You’ve seen them on TV ads and TikTok, or heard them joked about at the Oscars: Ozempic, Wegovy, Mounjaro. They’re weekly injections known as GLP-1 receptor agonists that help people lose a significant chunk of their body weight. These drugs can indeed produce dramatic results. But do they make people healthier?
Some people, yes. Others … the question is trickier than it sounds, and at least $100 billion a year is potentially riding on the answer. In the US alone, about 130 million adults are eligible for GLP-1s because of their weight and other health conditions. If just a third of Americans with severe obesity took them, US sales of weight loss drugs would swell more than 30 times, into an $80 billion industry, according to data analytics company Airfinity Ltd. Analysts at Jefferies Financial Group Inc. predict that GLP-1s for diabetes and obesity could become the biggest blockbusters of all time, bringing in as much as $150 billion a year globally.
But as of yet, most eligible people can’t get them, because they’re prohibitively expensive. In the US they cost upwards of $10,000 a year, potentially for the rest of someone’s life. (The drugs essentially work as appetite suppressants, and if people stop taking them, they may gain much of the weight back.)
Private and public insurers aren’t convinced they’re worth covering. Medicare, the federal health insurance program for the elderly and some people on long-term disability, puts weight loss in the same category as balding and erectile dysfunction. Three-quarters of private insurers don’t cover weight loss drugs, either. Most state Medicaid programs for low-income and disabled Americans restrict coverage, too, with just 10 offering broad coverage, according to a Bloomberg Businessweek survey of programs in all 50 states and DC. Coverage is also spotty in much of Europe and Canada. When insurers do pay, patients can face restrictions for how long they can take it or have to prove that they tried other weight loss methods first.
There’s no doubt that, particularly at the extreme end, obesity is closely tied to a host of chronic health conditions. Doctors frequently recommend even modest weight loss to avoid obesity-related risks—high blood pressure, cholesterol, blood sugar. From the pharmaceutical industry’s perspective, GLP-1s are a long-awaited solution to a growing and enduring public health crisis. Increasingly, doctors feel that way, too. “This is negligence and malpractice on the part of insurance companies,” says Caroline Apovian, an obesity specialist who advises Ozempic and Wegovy maker Novo Nordisk A/S.
Insurance companies, no surprise, don’t see things that way. They don’t dispute that there are a lot of heavy Americans. The health risks they face as individuals, however, aren’t so clear-cut. One recent review of medical studies found that up to a third of people with obesity are “metabolically healthy,” meaning they don’t have conditions such as diabetes and hypertension. Who even qualifies as obese is up for debate: The widely used body-mass index calculation doesn’t accurately measure fat. “We need to be clear about which patients really do benefit from these medicines,” Andrew Witty, UnitedHealth Group Inc.’s chief executive officer, said in April on a call with investors.
So far, trials have only proven that only Ozempic lowers blood sugar levels and rates of heart attacks and strokes in people with type 2 diabetes. And insurers will mostly give people with diabetes, a group that includes some 35 million Americans, coverage for that drug. There’s no proof yet that the drugs have long-term health benefits—beyond weight loss—for other people with obesity.
Novo and Eli Lilly & Co., which makes Mounjaro, are busy trying to prove they do. Both are testing whether GLP-1s prevent heart attacks and strokes in people without diabetes. Further trials are exploring other conditions associated with obesity, including heart failure, sleep apnea and knee osteoarthritis. “Our job is to change the assumption that obesity is not something you can manage medically,” Lilly CEO David Ricks says.
All of this is a familiar push-pull between pharmaceutical and insurance companies. Drugmakers always want more coverage; insurers resist. Even if just some people with obesity take a GLP-1, “the total cost could be overwhelming,” says Jeff Levin-Scherz, a physician who leads population health for the consulting firm Willis Towers Watson Plc. The drugs’ proponents argue they’d offer long-term savings. Studies have found adults with obesity account for $173 billion in extra medical costs in the US each year.
