Eli Lilly, Novo Nordisk latest battle in GLP-1 market war: cash-paying customers

Eli Lilly and Novo Nordisk are competing in the growing GLP-1 weight loss market, focusing on cash-paying customers, who often struggle with the high costs of medications like Zepbound and Wegovy.

To capitalize on this demographic, both companies have introduced a direct-to-consumer pricing strategy, offering their medications for $499 per month, while also entering partnerships with telehealth platforms like Hims & Hers and GoodRx.

This strategic pricing approach aims to address the rise of unregulated compounded alternatives and potentially satisfy regulatory pressures for lower drug prices in the U.S., as evidenced by cash transactions constituting about 10% of Wegovy sales.

Recommendation Rating: Strategic Pricing in the GLP-1 Weight Loss Market

As Eli Lilly and Novo Nordisk compete for dominance in the expanding GLP-1 weight loss sector, a crucial demographic has emerged: cash-paying customers. This group, consisting of individuals who either lack adequate health insurance or are completely uninsured, often struggles to afford the steep prices associated with Lilly's Zepbound (tirzepatide) and Novo Nordisk's Wegovy (semaglutide).

Recognizing the importance of this revenue stream, both pharmaceutical leaders have implemented a direct-to-consumer strategy, offering a one-month supply of their products for $499. Additionally, Zepbound is accessible via the telehealth platform Hims & Hers Health (HIMS). In a noteworthy development, Novo Nordisk recently forged a partnership with GoodRx, albeit after ending an agreement with Hims & Hers in June due to disputes surrounding compounded semaglutide.

This adjusted pricing strategy not only targets cash payers but also helps address the emergence of unregulated, compounded alternatives to both tirzepatide and semaglutide. Despite the FDA declaring that shortages of these medications have been resolved, the production of copycat versions continues, although creating such medications while under patent is allowed only during official shortages.

Furthermore, the reduced price point may serve to placate the Trump administration's ongoing efforts to regulate drug prices in the U.S. A spokesperson from Novo Nordisk indicated to Fierce Pharma that approximately 10% of overall Wegovy sales come from cash transactions, underscoring the significance of this market segment.