(Bloomberg) -- Subsidies for Ozempic will be restricted in Novo Nordisk A/S’s home country of Denmark due to rising public spending on the blockbuster diabetes medicine, which is increasingly being used as a weight-loss treatment.

The Danish Medicines Agency will keep some subsidies in place for GLP-1 analogues used to treat type 2 diabetes after Novo agreed to lower prices. But the authority will tighten current rules and only reimburse patients who can’t be treated with cheaper alternatives, according to a statement on Wednesday. 

Novo this week cut Ozempic prices in Denmark to $125 from $188 per month after a “negotiation process regarding public reimbursement for GLP-1 diabetes medications,” the company said in a statement late Tuesday.

The price cut will immediately save the government more than $70 million annually, the agency said.

The decision comes after a government committee, which advises the medicines agency on drugs subsidies, recommended ending aid for Ozempic due to high costs. The new setup would bring about half of current GLP-1 users on to a cheaper medicine, the agency said on Wednesday.

Read: Ozempic Maker Novo Nordisk Has Denmark’s Economy Hooked

The rising popularity of Novo’s diabetes drug has led to a massive bill for Denmark’s public health care system. Danish authorities spent $200 million on Ozempic in 2023 — 8% of all medicine costs, and twice as much as the previous year. Officials warned that should costs continue to surge, it would necessitate cuts.

The Danish Medicines Agency said the high consumption of subsidized GLP-1 analogues “is inappropriate” but due to Novo’s price reduction it decided to continue with subsidies for the drugs.

“Ozempic has been on the market in Denmark since 2018, and locally it’s normal for the price of a drug to be reassessed during the life cycle,” Novo said.

The agency in 2022 rejected a request by Novo to subsidize weight-loss drug Wegovy, which uses the same active ingredient as Ozempic, saying the price didn’t match the medical benefits. The authority is now reviewing a new application from the pharmaceutical giant to apply a model in which the cost of subsidies is shared between government and drugmaker, capping the potential public expense.

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