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Novo Nordisk to price oral diabetes drug Rybelsus similar to injectable Ozempic

Novo Nordisk A/S plans to price Rybelsus, the newly approved oral version of its diabetes therapy semaglutide, similarly to the injectable version of the drug, executives said in a Sept. 23 call with analysts.

Rybelsus, the first-ever once-daily diabetes drug in tablet form that harnesses the glucagon-like peptide-1 hormone to control blood sugar, was approved Sept. 20 by the U.S. Food and Drug Administration for use in patients with type 2 diabetes. The approval was supported by 10 clinical trials, dubbed Pioneer, that showed Rybelsus' safety and effectiveness.

The Danish drugmaker said the U.S. price of Rybelsus will be similar to that of Ozempic, which costs $6,520.02 per year.

Earlier in September, U.S. pricing watchdog Institute for Clinical and Economic Review said oral semaglutide seemed cost-effective compared with Novo Nordisk's blockbuster non-insulin injectable medication Victoza and Merck & Co. Inc.'s oral sitagliptin, marketed as Januvia.

Novo Nordisk will use its "strike model," which it used to promote Ozempic, in the marketing of Rybelsus, CFO Karsten Munk Knudsen said on the conference call. The company will make Rybelsus available to specialists by the fourth quarter of 2019, with the full launch to primary care physicians anticipated by the first quarter of the following year.

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"In the mix between Ozempic and insulins, we believe there's space for Rybelsus also, so at this point, we don't foresee significant changes to our U.S. sales rep footprint," Knudsen noted.

Ozempic has more than 90% market access two years after its launch, the company said. Sales for the medicine reached 3.75 billion Danish kroner during the first half.

Cautious on cannibalization

While it gears up to market Rybelsus, Novo Nordisk is cautious about cannibalizing the sales of its other diabetes therapies.

The target audience of Ozempic is very similar to that of Rybelsus', Knudsen said. "[S]o in that sense, we have good flexibility in terms of when and how fast to turn on Rybelsus without eroding Ozempic's business."

"We continue to believe the company faces a fine balancing act in pricing the drug to enable broad access, whilst minimizing market disruption and impact on its existing highly profitable injectable franchise," said Richard Parkes, an analyst from Deutsche Bank.

On the other hand, Steve McGarry, an analyst from HSBC, believes Rybelsus "will in the interim likely cannibalize sales and profits of Victoza, Saxenda and Ozempic" if the oral drug becomes a commercial success. "It is not a zero-sum game in the GLP-1 area, but Novo's existing franchise has the most to lose from a new competitor, even if that competitor is an internal program."

Following Rybelsus' approval, Novo Nordisk is negotiating with pharmacy benefit managers regarding discounts and rebates on the therapy.

"Given aspirations to position Rybelsus early in the type 2 diabetes treatment paradigm for metformin failures, we assume Novo will be willing to accept wider discounts/rebates for this oral drug compared to injectable Ozempic," according to analysts from Jefferies.

Executives on the call said the FDA's decision on Ozempic's expanded use to reduce cardiovascular risk in adult patients with type 2 diabetes is on track and still expected to be available January 2020.

Novo Nordisk said its Danish facilities are working to support the production and launch of Rybelsus, while its site in Clayton, N.C., is on track to gradually ramp up manufacturing in 2021.

As of Sept. 20, US$1 was equivalent to 6.79 Danish kroner.