From the price of forthcoming weight loss pill orforglipron, to Most Favored Nation drug pricing and the market battle with Novo Nordisk, pricing was the number one issue for Eli Lilly on its second quarter earnings call.
The next phase in Eli Lilly and Novo Nordisk’s battle for market dominance in obesity will come down to price, mirroring a policy fight playing out at the highest levels of the U.S. government where President Donald Trump is demanding that pharma companies lower the cost of prescription drugs.
With so many competitors breathing down Lilly’s neck, executives on the second-quarter earnings call on Thursday tried to turn the focus to the value that the company’s weight loss portfolio brings to patients.
CEO David Ricks, speaking to how Lilly is thinking about pricing for its forthcoming weight loss pill orforglipron, said the company will consider the overall savings to the healthcare system, comorbidities that the drug can address, the value to the economy and more.
“We’ve always had a philosophy across all medicines, including with incretins, to price the value,” Ricks said.
Lilly also has to consider accessibility, as commercial and government insurers balk at covering medicines such as tirzepatide or Novo Nordisk’s rival semaglutide for weight loss. Lilly has offered tirzepatide, which is marketed in the U.S. as Zepbound for weight loss, via direct-to-consumer channels that offer lower prices than patients may pay when going through insurance.
“You can continue to expect Lilly to offer consumer level pricing, as long as we have such a large hole in coverage in our country for important chronic disease like obesity that should be covered,” Ricks said.
Meanwhile, an error on Novo’s part means that generic versions of its medicine semaglutide will arrive in Canadian markets within about six months. One analyst pointed out that, with this coming soon, the price of generic offerings could blow a hole in justification for the price of the branded medications. It could also underscore that patients are willing to accept a lesser drug—in this case Novo’s—over Lilly’s Zepbound, to get the benefits of an incretin therapy. A legally approved Canadian off-brand version could also cause a headache similar to what Novo and Lilly have been facing against illegal compounders.
Ilya Yuffa, president of Lilly USA and global customer capabilities, brushed off the Canadian threat. “Zepbound is meeting a need for patients, even in the context of noise, whether you have compounded or [semaglutide] in the market [or not],” he said.
He pointed to Zepbound’s sales for the second quarter: an increase of 172% for $3.4 billion, compared to $1.2 billion in the same period a year earlier. So far, the drug has taken home $5.7 billion this year, which compares to $1.8 billion last year when it launched. Zepbound is currently taking 65% of the market share in new therapy starts, Yuffa noted.
The Worst of Two Worlds
This isn’t the only pricing battle Lilly is waging right now. The company has also taken center stage in Washington in the president’s campaign to lower drug prices in line with what other equivalent nations pay. Ricks was one of the recipients of a batch of letters sent by President Donald Trump last week asking drug makers to lower their prices or face consequences.
The industry seems to have coalesced around one idea: that instead of lowering U.S. prices, prices need to go up in other nations that aren’t paying their fair share. Trump has even taken up the gauntlet, promising in his letters to assist where he can in trade negotiations to make this happen.
“If we import foreign price controls and insert them into a U.S. system that isn’t built to function for patients, we risk embracing the worst of two worlds: the low productivity and output of Europe’s biopharma sector with the high out of pocket and distorted prices of the U.S. insurance market,” Ricks said on the earnings call.
The CEO said there needs to be a rebalancing of the prices in the various markets, but a sudden change in either market wouldn’t be helpful. Ricks said that European governments are not clamoring to pay more, so getting this right will be a significant challenge and will require help from the administration.
Another problem is that many new drugs that Lilly launches simply aren’t reimbursed in Europe at all, so a re-analysis of the quality of the medications and value they provide is needed.
Offering direct-to-consumer pricing—which the administration has encouraged—provides transparency on pricing, Ricks noted. Lilly has done that with tirzepatide, offering consumers the chance to self-pay for the drugs via LillyDirect if their insurance won’t pay for them.
“We believe, long term, we should rebalance pricing between the U.S. and Europe in terms of who’s bearing the cost for the amortized R&D and the risk we took. That’s a rational thing,” Ricks said. “And it’s, in my career, gotten more and more out of whack. So I think here the president’s right to call that out.”
