S. than it is in Europe. That's not the case for the
manufacturer. So, we need to decompose the complexity to get to
what is the real price, and I'll be happy to contribute to----
Senator Cassidy. I accept that. I also want to point out.
There's been a lot of faith being placed in PBM saying that
they would pass through a lower price. But I do want to point
out on the 20th, The Washington Post had an article speaking
about how the Federal Trade Commission has indicted the three
largest PBMs for manipulating the price of insulin.
One of them said rebates is our sweet drink, or something
like that. And so, I'm hoping that they would be sincere on
that. But I will note, and by the way, they dispute that--PBMs
are disputing this, but there was this file by the FTC and with
the Chairman's permission, I'll submit that for the record.
The Chair. No objection.
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Senator Cassidy. Then, my last question before I move on,
before I kind of let others go is--I'll stop there. I may have
a second round, but I'll stop there.
The Chair. Senator Kaine.
Senator Kaine. Thank you, Mr. Chair. And I want to pick up
right there. I am very proud of the work that this Committee
and Congress has done on the prescription drug pricing issues,
the Inflation Reduction Act, capping insulin, capping and then
progressively reducing out-of-pocket costs for folks under
Medicare Part D. Negotiated pricing, supported all of those
things.
The great thing about the IRA, it passed by one vote. So,
I'd tell everybody I was the deciding vote on all of these
matters. We were all the deciding vote, all of us who voted
yes. And some of those provisions weren't loved by the
pharmaceutical companies, but I've voted for them and I'm proud
of them.
But I have come to conclude along with a number of my
colleagues that the focus on pharmaceutical companies is
something I support. We're letting PBMs get away scot-free. One
industry researches, one doesn't. One industry produces
lifesaving treatments, one doesn't. One industry is super-duper
profitable and another one profitable.
The one that's the super-duper profitable is the one that's
not doing any research and not producing any lifesaving
innovations. One industry is under fairly intense scrutiny by
this Committee in Congress and one isn't. And it's the one
that's the super-duper profitable one that is not researching
and not producing products that is getting away scot-free.
In May 2023, we passed a great bill out of this Committee.
I think it was actually four bills. And if I remember by
memory, I think the votes were; 18 to 3, 18 to 3, 19 to 2, and
20 to 1. Overwhelming bipartisan bills, finally to regulate
PBMs. And I'm disappointed that those bills haven't gone
anywhere.
I turn on my TV, and I see the PBMs running all kinds of
ads against Congress, telling Congress not to vote for this
scary PBM reform bill. If we're going to bring prescription
drug prices down even more, we shouldn't let up on having Mr.
Jørgensen and other CEOs here and pressing them. But we
got to get serious about the PBM reform piece of it.
Mr. Jørgensen, you were here, I'm just going to go
into this. You were here in May 2023, and I asked you a
question about the connection between list price and formulary
placement. And I will say, Chairman Sanders, this was the
single best hearing I've attended in 12 years in the Senate.
The hearing where you had both the PBMs and the pharmacy CEOs
together. Because you're familiar with the phenomenon and
everybody blames the party that's not in the room. We had them
all at the same table.
You and your two CEO colleagues testified that PBMs prefer
the drug with a higher list price, and it's difficult, if not
impossible, to get a formulary placement for a drug with a
lower list price. And that's because they often make a profit
on the discount or rebate, they can negotiate off a list price.
And this perverse incentive artificially keeps drug prices too
high.
Then I followed up and asked this question to the PBM
witnesses, and I asked about this, and as you might expect,
they were not direct in their answer. I asked one witness, ``So
you do not have any fee structure in your company where you
collect a fee based on the percentage of the list price.'' The
response I received after a long pause, ``We certainly may have
a few in our client base.'' Everybody in the room knew that
answer was a complete dodge. And that was over a year ago.
Senators Marshall, Tester, and I had been working for over
a year on a bill that would address this issue. The DRUG Act
would delink the list price of a drug from PBM profits in favor
of a flat fee. We had hoped that might have been included in
the markup this Thursday. I'm sorry that it won't be, but we're
going to continue to make it happen.
