Pharmaceutical companies have started 2024 off with their usual bang, raising the list prices for diabetes drugs such as Novo Nordisk’s NOVOb.CO Ozempic and Eli Lilly’s LLY.N Mounjaro, according to the Wall Street Journal. In the complicated U.S. healthcare system, these prices don’t have much to do with reality for most people, as about two-thirds of the population is covered by commercial health insurance, and those institutions negotiate to receive big discounts. But list prices matter when the similar drugs are prescribed for weight loss, where more people pay out-of-pocket. As drug pushers know, reaching the masses is ultimately more lucrative than reaching the classes.
Both Wegovy and Zepbound, the two drugs that are sold for weight loss, are listed at over $1,000 a month. Only about a fifth of employers covered prescription weight loss therapies as of last March, according to the International Foundation of Employee Benefit Plans. As a result, many patients must pay full boat for the drugs if they want to use them to get skinny.
Even with the cost, demand seems nearly insatiable. Lilly’s Zepbound grew by about 25,000 new prescriptions weekly in December, and CEO David Ricks said the company may not be able to make enough of the drug this year. For now, the producers are somewhat constrained. And Lilly and rival Novo Nordisk should be able to reap huge margins from patients who are willing to pay full boat.
Yet the two companies are offering a discount – half off to patients with commercial insurance that doesn’t help pay, roughly similar to the discount insurers typically negotiate – to pique interest while clinical results seem miraculous.
While that means fewer golden eggs today, the goal is harvesting more over time. Obesity is a risk factor in nearly every major cause of death in developed nations. The companies are gambling that as the beneficial evidence of weight loss accumulates, insurance coverage will become standard. Since weight is gained once patients stop taking obesity drugs, the lower price can get people hooked.
Patients culled today may stick around tomorrow, or come back if the pounds return. The risk is patients stop using the drugs because of harsh side effects, insurance coverage remains spotty, or better new therapies emerge and steal these patients. Given the gigantic potential size of this market, with about 40% of U.S. adults obese, it’s worth the gamble.
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