Wegovy (semaglutide) is a self-injectable weight loss drug that has helped people … [+]
For those who are overweight or obese, medications known as glucagon-like peptide-1 agonists or GLP-1s have become very popular as weight loss treatments. GLP-1s, taken in accordance with label instructions and with an appropriate diet and exercise regimen, are effective in reducing a person’s weight. Given the various comorbidities associated with obesity, including diabetes and cardiovascular disease, it seems intuitively that using GLP-1 for weight loss would reduce overall medical costs, despite the increase in drug expenditure. But so far the data doesn’t show this.
Pharmacy benefits manager Prime Therapeutics issued an October study stating that “in the real world, the findings indicate that individuals using GLP-1 therapies do not have diabetes [over a two year period] will not see any medical cost compensation.” Analysis of health insurance claims showed that the treatments did not reduce other medical costs. Overall, average health care costs increased 46% in two years for patients trying GLP-1 anti-obesity drugs, from $12,695 to $18,507.
The Congressional Budget Office states that there appears to be no direct empirical evidence pointing to compensation for medical costs. This also takes into account the positive impact of GLP-1s on heart disease. Data from a large, randomized clinical trial called SELECT indicate cardiovascular protective benefits of taking the GLP-1 weight-loss therapeutic Wegovy (semaglutide) for a subpopulation with pre-existing cardiovascular disease. The Food and Drug Administration added a cardiovascular indication to Wegovy in March 2024.
In the process, Wegovy reduced the relative risk by 20% of a composite primary endpoint including death from cardiovascular causes, non-fatal myocardial infarction and non-fatal stroke. But the data did not show that Wegovy reduced the risk of cardiovascular death by a statistically significant margin. Moreover, the absolute risk reduction is small, which translates into a relatively high risk reduction number needed to treat of 67. This means that 67 people at (severe) cardiovascular risk would need to consistently use Wegovy to prevent one cardiovascular event, for example a heart attack.
A peer-reviewed study The study published last fall estimated that about 4.7 million American adults would meet the eligibility criteria for the SELECT study. Researchers apply a lifetime horizon model, which simulates all relevant costs and health outcomes over the lifetime of patients projected that semaglutide-based products could prevent 538,000 serious cardiovascular events at an incremental cost of $613 billion. They then calculated an incremental cost-effectiveness ratio for semaglutide (which costs $700 per month per person) of $443,000 per quality-adjusted life year gained. In the US, healthcare technologies and services are generally considered cost-effective if they are less than $150,000 per QALY. And so semaglutide does not meet this criterion at the current price.
To 20% of (specialty) drugs can be cost effective, that is, for every dollar spent, payers can actually save money over time in terms of lower downstream costs. But most prescription drugs are not cost effective. In other words, they do not offset medical costs. Typically, more money is spent to get additional benefits relative to the standards of care. This is what they call value for money. But it is not necessarily the same as cost savings. And in the case of the latest wave of weight loss drugs, right now at current prices not even profitablelet alone cost effective.
Perhaps the time frame being considered is the problem. Perhaps GLP-1s for weight loss will be cost-effective or even cost-saving in the long term, such as after ten years. Beyond the modeled projections, we don’t know yet, as there has been less than a decade of research on GLP-1s for obesity.
But suppose they do turn out to be cost-effective or cost-saving in long-term studies. Insurers in the US would still face the problem of churn, or attrition of enrollees, as they migrate from one health plan to another. GLP-1s cost the payer money up front, but with membership turnover, it is unlikely that a typical insurer will have the same enrollee in ten years to realize potential cost-effectiveness or savings. A publication notes that one in five members deregisters from a commercial insurer each year. Furthermore, the attrition rate in insurance programs like Medicaid is much worse.
This helps explain why payer coverage limitations for GLP-1s used for obesity remain a hurdle for patients seeking access. According to Becker’s Hospital Review, some insurers and self-funded employers across America are eliminating coverage altogether or imposing strict limits by 2025, due to the financial and operational challenges posed by the expensive drugs.
If Medicare were to cover weight-loss medications — which it currently does not, with the exception of Wegovy for a cardiovascular indication — the program would not be immune to cost problems. Although the Biden administration’s proposed reinterpretation of Medicare Part D coverage of weight loss medications would allow access to such therapies for approximately 3.4 million Medicare beneficiaries with obesity, it is unclear for budgetary reasons whether the new Trump administration will agree to that.
Compounding the cost burden for insurers is the fact that patients are often not persistent. In the Prime Therapeutic study cited above, only one in four patients were still taking Wegovy or Ozempic two years later. And in a Blue Cross Blue Shield Association white paper published last summer, the number was even lower: 15%.
This does not mean that GLP-1s are not valuable products. They certainly provide value for some: The minority of patients that persist long enough to achieve clinically meaningful weight loss. But the hype surrounding them belies the facts that must be included in any thorough analysis.