Weight-Loss Drug Could Help Millions. Will They Get It?
(Bloomberg Opinion) -- A drug that can help obese people safely cut an average of 15% of their body weight sounds like a miracle for those who can’t keep pounds off with diet and exercise alone.
Wegovy, a Novo Nordisk A/S drug that the Food and Drug Administration approved in early June, appears to do exactly that. It helps people lose substantially more weight than with existing drugs and showed sustained benefit with limited side effects in clinical trials. Despite that exciting data, it’s not clear that many of those who could use the drug will end up taking it because of uncertain insurance coverage and the baffling values of the U.S. health-care system.
It would be a mistake to let those barriers get in the way of a rare opportunity to address a significant personal and public health problem.
The prevalence of adult obesity in the U.S. jumped from 30.5% to 42.4% between 1999 and 2018, a concerning rise in a significant driver of ailments like diabetes, heart disease and cancer. A Milken Institute report released last year pegged the direct health-care costs of chronic conditions driven by excess weight at $480.7 billion in 2016 and indirect costs including lost productivity at more than $1 trillion.
While Wegovy certainly can’t fix the problem on its own, it is a potential difference-maker. The drug can cut enough weight to have a real health impact, and Novo Nordisk trials also found that it can reverse or prevent prediabetes. That seems like something worth paying for. The drug, which is a weekly injection, costs $1,350 a month.
The history of obesity drugs doesn’t offer much encouragement, however. Total U.S. sales were only $853 million last year because of limited insurance coverage and uptake, even as Americans spent billions to lose weight. Wegovy works much better than other weight-loss treatments, and the same drug has safely helped diabetics control blood sugar under the name Ozempic since 2017. It should be able to change the market.
But robust data can’t always fix structural issues. The U.S. health-care system spends enormous sums when people get acutely ill but often neglects forward-looking efforts. About half of Americans obtain private insurance from an employer, and those plans tend to be focused on annual costs rather than long-term health because people switch jobs. Even if paying for Wegovy helps prevent someone from developing diabetes, the savings could go to someone else.
Drugs that target large populations get a lot of pushback from health plans. When many people take a medicine, even a modest price adds up quickly. Yet insurers routinely pay six-digit sums for cancer drugs with little resistance even when there isn’t evidence they extend life because relatively few people in any given plan develop cancer each year. The result is a lot more spending on medicines to treat cancer than those that might prevent it.
Many drugs end up on the wrong side of this dynamic. Wegovy is particularly exposed because there are over 100 million obese people in the U.S. It will take some effort and compromise to make sure it reaches as many of those patients as it should.
Value-based contracts, in which drugmakers provide discounts to health plans if a medicine doesn’t deliver expected outcomes, could ease concerns about cost and real-world effectiveness. These contracts have obvious appeal but are hard to design in a way that makes both sides happy. Novo Nordisk will have to make real concessions on price, and insurers must accept some risk.
On the public side, Medicare limits coverage of obesity drugs, and Medicaid policy varies by state. Both programs cover many obese people for long periods, and it’s worth relaxing these restrictions to give Wegovy a chance. The government could limit costs and downside by paying for the drug as part of a limited research study at first, helping provide access while examining the best ways to use it.
Fixing bad incentives around preventative care will take more extensive work. But for now, making sure the most powerful obesity drug developed so far isn’t a niche product will do.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.
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