For now, patients are stuck in the middle. Sarah Bramblette, a 45-year-old with obesity who lives in Miami, lost nearly 70 pounds on Ozempic. Her insurance covered it as a treatment for insulin resistance. The weight loss also helped her qualify for a procedure to treat an irregular heart rhythm. When she needed to drop more weight for another surgery and to get a cancer screening, her doctor prescribed Wegovy, a stronger and more expensive treatment. Medicare wouldn’t cover it. “We get blamed for being a financial burden on the health-care system,” she says. “But then we don’t get access to treatments that we would need to lessen that burden.”
A decade ago, the American Medical Association voted to classify obesity as a disease. It did so to move the medical community away from treating weight as some sort of character flaw and toward something worthy of its care. The reclassification was also, in part, about economics: Insurers historically considered weight loss a cosmetic issue outside their purview; doctors wanted to encourage them to cover it as a health one, says Douglas Martin, who chaired the committee that brought the resolution to a vote. The promise of future reimbursements might encourage pharmaceutical companies to develop safe and effective drugs.
Up to that point, weight loss drugs had a bad track record. The fen-phen craze in the late 1990s imploded after one of its components was linked to heart valve damage. Over the next two decades, several other pills were recalled for safety reasons. “Obesity drug development was a graveyard,” says Novo CEO Lars Fruergaard Jorgensen.
GLP-1s first came to market as a diabetes treatment, but initial trials in the early 2000s showed they could result in weight loss, too. The drugs mimic a gut hormone—glucagon-like peptide-1—that reduces people’s appetites and makes them feel full. “We had lengthy discussions about whether we dared to go into development in the obesity indication,” Jorgensen says. Drug companies decided to push ahead with the drugs just for diabetes, a more stable market. In 2005, the US Food and Drug Administration approved the first GLP-1 for diabetes, Byetta, followed by a Novo drug called Victoza in 2010.
At that point, the weight loss GLP-1s caused in clinical trials was so significant that Novo decided to test them as obesity meds. Five years later, Saxenda hit the US market. Saxenda, a daily shot that costs about $1,350 a month, can help people lose about 5% to 7% of their body weight. It often has unpleasant side effects, as other GLP-1s do, including nausea, diarrhea and vomiting. The medication also lists a potential risk of thyroid cancer. Saxenda wasn’t very successful commercially, but it was effective and largely safe, which was enough to encourage more development from Novo and its competitors. Ozempic, Novo’s weekly GLP-1 shot for diabetes, went on sale in 2018, followed in 2021 by Wegovy, a higher dose of the same medication developed specifically for obesity. Eli Lilly’s Mounjaro, approved for diabetes last year, has shown even more dramatic slimming results, with patients on the high dose losing around 50 pounds in a big trial published last year. Lilly is filing for approval to treat obesity.
The drug companies, it turned out, didn’t need the promise of insurance coverage to create a market for these treatments. Americans spend about $50 billion a year trying to shed pounds. (We didn’t evolve to sit in offices and eat highly processed carbs all day, but here we are.) Drugs that seem to offer quick, straightforward results are particularly appealing. Four million people took fen-phen in the few years the drug combination was popular. Novo, which sold nearly $900 million worth of Wegovy last year, has roughly doubled its market value since launching the drug in mid-2021—making it more valuable than Pfizer Inc.
One uncomfortable truth, though, is that at least some of that demand is driven not by a medical need but a desire to be thin that’s not necessarily healthy. Celebrities, including Elon Musk and comedian Chelsea Handler, have said they’ve taken the drugs; there are rumors of “Ozempic parties” in Hollywood.
Insurers, reasonably, don’t want to support that kind of use. But another uncomfortable truth is that it can be hard to tell when a person’s need is cosmetic, medical or both.
