Sen. Warren Raises the Alarm over Catalent/Novo Nordisk Merger

Washington, DCOn October 10, U.S. Senator Elizabeth Warren sent a letter to Federal Trade Commission (FTC) Chair Lina Khan, urging the FTC to closely review a proposed merger between Novo Nordisk and Catalent. Catalent is one of the very few suppliers that provide specialized development and manufacturing services to GLP-1 manufacturers. The letter urges the FTC to block the deal if it could hurt Americans by limiting competition and raising the price of life-saving medicine. Not coincidentally, killing competition might also limit the development of drugs without the dangerous side effects of Ozempic.

Questions of antitrust law complicate the already tangled good news/bad news story about Ozempic and Wegovy, both semaglutides, classed as GLP-1 RA drugs. They have been shown to help patients lose weight and/or manage type-2 diabetes. On the other hand:

• Ozempic side-effects can be devastating or deadly;
• maintaining the benefits of these medications appears to require a lifetime of use; and
• both are hugely expensive and often not covered by insurance.

A merger could limit patients’ access to other similarly useful, but potentially less dangerous drugs. We’ve seen this movie before in the controversaries surrounding Suboxone sub-lingual film.

Good news, great promise

Semaglutides, like Ozempic, can help people lose up to 15 percent of body weight, which can make them life-changing for adults who suffer from obesity and obesity-related diseases, like diabetes.

Novo Nordisk reports that roughly 25,000 new people try these drugs each week. Six percent of all American adults are already taking them, according to a survey by the Kaiser Family Foundation. The market for drugs like Wegovy and Ozempic is huge, including 11 percent of American adults who have diabetes and 42 percent of adults who have obesity.

This is not just a U.S. phenomenon. In the United Kingdom, the new Labour government is considering offering weight-loss drugs like Ozempic to unemployed people to help them get back to work. Recent research suggests that Ozempic may also be useful in treating alcohol and opioid abuse.

Now for the bad news

The sky may be the limit when considering the potential for Ozempic, but the cost, including the risk of death and devastating illness is sky-high, too. Well-documented Ozempic side-effects include stomach paralysis, a rare form of blindness, thyroid cancer and bowel obstruction.

Ozempic is also 10 times more expensive in the U.S. at $936 per month compared to the United Kingdom, where the drug costs just $93 per month. Wegovy carries a monthly cost of $1,349 in the U.S., compared to just $296 per month in the Netherlands. Reducing competition, Sen. Warren warns, will make the affordability crisis worse, potentially rendering GLP-1s unaffordable for a large number of Americans, who could benefit from treatment. 

Will this become medicine for only the rich?

Understanding the merger

Catalent is a leading contract development and manufacturing organization (CDMO) that specializes in developing and manufacturing complex drug products. CDMOs play a crucial role in the pharmaceutical industry by providing essential services to drug companies, including formulation development, clinical trial supply, and commercial manufacturing.

As a matter of shorthand, we often speak of giant pharmaceutical companies, like Novo Nordisk, as manufacturing and marketing drugs. In truth, it is the CDMOs who do the nitty-gritty tasks of filling syringes and getting the product to market.

The proposed merger between these two companies raises a host of cocerns, including:

• Market concentration: The merger could lead to increased market concentration in the CDMO industry, potentially reducing competition and leading to higher prices for drug manufacturing services. This could, in turn, affect the cost of medications for patients.
• Limited supply of critical medications: Catalent is a significant supplier of drug products, including those used to treat chronic diseases. A merger could limit the supply of these medications, particularly if the combined company faces production challenges or prioritizes other products.
• Impact on innovation: The merger could stifle innovation in the pharmaceutical industry by reducing competition and limiting the availability of essential services to smaller biotech companies. This could hinder the development of new life-saving drugs as well as alternatives to Ozempic which might have fewer dangerous side-effects.
• Potential for anticompetitive behavior: The combined company could engage in anticompetitive practices, such as price-fixing or exclusive contracts, which could harm consumers and patients.

The bottom line is that market concentration could deprive patients of the choices they need to stay healthy.

Suboxone – a cautionary tale

We’ve already seen another story of a successful, but flawed drug, which its patent-holders struggle to protect by shutting out competition. In 2010, a collection of pharmaceutical companies and Medicare brought an antitrust lawsuit that focused on a corporate decision by Indivior to pull Suboxone tablets off the market in connection with the introduction of the sublingual film.

The plaintiffs alleged that this switch was done for the purpose of frustrating emerging competition from generic forms of the medication. It was, plaintiffs claim, accompanied by a campaign to disparage the tablet form through fabricated safety concerns. For consumers the effect was that they paid more money and lost the chance to choose a product that might have done them less harm.

The possibility that Novo Nordisk is pursuing a similar strategy is intriguing. With the FTC on the case, American consumers may have the chance to know the full story.