The New York Budgets

Tag: National Institutes of Health (NIH)

  • Weight-Loss Drug Price Wars Are Upending Big Pharma’s Business Model

    Weight-Loss Drug Price Wars Are Upending Big Pharma’s Business Model

    The multibillion-dollar market for GLP-1 weight-loss drugs, once a duopoly dominated by Novo Nordisk and Eli Lilly, is fracturing under intense pricing pressure, political intervention, and rising competition from compounded alternatives. What began as a revolutionary breakthrough in obesity treatment has evolved into a fierce price war that’s challenging the core business models of Big Pharma giants, raising questions about innovation, profitability, and access to life-changing medications.

    Novo Nordisk, the Danish pioneer behind Ozempic and Wegovy, stunned investors this week by forecasting a 5% to 13% sales decline in 2026 – its first drop since 2017 – amid “unprecedented” U.S. price cuts and patent expirations in key markets like China and Brazil. The company’s shares plunged 17% on Wednesday, erasing nearly $50 billion in market value, as CEO Mike Doustdar acknowledged short-term “pain” from slashing prices to boost volumes and compete with Lilly’s surging Zepbound and Mounjaro.

    In contrast, U.S. rival Eli Lilly delivered a bullish outlook, projecting 25% revenue growth to $80-83 billion in 2026, far exceeding Wall Street expectations. Lilly’s tirzepatide-based drugs raked in over $36 billion in 2025, outpacing Novo’s semaglutide portfolio and positioning Lilly as the clear leader in the GLP-1 race. “We’re seeing incredible demand, and our manufacturing investments are paying off,” Lilly CEO David Ricks told analysts, downplaying pricing headwinds as a temporary drag offset by volume gains.

    As illustrated in the accompanying chart from LSEG Workspace, Novo’s revenues have boomed in double digits for years, driven by weight-loss drug sales, but the firm now anticipates a sharp reversal in 2026 due to these pressures.

    The divergence highlights how pricing dynamics, fueled by U.S. President Donald Trump’s “most favored nation” (MFN) policy and direct-to-consumer platforms like TrumpRx.gov, are reshaping the industry. Launched on February 5, TrumpRx connects Americans to discounted drugs from manufacturers like Novo, Lilly, Pfizer, and AstraZeneca, offering prices as low as $149 for Wegovy’s starter dose – a fraction of the original $1,000 monthly list price. In exchange, companies received tariff relief and expedited approvals, but critics argue it sidesteps systemic issues, with limited impact for insured patients who may still pay less through coverage.

    “TrumpRx could have some impact, but it’s far from revolutionary,” said Craig Garthwaite, director of health care at Northwestern University’s Kellogg School of Management. Experts like economist Öner Tulum warn that MFN relies on opaque global pricing, allowing companies to game the system by raising overseas prices or delaying launches.

    Adding fuel to the fire, telehealth provider Hims & Hers Health launched a $49 compounded semaglutide pill on February 5 – just weeks after Novo’s Wegovy pill debut – prompting Novo to vow “legal and regulatory action” for alleged patent infringement and patient safety risks. Hims uses liposomal technology to aid absorption, bypassing Novo’s proprietary SNAC method acquired in a $1.8 billion deal. The FDA has warned against compounded GLP-1s, citing lack of safety evaluations, while the Department of Health and Human Services referred Hims to the Justice Department for investigation.

    This isn’t the first clash: Novo previously partnered with Hims for Wegovy injections but ended ties acrimoniously last summer. Now, compounded knockoffs – estimated to serve 1.5 million Americans – threaten the duopoly’s pricing power. “This new offering could test how far compounders can skirt Big Pharma’s patents,” said Deb Autor, Hims’ chief policy officer.

    The broader shift to cash-pay channels has made prices more sensitive, with injectables now starting at $149-$299 on company sites, down from $1,000. Analysts like Markus Manns at Union Investment fear a “no-win” price war: “There’s no assurance cuts will pay off.” Bernstein’s Courtney Breen noted Novo’s cuts are risky given its trailing position.

    Lilly holds clinical edges – Zepbound achieves higher weight loss than Wegovy’s injection, while Novo’s pill edges Lilly’s upcoming orforglipron in trials. Lilly expects orforglipron approval in Q2 2026, potentially expanding the market further. “Pills could reshape GLP-1s like consumer products,” one analyst noted.

    Yet the market is crowding: Pfizer and Amgen eye 2028 launches, while GSK focuses on obesity’s downstream effects like liver disease. Goldman Sachs raised Lilly’s target to $1,260, citing confidence in 25% growth despite pressures.

    Critics argue Big Pharma’s model prioritizes shareholders over patients. Economist William Lazonick’s research shows U.S. pharma spent $747 billion on buybacks and dividends from 2012-2021, exceeding $660 billion on R&D. During the pandemic, 18 firms distributed $377.6 billion to shareholders – over 90% of profits – while claiming high prices fund innovation. “It’s a fallacy,” said UNAIDS’ Winnie Byanyima. “Profits go to Wall Street, not cures.”

    A Senate HELP Committee report echoed this: In 2022, Bristol Myers Squibb spent $12.7 billion on buybacks, dividends, and exec pay versus $9.5 billion on R&D. Overall, 10 firms with drugs under Medicare negotiation spent $162 billion on shareholder handouts and marketing in 2023 – far outpacing $95.9 billion on R&D.

    As shown in the second chart from LSEG, Novo’s market cap peaked in June 2024 before a sharp plunge, reflecting these pressures and Lilly’s ascent toward a trillion-dollar valuation.