Color me skeptical that an industry that is now giving us
pie in the sky statements about what they're willing to do, but
that's all, that's also buying advertisements on TV trying to
attack Congress for doing PBM reform, color me skeptical that
they're going to come to the table and suddenly have a
conversion experience, and start doing the right thing.
But I guess one evidence of whether they're doing the right
thing is since you were here in May 2023, have PBMs changed
their practices, or are they continuing to favor higher price
drugs on the formulary and make it difficult to put lower price
drugs on the formulary?
Mr. Jorgensen. Thank you, Senator for the question. We have
not seen a wide uptake of the insulins where we lower the
price. They can always find special formularies where, where
they're present, but we have reduced access to those insulins
compared to other insulins. So, like you, I'm also a bit
skeptical, but I'm willing to explore the opportunity of what
we can do together all of us to benefit patients living with
these diseases.
Senator Kaine. I mean, as a general matter, you might think
if the PBM saw the HELP Committee vote a bill out to the floor
that was going to put some significant regulation on it by an
overwhelming bipartisan margin, they would think, man, maybe we
better improve a little bit. I've seen no evidence of
improvement. I see ads on TV attacking Congress and telling
them not to do PBM reform. So, I want to get the balance right
here. I'm going to continue to vote with this Committee to
focus on pharmaceutical companies and bring down prices. And if
the pharmaceutical companies don't want to negotiate for
prescription drug pricing under Medicare, I stand with those
who think negotiation is a good idea.
But we're letting a huge part of this problem that afflicts
the everyday American who's trying to afford prescription
drugs. We're letting them go scot-free, and we've got a good
bill on the floor right now that I think with some improvement
could do a great job. And, I hope we'll take it up, and I hope
we'll devote the same attention and focus to the PBMs as we do
to the pharma companies.
With that, Mr. Chair, I yield back.
The Chair. Senator Braun.
Senator Braun. Thank you, Mr. Chairman. We've had so many
discussions like this, and I wish I had a big something to hold
up, but I want to just talk about this. It has nothing to do
with pharma. It happens, it has everything to do with a system
that's broken with no transparency, no competition, barriers to
entry, and by the way, a consumer who doesn't have the tools to
really measure what the best value is.
This is a case in California that impacted a sophisticated,
self-insured plan and it had a psychiatric underpinning to it.
But how that could ever end up being $4 million, that's what
the company paid for that case. A self-insured company that's
going to be a lot more sophisticated than any individual would
be. Cigna, the insurance company, got $2.5 million of what the
company paid.
Another multiplan, TPA, got about $700,000. The provider
that actually provided the service, in other words, to affect
the cure or the remedy, got $875,000. They are suing the
insurance company because they think they didn't get paid
enough. And who got screwed was the company and the patient
when it was a $4 million claim. And the provider that provided
all the services charged only 875 and they made a profit.
That means the claim was probably 10 times the amount of
the underlying cost of the service. That's one side of
healthcare. Hospitals used to be about one-third of the
healthcare dollar. Practitioners, nurses, and doctors, maybe
independent pharmacists, throw them in there, at about one-
third. And then pharma and insurance splitting the other third.
So, the whole thing has gotten convoluted.
Then we're talking today about your industry and I come
from the world of distribution. And in any other industry,
there's full transparency, competition. The consumer drives the
dynamic. That's why you don't get by with all the stuff we're
talking about. Your business is largely one of heavy fixed
cost. Is that correct?
Mr. Jorgensen. Yes, that's correct. And research.
Senator Braun. Yes, which that'd be part of it. Research.
What are your variable costs, generally, on a drug like this as
a percentage of your--whatever you're selling it for?
Mr. Jorgensen. That's perhaps 20 percent.
Senator Braun. It's very low. Are you making a profit on
your Ozempic product when you're selling it to Australia for
$87 and you're selling it to the U.S. for 936? Are you making a
profit at $87?
Mr. Jorgensen. Yes, we are. And the price you mentioned in
the U.S. is not what we get. That's the list price.
Senator Braun. What are you getting in the U.S.? What
price?
Mr. Jorgensen. I mentioned that on the average for our
products, we give 74 percent in rebates to PBMs----
Senator Braun. That was a chart that Senator Marshall----
Mr. Jorgensen. Yes.
