Ro CEO digs into new Wegovy cash pay offering

Key Concepts:

• GLP-1 drugs (e.g., Ozempic, Wegovy) for obesity treatment
• Insurance coverage vs. cash pay for medications
• Patient adherence and retention
• Direct-to-consumer (DTC) healthcare
• Price elasticity of demand in healthcare
• Role of digital health platforms
• Competition between pharmaceutical companies (Novo Nordisk, Eli Lilly)
• Pharmacy Benefit Managers (PBMs)

1. Novo's Price Reduction and Market Impact

• Novo Nordisk has significantly reduced the price of Wegovy to $499, a substantial decrease from the previous $1,000-$1,350 range.
• This price drop coincides with the end of drug shortages and Novo's efforts to curb compounding practices.
• Ro views this as a positive step towards increased patient access, especially for the uninsured or underinsured.

2. Ro's Business Model and Patient Access

• Ro has been assisting patients with obesity for four years and facilitating access to Wegovy for three years, primarily through insurance coverage.
• Approximately 50% of Ro's patients have insurance coverage for GLP-1 drugs.
• Ro emphasizes its commitment to providing affordable options and handling insurance coverage processes for patients.

3. Economic Factors and Patient Behavior

• Despite potential insurer pushback and economic uncertainties, Ro observes resilient demand for GLP-1 drugs.
• Patients prioritize these medications over other expenses like vacations, indicating their perceived value.
• Price decreases correlate with increased adoption and adherence, leading to better patient outcomes.

4. Healthcare Coverage and Pricing Dynamics

• The impact of lower prices on healthcare coverage is uncertain, but it could potentially influence employer coverage decisions.
• The discussion highlights a shift in how new treatments are delivered, potentially bypassing traditional middlemen like PBMs and insurance companies.
• The drastic price reduction from $1,300 to $499 is presented as an unprecedented event in the pharmaceutical industry, signaling increased accessibility.

5. Price Sensitivity and Retention

• Ro's data shows a direct correlation between price and patient retention.
• Retention rates are highest when patients pay between $0 and $50 (copay).
• Increased prices (above $100, $200, or $300) lead to decreased adoption and adherence.

6. Competition and Patient Choice

• With the shortage issue resolved and similar pricing between Lilly and Novo, the focus shifts to competition and patient choice.
• Ro positions itself as a neutral platform, offering integrations with both companies and prioritizing patient and provider preferences.
• The speaker emphasizes that competition ultimately benefits patients.

7. Alternative Platforms and Pricing

• The speaker notes that other platforms offering similar services have a monthly membership fee of $400, in addition to the cost of the medication.
• Ro's pricing structure is presented as more competitive, with the $499 price including access to the platform.

8. Notable Quotes

• "Our allegiance is to patients and providers and presenting those options to them and seeing who comes out on top right. It's going to be patients when companies compete." - Zach Reitano, CEO of Ro, emphasizing the company's patient-centric approach.
• "When has that ever happened before in the health care industry and the pharma industry?" - Highlighting the unprecedented nature of Novo's price reduction.

9. Technical Terms

• GLP-1: Glucagon-like peptide-1, a class of drugs used to treat diabetes and obesity.
• Compounding: The process of creating customized medications by combining or altering ingredients.
• PBM: Pharmacy Benefit Manager, a third-party administrator of prescription drug programs.
• Adherence: The extent to which a patient follows medical advice, including taking medications as prescribed.
• Retention: The ability to keep patients engaged and continuing with treatment over time.

10. Synthesis/Conclusion

The interview focuses on the impact of Novo Nordisk's decision to lower the price of Wegovy and the broader implications for patient access, competition, and the evolving healthcare landscape. Ro's CEO, Zach Reitano, highlights the company's role in facilitating access to affordable treatments and emphasizes the benefits of competition for patients. The discussion underscores the importance of price sensitivity, adherence, and the potential for digital health platforms to improve patient outcomes. The price reduction is seen as a significant step towards making obesity treatments more accessible, potentially reshaping the traditional pharmaceutical distribution model.