At more than $10,000 a year, GLP-1 drugs are some of the most expensive type-2 diabetes treatments on the US market. Wegovy, which has approval as an obesity treatment, goes for more than $17,000 a year—40% more than Ozempic, which is the same drug in a smaller dose. (Asked about the high pricing for Wegovy, Jorgensen says “it’s a more efficacious product.”)
Even if only 10% of Medicare beneficiaries with obesity take Wegovy, it could cost around $27 billion a year, or about 18.5% of Medicare’s net drug spending, according to an analysis recently published in the New England Journal of Medicine. “If the drugs cost $10, we wouldn’t be having this discussion,” says Angela Fitch, an obesity doctor in Massachusetts and president of the Obesity Medicine Association.
GLP-1 drugs aren’t costly to make. Wegovy could be sold for just $40 a month, according to a February study in Obesity that analyzed prices of raw chemical ingredients. In the UK, where drugs are generally cheaper, Ozempic costs about $90 a month. Andrew Hill, a study co-author at the University of Liverpool, says high prices will keep these medications from people in Africa, India and other lower-income countries where obesity rates are on the rise.
“We’re going to be looking for the very best pricing on these medicines,” UnitedHealth Group’s Witty said on the April call with investors. “Still plenty to come here, I think. Early days.”
Daniel Drucker, a co-discoverer of the GLP-1 hormone who works as a professor of medicine at the University of Toronto, says he’s asked companies he consults for why they don’t make their medicines more affordable. “When they run the models, they make more money selling fewer units for higher costs,” he says.
Pharmaceutical companies, as ever, need new moneymakers. Pfizer’s stock has fallen this year as demand for Covid-19 vaccines and treatments has waned. In January, CEO Albert Bourla predicted the GLP-1 pills it’s developing could bring more than $10 billion in annual sales. Novo and Lilly are both seeking replacements for the designer insulins that make up billions of their sales now that US lawmakers have pressured them to slash prices.
Lilly and Novo declined to comment about Drucker’s remarks. They said their prices reflect their products’ efficacy and medical value. Drug companies, of course, charge as much as possible for as long as possible. They also provide coupons to shield patients with private insurance from high out-of-pocket costs, while getting insurers to foot much of the bill.
The government could make insurers budge. Accordingly, Novo has increased its lobbying spending in the US by nearly 80% since it launched its first obesity drug. It also funds research on the costs of obesity and works with doctors who prescribe the drugs.
This year, the Office of Personnel Management started requiring insurers in the sprawling federal employee health plan—which covers 8 million people—to include at least one GLP-1 obesity drug. Bloomberg Businessweek’s survey of Medicaid plans found four states have added obesity drug coverage since 2021: Michigan, Minnesota, Pennsylvania and, starting in July, Connecticut. Eight more have said they’re considering adding coverage.
Novo Nordisk has also lobbied Congress to pass the Treat and Reduce Obesity Act, which would expand Medicare coverage to include obesity drugs. There are an estimated 20 million Americans with obesity on Medicare. The Centers for Medicare and Medicaid Services is also now considering updating the Affordable Care Act’s requirements about which basic benefits health insurers have to cover. The AMA is pushing to have obesity drugs included; Cigna Group is opposing this change.
While insurance and pharmaceutical companies battle it out, Americans are going to great lengths to pay for the drugs. When Lisa Carannante first got on Wegovy, her insurance covered it. About six months and 60 pounds later, Blue Cross and Blue Shield of North Carolina suddenly dropped the drug from Carannante’s plan. (The insurer told Bloomberg Businessweek it did so to “align with current market offerings.”)
Carannante had worked with her husband at their restaurant in Burlington, North Carolina, while raising their eight children. To get Wegovy coverage, last November she took on an overnight shift at a hospital as a nursing assistant. She found the hours too grueling to manage with child-care duties, and in April she switched to a job with better hours. She thinks her new insurance plan covers Wegovy but isn’t 100% sure. She’s stocked up on refills just in case. —With Tanaz MeghjaniRead next: How to Be 18 Years Old Again for Only $2 Million a Year
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