Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
From amphetamines to slimming pills, there is a long history of weight-loss drug crazes that ended in disappointment, or worse. Until anti-obesity medicines such as Wegovy and Zepbound, none of them had started out promisingly and then produced better and broader results.
It is surprising, but studies of the health impact of the new generation of weight drugs have steadily brought more encouraging news. One published this week found that patients who took Novo Nordisk’s Wegovy sustained weight loss for up to four years. It builds on data from last November showing the drug reduced the risks of heart attacks and death.
Health systems are waking up to the full potential of medicines that were first developed to address diabetes: Eli Lilly’s Zepbound anti-obesity injectable was only approved in the US last year. “These drugs are doing more than just one thing and producing benefits across a range of diseases,” Naveed Sattar, a Glasgow University professor who chairs the UK government’s Obesity Mission, tells me.
Other companies are playing catch-up with the leaders in the field, while they advance: Novo Nordisk is trialling its compounds to see if they can reduce alcohol intake and alcoholic liver disease. The reasons to remain cautious over safety and whether these drugs improve health as well as promoting weight loss, which I wrote about last July, are diminishing.
But everything comes at a price, and the one attached to the GLP-1 agonist drugs is enormous. Indeed, the more effective they turn out to be in treating a variety of chronic and life-shortening ailments, the higher the looming costs to health insurers and governments. Battles about the prices of innovative drugs are nothing new, but this one is on another financial scale.
The drugs are now testing the rule that no product can be too successful. If they were as cheap and convenient as blood pressure pills and statins, they might soon be routinely prescribed. But they are far from it: Wegovy’s list price in the US is $15,600 per year, although insurers obtain discounts. There is a widening gulf between benefit and affordability.
Bernie Sanders, the democratic socialist US senator, this week released a study that claimed these drugs had “the potential to bankrupt Medicare, Medicaid and the entire [US] healthcare system”. He wants Novo Nordisk to reduce the US price of Wegovy to the much lower one in Denmark but, even there, the government only provides limited coverage for severe obesity.
It was easier for governments and insurers to hold the financial line before studies showed benefits beyond simply curbing obesity. But the US Food and Drug Administration approved Wegovy for heart disease risk in March, opening coverage for older Americans under Medicare. If it does what trials show, cost alone may become the chief obstacle to mass adoption.
Still, the fact that something is useful does not make it worth the price. It is extremely valuable to an individual to avoid a heart attack that debilitates or kills them, but that does not mean a government should provide the same treatment more widely to limit the risk to millions of people. There is a hard financial calculation to be made.
Drugs such as Wegovy and Zepbound fail the latter test at their current US prices, says Jonathan Gruber, economics professor at the Massachusetts Institute of Technology. A healthcare system can save money with drugs that prevent disease, but “the bottom line is that the savings are not enough to justify anything near the price”, he says.
Very large numbers accumulate on both sides of the calculation. The potential cost of prescribing such drugs to all obese Americans could exceed $1tn, Gruber has estimated. Yet obesity also has high costs, not just to healthcare systems but to societies and economies. Being overweight can make it more difficult for people to work, and add to the burden of social care.
There are sound reasons for optimism: the tensions are, after all, produced by the fact that the drugs seem to be very effective. Sattar believes they could not only contribute to raising workforce productivity, but address conditions from kidney disease to dementia, if current progress continues. “There is a sweet spot in the future where they will become cost effective,” he says.
So far, the companies leading the field have enjoyed amazing success: Goldman Sachs predicts that the global market for these medicines will grow to $100bn or more by 2030. But very high drug prices are usually justified by their research costs having to be spread over a limited set of potential patients. In this case, the target population could be more than 1bn people.
The question is not whether something has to give on anti-obesity drugs, but how soon it happens. Novo Nordisk has cut its prices in response to Eli Lilly’s and has talked of innovative deals to spread costs over years, matching long-term health benefits. The elite pricing model with which it started is being overtaken by events.
Read the full article here