    What tames Big Pharma? Tulum suggests emulating the VA system’s deep discounts via centralized negotiation. Biden’s Inflation Reduction Act (IRA) enabled Medicare negotiations for 10 drugs in 2026, including GLP-1s like Ozempic in 2027. Yet industry lobbies fiercely, with $83.2 million in trade dues funding opposition in 2023.

    Mark Cuban’s Cost Plus Drugs offers transparent markups, but scalability is limited. Ultimately, reformers like Lazonick advocate banning buybacks and stock-based pay to redirect profits toward innovation.

    As prices fall and competition rises, the GLP-1 war may force Big Pharma to adapt – or face a reckoning. For patients, lower costs could mean broader access, but sustained innovation requires reining in financialization.

  • The government watchdog has found NIH funding delays to be in violation of the law

    The government watchdog has found NIH funding delays to be in violation of the law

    WASHINGTON, D.C. — A new report from the Government Accountability Office (GAO) has found that the National Institutes of Health (NIH), under direction from the Trump administration, unlawfully delayed and canceled billions of dollars in federally approved medical research grants. The decision, rooted in efforts to dismantle diversity, equity, and inclusion (DEI) initiatives across federal agencies, violated the 1974 Impoundment Control Act (ICA), the congressional watchdog concluded.

    The GAO report, released Tuesday, revealed that nearly 1,800 grants were either canceled or delayed between January and June 2025, resulting in $8 billion less in grant awards compared to the same period in 2024. This move was made in accordance with several Trump administration executive orders that aimed to eliminate federal spending on DEI-related programs.

    “The NIH intended to withhold budget authority from obligation and expenditure without regard to the process provided by the Impoundment Control Act,” the report stated bluntly.

    The Impoundment Control Act of 1974 limits the ability of the executive branch to withhold or delay spending that has been approved by Congress. If the president wants to rescind or delay funding, the administration must formally notify Congress and seek approval.

    According to the GAO, the NIH bypassed this process, acting on executive orders that had not been legislatively authorized. As such, the delays and cancellations constituted unlawful impoundment of funds.

    The Trump Administration’s Executive Orders

    Following his re-election and return to office in January 2025, President Donald Trump signed several executive orders targeting DEI initiatives. One such order required all federal agencies to cancel equity-related grants and contracts within 60 days.

    The NIH, falling under the Department of Health and Human Services (HHS), responded swiftly by halting grant announcements, removing pending notices from the Federal Register, and pausing peer-review meetings—an essential step in grant distribution. This paralyzed funding flows and research programs for nearly two months, according to internal NIH data and the GAO’s findings.

    Researchers and lawmakers across the political spectrum reacted with concern and, in some cases, outrage.

    Senator Patty Murray (D-WA), Vice Chair of the Senate Appropriations Committee, issued a strong rebuke:

    “It is critical President Trump reverse course, stop decimating the NIH, and get every last bit of this funding out. The longer this goes on, the more clinical trials that will be cut short, labs that will shutter, and lifesaving research that will never see the light of day.”

    According to Science.org, dozens of leading universities and medical institutions have already reported disruptions to ongoing trials and lab operations. Some have had to suspend hiring, postpone experiments, or seek alternative private funding to stay afloat.

    Dr. Lisa Granger, a biomedical researcher at a top-tier cancer research institute in New York, told STAT News,

    “We were days away from final approval for a multi-year immunotherapy project when everything froze. We’ve already lost a few team members to layoffs.”

    Neither the NIH nor the White House immediately responded to requests for comment on the GAO’s findings. However, a spokesperson for HHS sent a brief statement to The Hill, noting that the pause on Federal Register notices had been lifted and that peer-review meetings have resumed.

    But the damage may already be done, say experts.

    Dr. Michael Eisen, a policy expert at the Brookings Institution, told Politico,

    “When you weaponize grant funding for political purposes—especially in health and science—you erode both trust and progress. The long-term effects of this slowdown could be devastating.”

    The GAO’s determination is not legally binding but carries significant political weight. In a related legal case, a federal district court ruled in June that the Trump administration’s mass cancellation of NIH grants was unlawful. The court ordered a review of the canceled grants, but the administration has not yet signaled how it will proceed.

    Republican lawmakers have backed the administration’s moves, arguing that DEI-focused research diverts resources from essential scientific objectives.

    “Taxpayer money should go to actual science, not woke social engineering,” said Rep. James Comer (R-KY), Chair of the House Oversight Committee, in a statement to Fox News.

    The immediate future remains uncertain. While HHS has lifted the pause on some procedures, the $8 billion shortfall has yet to be restored. The GAO recommended that Congress demand a full accounting of canceled grants and require the NIH to expedite reallocation of funds to eligible researchers.

    Medical associations, including the American Medical Association and the Association of American Medical Colleges, have called on Congress to step in with emergency legislation that would protect research funding from future political interference.

    “We cannot let partisanship dictate whether cancer cures or pandemic response strategies are developed,” said Dr. Amy Martinez, president of the NIH Grants Advocacy Coalition, in an op-ed for Bloomberg.

    Although NIH funding is not directly tied to public markets, biotechnology and pharmaceutical stocks reacted negatively when grant cancellations were first reported in Q1 2025. According to Bloomberg Markets, the Nasdaq Biotechnology Index saw a 3.7% drop in March, when internal NIH memos revealed delays in funding cycles.

    Investors and venture capitalists in the life sciences space are now watching closely to see if Congress will act—or if further executive actions will chill scientific investment.

    The GAO’s ruling adds to growing scrutiny over how political decisions are influencing scientific research and public health funding. As the Trump administration continues to reshape the federal government’s priorities, the NIH—once considered a relatively neutral institution—is emerging as a political battleground.

    Whether the full weight of the $8 billion in delayed funding will be restored remains to be seen. What is clear is that the implications of these actions will reverberate across the scientific community for years to come.