Shares of Santa Monica-based prescription medication discount company GoodRx Holdings Inc. surged 37% on Aug. 18 after the company announced a deal with Danish pharmaceutical giant Novo Nordisk to make available popular diabetes and weight-loss drugs Wegovy and Ozempic to self-paying customers for $499 for a month’s supply.

That’s half the current self-pay price for Wegovy and about a third the current self-pay price for Ozempic.

Both drug brands are produced by Bagsvaerd, Denmark-based Novo Nordisk. They are part of a new class of drugs known as GLP-1 and are variations on a specific medication known as semagludtide. Wegovy has been approved by the U.S. Food and Drug Administration for weight loss while Ozempic is approved for Type-2 diabetes patients. However, Ozempic has been used off-label for weight loss. Both are administered through injections given roughly once per week.

The high popularity of these drug brands has been driven in part by social media and celebrities touting the weight-loss benefits. The demand has been so great at times that it has outstripped the supply, leading to shortages. Also, insurance coverage is spotty for the drug brands, especially for Ozempic, since insurers are often reluctant to cover unapproved uses of a drug.

Drug discount platform

GoodRx rose to prominence a decade ago as a platform allowing consumers to shop for the lowest price for a drug among a participating network that has grown to about 70,000 pharmacies nationwide.

The company has long had a “manufacturer’s solutions” division, which consists of partnerships with drug manufacturers. Typically, these partnerships allow the manufacturer to advertise its discount price programs for eligible consumers on the GoodRx platform.

But this deal breaks that mold in that it involves a deal with a drug manufacturer for an advertised fixed price for patients who use GoodRx’ discount coupon at any of the participating pharmacies. It also represents a major marketing coup for GoodRx and its new Chief Executive Wendy Barnes, who took the helm at the beginning of this year.

The company said in its announcement that it is addressing skyrocketing demand for the drug brands, noting that over the past 12 months, its platform has logged more than 17 million inquiries about discount prices for the drug brands, a 22% increase over the previous year.

“Demand for GLP-1 medications is at an all-time high, but too many Americans still face barriers accessing them,” Barnes said in the announcement.

“By partnering with Novo Nordisk, we’re taking a significant step forward in making these innovative brand-name treatments more accessible for millions of people who need them,” Barnes added. “It’s a powerful example of how the GoodRx platform can deliver savings at scale – bridging gaps in coverage and ensuring more people can get the care they deserve.”

Motivating customers

Dave Moore, executive vice president of U.S. operations for Novo Nordisk, echoed Barnes’ comments.

“Improving access to effective FDA- approved treatment is central to our mission, and our collaboration with GoodRx allows us to reach those who seek savings and support from their trusted and established platform,” Moore said.

But in an interview with Yahoo Finance, Barnes suggested another reason for Novo Nordisk to agree to the deal.

“Their motivation in this partnership was squarely focused on ensuring that patients could access the branded drug as opposed to the compounded alternative,” Barnes said, referring to non-Novo Nordisk versions of the drugs produced by compounding pharmacies.

In that same interview, Barnes said GoodRx intends to pursue similar fixed-price arrangements with other pharmaceutical manufacturers.

One analyst in a note immediately after the GoodRx announcement, called the deal a win for the company’s division that cuts deals with pharmaceutical companies.

“GoodRx’s agreement with Novo Nordisk to offer Ozempic and Wegovy at a discounted cash price is a significant win for the manufacturer solutions segment,” said Michael Cherny, research analyst with Leerink Partners in New York.

Share-price jump

GoodRx shares shot up 37% to $5.12 on the day of the announcement as investors were eager to cash in on what could prove to be a huge customer and marketing boost for the company.

However in the next two trading sessions, the stock gave back roughly half that gain, closing on Aug. 20 at $4.37 a share.

Also, while the announcement and resulting share price surge may have been a quick dose of good news for shareholders, it did little to alter the long-term picture for them. The Aug. 18 close was down 40% from the same date last year and it was down more than 90% from the level of five years ago.