Senator Braun [continuing]. Held up that PBMs are making 74
percent and you're getting 26. So, you've got a screwed-up
industry, No. 1. When I've talked to other pharma folks, they
regret that PBMs ever came into it. It would seem like since
you make the product that you could disassemble them or do
something that would go around it, if in fact this place won't
do something about it. Have you ever thought of that?
Mr. Jorgensen. It's very difficult, Senator, because they
control what insurance is put in front of patients. So, they
have integrated themselves with insurance companies. And we
negotiate against the PBMs, but they're owned by the insurance
companies. So, no matter what we do, they decide what products
patients----
Senator Braun. Okay. And I think we--that's kind of the
conundrum, but you're making a profit at $87. And of the $936,
it would be the list price, is that total being split between
you and the PBM? I know you give big discounts to the PBM. Why
do you give them such large discounts for them to make that
much money?
Mr. Jorgensen. On this, we have a high list price and give
them rebates. We are not making it, the insurance formulary.
So, they make a fee based on the list price. So, you mentioned
distribution. They don't get a flat fee for the distribution
they give.
Senator Braun. After you give the discounts and you do
everything, what is your revenue on Ozempic, roughly?
Mr. Jorgensen. I don't have that number from the top of my
head. So, on every----
Senator Braun. That'd be something I think it ought to be
on the top of your head because most of us would want to see
that so you can make the case against PBMs. And that basic lack
of transparency, that to me comes from the top, the cloaks, the
system in general is what is impacting the future of why in our
own Country it's 18 percent of our GDP. And from Canada to
Europe, it's 10 to 12 percent of our GDP. Eastern Europe is 6
to 7 percent.
Yes, rationing is maybe going to be one of the results, but
it should never be to where something's going to cost that much
more here versus there when you're making a profit on it. And
until you figure that out, everyone's going to think your
industry's screwed up.
Mr. Jorgensen. I'm not sure if it was a question, but I
just want to say that since we launched a product like Ozempic
in 2018, the price we get has gone down by 40 percent. So,
there's a----
Senator Braun. That's good. And it looks like Lilly has got
something similar.
Mr. Jorgensen. Yes.
Senator Braun. They sense competition, and theirs is gone
down by 40 to 50 percent. And that's what we need more of. And
until you put it out there, expose the PBMs in terms of what
they're getting, and you get consumers engaged in it, you're
not going to solve the problem. You're going to end up having
government as your business partner because when you operate
like an unregulated utility, you're going to get government
regulating you. And I think there's a strong interest in that
happening.
Unless you, hospitals, insurance take the bull by the
horns, you're going to increasingly be in more conversations
like this. And I want to end on this. So why should the
Europeans and everyone else be taking advantage of the fact
that we do the R&D? Why don't you charge them more to where
there's at least not a 10 to 1 differential to where you share
the costs across the world, not put it on the burden of a
place. It's now borrowing 30 cents on every dollar for
whatever's provided through government and to where you're,
you're jabbing it through the private insurance side.
Now, why is there that kind of difference? Why don't you
charge them more in Europe?
Mr. Jorgensen. Senator, we might also do that in the
future, but actually the price differential you mentioned is
not the real price differential. I think that's part of the
problem that we are not in charging as much in the U.S. as
you----
Senator Braun. I think you're hiding behind your opaqueness
and you need to promote transparency for your own good. It'd be
easier to understand. Thank you, Mr. Chairman.
The Chair. Thank you, Senator Braun, and thank you Mr.
Jørgensen. Let me just make a few remarks. Senator Braun,
and I come from different perspectives, but occasionally we
agree that the system is broken. Senator Braun said, ``the
industry is screwed up.'' Is that the right quote? I don't
agree that it's screwed up. It's enormously profitable as a
company that makes huge profits. Top 10 pharmaceutical
companies made up $100 billion dollars in profit last--it's not
screwed up. They're making huge amounts of money.
I think Mr. Jørgensen, you are not quite correct when
you talk about 79 percent rebates on Ozempic and Wegovy. That
may be, in general. My understanding, it's a 40 percent rebate.
