Estimating the Cost of New Treatments for Diabetes and Obesity

Benedic Ippolito and Joseph Levy
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Benedic Ippolito: American Enterprise Institute

AEI Economic Perspectives, 2023

Abstract: The rising popularity of drugs to treat obesity and diabetes, including Ozempic, has focused attention on their costs. However, existing research has incompletely characterized prices by focusing on only undiscounted list prices. We estimate that net prices received by drugmakers are 48–78 percent lower than list prices. In effect, we document a large difference between net payments to manufacturers and the prices faced by some consumers who pay list prices, even after we adjust for currently available coupons from manufacturers. We conclude by highlighting uncertainty surrounding future prices of drugs in this class and policy implications.

Keywords: drug industry; drug pricing (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2023
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