Comment by apsec112 | Hacker News Reader

Comment by apsec112 | Hacker News Reader

This compares Ozempic with past drugs, but sales of past drugs are almost always limited by demand. I'm not sure there's much to learn here for a drug that is limited by supply. Also, this part is silly:

"The announced investments across both companies total $32 billion. GLP-1s were 71% of Novo’s revenue in 2023, 16% of Lilly’s in 2023, and 26% of Lilly’s in 2024Q1. If these sales are proportional to the manufacturing capacity used to create those drugs, then about 40% of Novo and Lilly’s combined estimate of $45 billion in gross PP&E is for GLP-1s, for a total of $18 billion; $25 billion would then mean a 140% increase in GLP-1-relevant PP&E."

Manufacturing investment is not proportional to sales, because there's a fixed cost to making a certain drug regardless of how much you sell. If a rare-disease drug will have a few thousand patients ever - not uncommon! - you still need to figure out a synthesis path for that particular drug, run QC tests on the production line, get regulatory approval, etc. Economies of scale matter a lot (https://en.wikipedia.org/wiki/Experience_curve_effects).

And apparently the pure manufacturing cost for Ozempic is relatively low:

> the active drug in Ozempic can be produced for about 29 cents for a month’s supply, or 7.2 cents for a typical weekly dose, the research found. It’s not cheap to make — semaglutide costs over $70,000 per kilogram. But only a tiny quantity of the drug is used in each weekly dose.

> https://fortune.com/europe/2024/03/28/ozempic-maker-novo-nor...

I think this makes it likely that strongly ramping up the supply is not a major problem.

By chance I just talked to someone with deeper knowledge on this and they said the current constraint is actually ramping up supply of the delivery mechanism, not the drug.

I have zero expertise on this, but would be curious if anyone knows what's special about Ozempic delivery that can't be served by a commodity syringe.

hims sells the generic version for a fraction of the price but you have to do regular injections

"hims" is selling Compound Pharmacy drugs, which will be made illegal soon. Soon your options will be $1000-1500/month from the two big drug companies.

They're meant to have a vial-needle version, but it is $600/month and you can only do it for up to 5-months and a low max dose. So it isn't a real program, but rather a way to avoid critique from legislators.

Why are they making it illegal? Is there an issue with the compound, or is it an issue if lobbyists protecting the more profitable drug?

It’s “legal” because of the lack of supply in critical medications so the FDA gives a variance to allow compound pharmacies to produce/sell critical medications until supply issues are resolved.

Seems to me there is a lack of supply for low cost semaglutide (and similar). That should be enough for the FDA to say “I’ll allow it”

> what's special about Ozempic delivery

People don't want to use a commodity syringe. People are scared of needles. The autoinjectors take most of the fear out of it.

Teach a man to fish, and you can't charge him obscene amounts for fishing to be done for him.

> but would be curious if anyone knows what's special about Ozempic delivery that can't be served by a commodity syringe.

They can't charge as much. That's basically it. Generic semaglutide from compounding pharmacies (which have their own issues for sure) is under $150 a month cash-pay these days.

The real issue with syringes and self administration is that the vast majority of the population are not comfortable with it and don't have the diligence to do it correctly every time, so you get under/over dosage or noncompliance.

That being said, the autoinjector format doesn't really solve that problem, it just slightly ameliorates it, in exchange for approximately 8x the cost.

So basically, 99.8% margin the maximum they can charge (at ~15-30cents/mo) or 99.5% margin at $1000/mo for a $2.5 injector? Semaglutide has been in production since 2012 and approved by the FDA since 2017. There's a real chance that specifically as a weight loss drug it's not patentable since it was in off label use before the patent was filed. That's being argued in the PTO now.

>Generic semaglutide from compounding pharmacies (which have their own issues for sure) is under $150 a month cash-pay these days.

...Is that supposed to be impressive? I assume you mean USD, so that works out to more than I pay for my food. Toronto isn't a cheap place to buy food, either.

It is cheap compared to the $1200 a month for the branded stuff.

> By chance I just talked to someone with deeper knowledge on this and they said the current constraint is actually ramping up supply of the delivery mechanism, not the drug.

The article says this:

> Surprisingly, the study found that the biggest cost in producing Ozempic is not the active medicine, called semaglutide, but the disposable pens used to inject it. They can be made for no more than $2.83 per month’s supply, the authors concluded, based on interviews with former employees and consultants to injection device manufacturers. One Ozempic pen is used weekly and lasts a month.

So while the injection pens are significantly more expensive than manufacturing the drug itself, they are still relatively cheap. So it seems to be not a major problem to strongly ramp up production here as well.

Which suggests any supply shortage will be resolved relatively quickly. Perhaps in less than a year? Then the limiting factor will not be the supply but the market price.

There are also doctors that are prescribing vials of semaglutide and commodity needles, and training patients to properly dose up and administer the drug via a standard needle. There's more to it than the auto-injector pens, but not that much more to it. And it does bring costs down, which is important to some. Alternatively, you can just go to the doctor's office weekly and have a nurse there do a traditional injection for you (doesn't help as much with costs, but does bypass the auto-injector shortage).

I agree needles can alleviate the Ozempic shortage, though only if Novo Nordisk decides to sell Ozempic without pens. But not including pens will hardly reduce the price of Ozempic anyway, because pens cost basically nothing (estimated USD 2.83 for a month) compared to the full price of the drug.

The marginal cost to produce the few milligrams of the drug that goes into the pens is much much less than $2.83; it's on the order of cents. Plus, scaling up manufacturing of the drug is easier than scaling up manufacturing of the auto-injectors (which have a decent number of parts in them). The auto-injectors really are the bottleneck, and manufacturing of them so far has not been able to be ramped up quickly enough.

I'm shocked that TFA doesn't mention the (massive, booming) market for compounded semaglutide and tirzepatide. The long-term future is uncertain, but since these drugs have been under shortage status, third-party pharmacies can legally compound them to meet increased demand.

9 days ago the FDA declared the tirzepatide shortage over, though the other popular drugs in this class are still eligible for compounding based on shortage status:

https://www.fda.gov/drugs/drug-safety-and-availability/fda-c...

Not fully true- orphan drug status exists for rare diseases and gives advantages to companies who develop drugs for rare conditions. This includes longer exclusivity periods amongst other incentives, rendering these categories more feasible economically.

Agreed. Don't forget they're spending on next-gen versions of these too -- Novo is testing a pill form that's apparently twice as effective as semaglutide(!) right now. It's easy to imagine that becomes part of many people's January routine -- stop drinking, take your pills, go to the gym for a month, slowly put the weight back on during the year, no problem.

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