I believe, I have heard that in fact the product that after all
of the rebates from the PBMs, it's your product is about, for
Ozempic, about $600.
Mr. Jorgensen. Can I clarify that please? So, our price has
gone down by 40 percent since launch and already when we
launched it, there was a significant rebate. So, the rebate has
gone up by 40 percent since launch on top of launch rebate.
The Chair. All right. My understanding is that factoring
in, and we all agree, it is a complicated and broken system. I
would point out, and you correct me if I'm wrong, Mr.
Jørgensen, that in your beautiful country, Denmark,
anybody can walk into a doctor's office, go to the hospital.
How much do they pay out-of-pocket?
Mr. Jorgensen. In Denmark, we have a healthcare system that
is tax paid.
The Chair. Yes. How much does an individual pay out of--if
I'm in the hospital 2 weeks in Denmark, how much do I pay out
of pocket.
Mr. Jorgensen. To go to the hospital?
The Chair. Yes.
Mr. Jorgensen. Zero.
The Chair. Zero. You go to any doctor, zero. And you are
spending a little bit more than half as much per capita as we
are. So, they provide quality care for all of your people and
almost half of what we do. All right? That's a simple system
that my mind makes sense. We have a complicated system not only
in healthcare but in prescription drugs as well.
But the point that I want to make is that factoring in all
of the rebates, we heard a lot about rebates, I agree with much
of the criticism factoring in all of the rebates that PBMs
receive. The net price of Ozempic is still nearly $600. Over
nine times as much as it costs in Germany. And the estimated
net price of Wegovy is over $800, nearly four and a half times
as much as it costs in Denmark.
I know Senator Romney and others said, well, how is that?
So why is it so much less expensive in Europe? And the answer
is obvious. In the United States of America, we are the only
major country on Earth that does not, has not negotiated
prices. So, you can charge us any price that you want. Other
drug companies can charge us any price that they want, as much
as the market will bare. And that's what you do.
Understandably, you charge us far more than other countries
because they negotiate and regulate prices. Now, the good news,
and I share the concerns and the skepticism about PBMs, but we
have, as I've mentioned to you, and we'll share with you
statements from the three major PBMs, that they would not
penalize Novo Nordisk in terms of formula placement if you
substantially lowered list prices. And I look forward to
sitting down with you, your representatives, and the three PBMs
to make sure that happens. Senator Cassidy, your closing
remarks?
Senator Cassidy. Yes. Mr. Jørgensen, again, thank you
for coming here. I'm sure it's like getting your eye and teeth
pulled. We spoke though about those patients who have high
deductible plans or health savings accounts, and often they
have them because that is what is affordable and works best for
them. And it's been my concern that it seems as if the system
has been set up to drain those in order to subsidize other
actors within the system, knowing that your current
negotiations with PBMs offer no relief for them.
I would say that if we are truly concerned about people who
are trying to purchase insurance, trying to do the best thing
for their family, and then they have a system which manipulates
that process to drain their savings in order to pay for a drug
as great as your drug is, that's wrong.
If you look demographically, the people who have the
greatest incidence of a high BMI, of obesity, are going to be
folks who are probably the lowest two to three quintiles of the
American population. Those who might be more likely to have
that high deductible policy because that is what's more
affordable to them.
There's just kind of this train wreck of those who are
trying to do the right thing by their family, by their own
health, are the ones who have no allowance made for them in
these negotiations between pharma and between PBMs, that is
separate from being the profits, which I thoroughly agree to
drive innovation. Because I'm all about that innovation, but
I'm all about that family. So, as you-all go forward on that,
that would be something I think would relieve tension between
policymakers and companies such as yours and the PBMs if more
consideration were given to them. With that, I close.
The Chair. Thank you, Senator Cassidy. That is the end of
our hearing today. I want to thank Mr. Jørgensen for his
participation. For any Senators who wish to ask additional
questions, questions for the record will be due in 10 business
days, Tuesday, October 8th at 5 p.m.
The Chair. I ask a unanimous consent to enter the record 10
statements from patients, doctors, and others concerned about
the high cost of Ozempic and Wegovy.
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The Chair. The Committee stands adjourned.
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[Whereupon, at 12:18 p.m., the hearing was adjourned.]
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