Title: Trump's Greenland Pursuit Potentially Boosts Ozempic Costs
Title: Trump's Greenland Pursuit Potentially Boosts Ozempic Costs
Trump cranked up the pressure on Danish officials over the strategically important North American island, employing his go-to tactic: Threatening massive tariffs. During a press conference, he vowed to impose "very high" tariffs on Denmark if they didn't sell Greenland to the United States. It's worth noting that Greenland is a self-governing entity within Denmark's kingdom. (Trump also declined to rule out military force to seize Greenland.)
High tariffs on Denmark might not cause significant trouble for American consumers, as Denmark isn't a major trading partner with the United States. Danish goods account for less than half of 1% of total U.S. imports. However, the United States did import around $5.7 billion worth of pharmaceutical products from Denmark in 2023, according to Trading Economics' annual United Nations trade data.
One of the key reasons for this high import value is the popularity of two diabetes and obesity drugs: Ozempic and Wegovy, manufactured by Danish pharmaceutical giant, Novo Nordisk. Americans have increasingly turned to these drugs, which have been approved to fight diabetes and obesity, respectively. Ozempic, in particular, has become incredibly popular, with Novo Nordisk's market value skyrocketing to almost $300 billion.
If Trump imposes steep tariffs on Denmark, it could at least temporarily increase the cost of these highly sought-after medications. Trade experts note that Novo Nordisk retains a significant monopoly power in the market and could pass on the increased costs to U.S. consumers. The consumer price of Ozempic and Wegovy, which cost nearly $1,000 and above $1,300 per package, respectively, prior to discounts or insurance, could become even more expensive as a result.
It's important to note that the American price for these drugs is already significantly higher than their prices in other countries. A key focus of Trump's first term was to close this gap, and these tariffs could potentially widen it further. Novo Nordisk has several facilities that fill containers and package these drugs around the world, including in the United States, which could provide some mitigation for the potential price hikes.
However, there are uncertainties surrounding the situation. Experts are unsure of how serious Trump is about buying Greenland or using tariffs to force a deal. They also note that Novo Nordisk could potentially find legal ways to circumvent tariffs, which may not be possible immediately.
Christine McDaniel, a former trade official in President George W. Bush's administration and now a senior research fellow at George Mason University's Mercatus Center, pointed out that, with Trump, tariffs are a go-to tool. "He is trying to get their attention," she said. "And he has gotten their attention."
Importantly, even just the threat of tariffs can cause stockpiling and drive up prices, according to McDaniel. US workers could potentially be hurt if Trump's tariffs on Denmark escalate into a tit-for-tat involving the entire European Union, which is the U.S.'s second-largest export destination for goods.
In the face of these looming challenges, Novo Nordisk has remained focused on delivering lifesaving medicines to patients worldwide. The company declined to comment on "hypotheticals and speculations" related to potential tariffs, but a spokesperson acknowledged that they would closely follow the situation.
The potential tariffs on Denmark could affect the cost of highly popular diabetes and obesity drugs, such as Ozempic and Wegovy, manufactured by Novo Nordisk, leading to increased prices for American consumers. The United States imports a significant amount of pharmaceutical products from Denmark, with Novo Nordisk having a substantial market value due to the popularity of these drugs.
If Trump follows through with imposing tariffs, it could impact the affordability of these medications, as Novo Nordisk might pass on the increased costs to consumers. The consumer price of Ozempic and Wegovy, which are already expensive in the U.S., could further increase due to the tariffs.