The price war has begun! Novo Nordisk (NVO.US) will significantly lower the price of weight loss drugs in the US starting next year, targeting Eli Lilly (LLY.US) to regain market share.

Novo Nordisk (NVO.US) plans to significantly reduce the official U.S. prices of its two flagship drugs, Wegovy and Ozempic, next year to capture a larger share of the obesity treatment market.

The Danish pharmaceutical company will set a uniform monthly price of $675 for its entire semaglutide product line, a reduction of up to 50%. Its U.S. competitor, Eli Lilly (LLY.US), currently prices Zepbound, a similar weight-loss drug, at $1,086.37 per month.

This price cut targets wholesale procurement costs; the publicly listed prices do not reflect the complex rebate system in the U.S. market. In terms of commercial insurance, patients using Zepbound and Wegovy may pay as little as $25 per month out-of-pocket.

Jamey Millar, head of Novo Nordisk U.S., said the price reduction does not apply to existing out-of-pocket prices but will help reduce costs for some insured patients—especially those who bear a higher share of drug costs.

“I believe payers will accept and welcome this price reduction; they have previously called publicly for lower drug prices,” Millar said. He added that this move alone will not impact the company’s net sales.

Currently, Novo Nordisk is taking multiple steps to improve its competitiveness in the obesity field. Millar, who previously worked at Optum Rx, a pharmacy benefits manager under UnitedHealth (UNH.US), is an expert in U.S. pricing strategies.

The new prices will take effect on January 1 next year. Millar said the company needed to announce the price cut now to give payers time to prepare for the changes in the coming year.

He pointed out that the adjustment will particularly impact high-deductible insurance groups—whose out-of-pocket costs are closely tied to official prices—and co-insurance patients who pay a percentage of drug costs.

According to the KFF employer health benefits survey, about one-third of insured workers last year chose high-deductible health plans paired with personal health savings accounts; the survey also showed that fewer than half of large employers reimburse for GLP-1 weight-loss drugs like Wegovy.

This official price reduction will be implemented alongside the discounts negotiated last year with the U.S. federal government for Medicare patients. Millar emphasized that the two price reductions are independent and unrelated.