Prices of weight loss drugs rise with demand, but are they worth the money?

Are such high prices justified?

Novo Nordisk and rival Eli Lily, companies responsible for the GLP-1 weight-loss drug Zepbound, have made billions of dollars by bringing that drug to market, but only a fraction of the estimated 100 million obesity patients take it.

Novo and Eli Lily believe Zepbound will give Americans back money by alleviating obesity-related health problems, but Reuters analysts noted “no reduction in obesity-related medical events” such as heart attacks, strokes and type 2 diabetes diagnoses was determined. or treatment of high blood pressure and high cholesterol compared to a control group.¹

Despite their effectiveness, many employers and government health agencies are reluctant to cover these GLP-1 drugs because of the significant upfront costs, not to mention the uncertainty about future savings. Because of the drug's price and continued high medical costs, providers and insurers could spend up to $11,200 for each patient who takes a GLP-1 obesity drug in the first two years.¹

Ben Ippolito, an economist at the American Enterprise Institute, said: “The budget decline here is frightening for many governments and private entities. What sets these drugs apart is the sheer size of the potential demand.”

It's difficult to justify the cost of these types of medications, especially because so few patients stick with their medications long-term, not to mention the fact that less than 20% of members are insured for weight loss medications.¹

David Lassen, PBM vice president of clinical pharmacy services, says, “We want to do everything possible to help individuals achieve the positive results of taking this medication, but if we determine that there is not a positive outcome based on our data, then Neither is there a return on investment, that will be a tipping point that we have to take into account.”

Some analysts believe the weight loss market could reach $150 billion annually over the next decade. Given these challenges, the future of weight loss drugs like GLP-1 drugs will depend on balancing their high costs with long-term health benefits and broader access to insurance coverage.

Read the Reuters report here.

Reference:

1. Terhune C. Weight loss medications failed to reduce healthcare costs within two years. Reuters. October 2024.