Looking Under the Hood at the Pricing Approach for the New Zepbound Obesity Med

Look, you’ve all seen the news, so I probably don’t need to provide the details: Lilly won FDA approval for Zepbound in obesity. It’s the same ingredient in Mounjaro and the latest entrant into the GLP-1 obesity space. 

There are endless ways to think or talk about the approval, and there will be a million monkeys with a million typewriters and a million hot takes in the months to come. I’ll spare you that (for today, anyway). 

Instead, I think it’s worth looking at the company’s pricing approach, both the strategy itself as well as how they communicated it. 

As was widely reported, the list price will be a tick below $1,060 a month, which is, in turn, about a 20% discount off of the price of Novo’s Wegovy, Zepbound’s most direct competitor. 

Because this is America, that immediately raised questions as to whether Lilly was pricing itself out of the payer market on the logic that the biggest rebates win, and Lilly’s list price would be too low to offer Wegovy-sized rebates. (One analysis, from AEI, suggested that Novo’s monthly rebate averages about $650.)

And while that upside-down reality seems to be playing out in other areas, this snippet of an analyst report explains Lilly’s approach: employers tend to focus on list price when deciding to exclude something (because net prices are not particularly transparent), so a lower list price increases the chance that employers will opt-in to coverage. 

Lilly’s couponing approach is now clear, too. For insured patients whose Zepbound isn’t covered, the drugmaker is offering a coupon to buy down the out-of-pocket cost to $500. (AEI’s numbers suggest that an equivalent Wegovy patient is looking at a post-coupon price of $849.) 

Lilly’s CEO had, earlier this year, suggested (in a kind of off-the-cuff way) that the net price for obesity meds would settle in around $400 a month, so all of this kind of lines up. 

It’s also worth noting that all of these details were provided in the press release itself (and, apparently, a conference call for reporters). That’s not SOP for pharma, but it really allows for a fuller understanding of what’s going on. And I’m firmly on the record as thinking that a smart conversation on price, even with the attendant risks, leaves industry far better off in the long run than dampening attention.

Now, none of these pricing moves is a magic wand. Budget impact issues are still going to have to be addressed (hopefully in a thoughtful way), and the reality is being able to access a $500/month cash-pay market is a kind of privilege. But the reality is that this market is moving toward lower, not higher, prices, and that’s something worth spotlighting and celebrating.

If I hadn’t spent so much of the past 24 hours thinking about obesity, I’d have a more thoughtful take on the latest in 340BLand. 

But here’s the short version: there was a legal decision in a lawsuit from a provider called Genesis last Friday that rejected the government’s argument that they could define what a patient was in the context of 340B. 

That turns out to be a pretty important distinction. It makes sense that if I go to the ER at a 340B facility and get some prescription-strength ibuprofen, that script can be processed at the 340B price. But Genesis was arguing that, once I went to the ER, all of my scripts, no matter who wrote them or when, would be 340B-price-eligible. Which is a ridiculous way to run the program. 

But the court sided with Genesis for what seemed to be dull, administrative reasons. The good news is that the ruling is technically narrow and just applies to Genesis, but lawyers seem to think that it exposes some weaknesses in the government authority that could create all kinds of problems down the road if this doesn’t get fixed. 

There’s a lot more to sift through here, but, fortunately, law firms seem to be happy to provide explainers. (e.g. here, here, here, etc.)

Really, those two things were quite enough for one day, but … 

• The Senate Finance Committee passed a package of health provisions -- including some interesting PBM regulations -- out of committee on a 26 to 0 vote. Of note, though: one of the PBM provisions, which would ensure that biosimilars are given advantageous formulary position, didn’t get a vote because there wasn’t a CBO score. 

• There were two plain-vanilla JAMA Viewpoints by IRA proponents. I don’t think this assessment of access or this analysis of the legal cases moves anything forward, but it’s helpful to know the kind of spin doctors are being exposed to. 

• This Bloomberg Law story mentions that CMS has 80 staff currently working on implementing the IRA, which feels like it’s an order of magnitude too small. It’s increasingly evidence that the timelines enshrined in the law are absurd and going to lead to bad outcomes.

• AbbVie could get into the biosimilar business -- the FDA cleared an unbranded version of Humira -- but the company told Endpoints that such a move isn’t in the cards right now. The thought bubble here: why would they want to enter the low-list marketplace? They seem to be doing a great job of destroying that market with the brand name alone.