It is rare, miraculously, for a drug to have such a remarkable effect that its immediate benefits translate into years or even decades of savings in health care costs. The wonder drugs Harvoni and Sovaldi have joined the hepatitis C eradication efforts of the weight-loss drug Ozempic and its cousins Wegovy, Maunjaro and Zepbound.
These drugs have shown remarkable effectiveness in reducing obesity, which indicates that users are less vulnerable to all obesity-related diseases in the long term, including diabetes, cardiovascular disease, knee pain, and sleep apnea.
They also appear to be effective against other unhealthy addictions, such as drug and alcohol addiction, and may be effective against Alzheimer's disease.
“Insurance companies typically don't see patients for more than a few years at a time…. This limits the period over which health benefits can be internalized as reduced claims.”
— David Anderson, health policy expert at the University of South Carolina
But millions of Americans lack access to these drugs because of two major, interrelated flaws in our health care system: unlimited pricing by pharmaceutical companies and the economics of health insurance.
We will explore how these factors impede access to medicines that address America’s No. 1 health problem. First, let’s look at the severity of the obesity epidemic.
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Weight is usually measured by the Body Mass Index (BMI), which is a correlation between weight and height. Roughly speaking (regardless of gender), according to the US Centers for Disease Control and Prevention, a “healthy” weight for someone who is 5'10″ tall is between 128-173 pounds, which translates to a BMI of 18.4-24.9.
Weights between 173 and 208 pounds are considered “overweight,” and anything above that is considered “obese” with a BMI of 30 or above. A BMI of 40 or above, or more than 278 pounds for an adult who is 5 feet 10 inches tall, is considered “severely obese.”
Obesity has been increasing in America over time: in 1960, about 31.5% of U.S. adults were overweight, compared to 30.3% in 2017. However, in 1960, 13.4% of adults were obese and 0.9% were severely obese, whereas in 2017, 42.8% of adults were obese and 9.6% were severely obese.
Of particular concern is the current childhood obesity rate of around 20 percent, which means obese children are more likely to develop high blood pressure and diabetes than those at a healthy weight, and are more likely to remain obese as adults.
The economic toll of this epidemic is staggering: The Centers for Disease Control and Prevention estimate that obesity and its effects cost the U.S. healthcare system approximately $173 billion per year.
Previous experience with weight-loss drugs has shown that they can significantly reduce the incidence of obesity-related diseases. A five-year study of more than 24,000 non-diabetic obese subjects published by a Taiwanese research team earlier this month showed not only a significant reduction in heart disease, high blood pressure, stroke, and kidney failure, but also a reduction in all-cause mortality. The annual mortality rate for the control group (not taking the drugs) was 3.5%, while the mortality rate for those taking the drugs was just 0.75%.
So why aren't stakeholders in our health care system fighting to make these drugs more widely available?
The answer, of course, comes down to money.
The estimated cost to insurers of Wegovy and similar drugs, minus volume discounts offered by the manufacturers — Denmark's Novo Nordisk for Wegovy and Ozempic and Indianapolis' Eli Lilly for Maunjaro and Zepbound — is about $8,600 to $9,100 a year. That's a steep price to pay for insurers looking to cover drugs for which public demand could reach millions.
That might work if insurers could be confident that the long-term savings from improved health outcomes for their members would be the same or even greater. But because our health care system is fragmented, insurers cannot be sure they will be able to keep members covered during the cost-avoidance period. Customers may move to other insurers or leave the employers that provided their coverage.
“Insurance companies typically don't see patients for more than a few years at a time,” says David Anderson, a health policy expert at the University of South Carolina, “which limits the period during which health benefits can be internalized as reduced claims.”
As a result, insurance companies have erected obstacles in front of customers seeking coverage. Some insurers require prior approval before paying claims or limit coverage to patients with a high BMI. Some insurance plans only cover employees diagnosed with diabetes, for which these drugs were originally developed, and not for weight loss alone.
Insurance companies that administer plans for self-insured employers (large companies and groups) are likely following their customers’ directions.
Some major companies that initially covered weight-loss drugs have now dropped the coverage. The Mayo Clinic has placed a $20,000 cap on employees' lifetime coverage. Purdue University covers drugs for employees with a BMI over 30, but requires employees to lose at least 5% of their body weight after three months to continue coverage.
Other companies have simply eliminated the option altogether, resulting in employees or the uninsured costing them more than $1,000 per month.
The insurer best positioned to pay for weight-loss drugs and reap the long-term benefits is Medicare, which typically covers members for life. Moreover, insurers are generally required to cover drugs that are considered standard of care for known medical conditions.
Unfortunately, Medicare is prohibited by law from covering drugs prescribed for weight loss. They are only covered if they are prescribed to treat related illnesses, such as heart disease or diabetes. For example, Wegovy was added to the standard formulary list for Medicare's Part D prescription drug benefit after receiving approval from the Food and Drug Administration in March as a treatment for heart attack risk.
The popularity and effectiveness of these drugs prompted lawmakers in June to revise a failed 2014 bill that would have made Medicare coverage for weight loss alone, though the new bill would primarily cover people who had been taking the drugs for at least a year before enrolling in Medicare.
Some experts estimate that expanding coverage for weight-loss drugs could cost Medicare $6.1 billion a year, assuming that 10 percent of eligible patients actually fill a prescription, which would increase Medicare's $120 billion annual prescription cost (before enrollee premiums and contributions from state programs) by just over 5 percent.
It's unclear whether those costs will be fully offset by subsequent Medicare savings. Not everyone who is prescribed a weight-loss drug tolerates it well enough to continue taking it for even a year, and not everyone avoids serious health risks that could have been averted by simply losing weight.
But it looks like our health care system will have to deal with this new breed of weight-loss drugs somehow. Wegobi and Ozempic will be selected in the next round of Medicare price negotiations, due to take place next year, with price cuts set to take effect in 2027. Pharmaceutical industry analysts don't expect the drugs' popularity to wane: The market for these drugs reached $6 billion last year and is projected to grow to $100 billion by 2030, according to Goldman Sachs.
Weight-loss drugs are by no means the most expensive on the market — certain cancer drugs and gene therapy drugs are the most expensive, some of which cost millions of dollars per treatment — but none have a market size approaching the potential size of weight-loss drugs.
Unless the U.S. moves to a single-payer health care system and caps drug prices, makers of weight-loss drugs will reap most of the benefits.Sales of Wegobee and Ozempic made Novo Nordisk the most valuable European company last year and helped Lilly's profits rise about 69 percent in the second quarter ended June 30 from a year earlier.
In other words, America's 20th-century health care system is faced with a 21st-century drug explosion. Something will have to be sacrificed.
