A pair of new drugs offer something many Americans desperately want: a way to lose weight.
In clinical trials, Novo Nordisk’s
NOVO.B,
Wegovy helped adults lose about 15% of their body weight. The drug, which received approval from the U.S. Food and Drug Administration last year, had such a successful launch that it’s now in short supply. Eli Lilly’s
LLY,
tirzepatide, meanwhile, is still in clinical trials, but data from a Phase 3 trial showed that people taking the drug lost up to 22% of their body weight.
For the roughly 42% of Americans who are obese, these results are nothing short of a miracle.
Wall Street is thrilled, predicting a global market for the drugs as big as $54 billion by 2030. And physicians feel they finally have a new treatment option for their patients. “I was prescribing Wegovy almost as fast as I could,” said Elizabeth Fryoux, a physician who practices obesity medicine at the University of Mississippi Medical Center.
And there is more research coming: Lilly and Novo are also running studies to figure out if the same drugs can reduce the risk of death or improve outcomes for conditions like high blood pressure and stroke that often go hand in hand with obesity.
But there are roadblocks to getting these therapies to patients who need them. Late last year, Wegovy ran into supply issues brought on by a combination of high demand and production issues involving the syringes used in the pens that inject the medication. The issues are expected to resolve sometime before the end of the year. The stigma surrounding obesity, meanwhile, may be discouraging insurers and policymakers from covering these drugs.
The drugs developed by Novo and Lilly to treat obesity have both been approved, in different formulations, to treat Type 2 diabetes. Those therapies — Novo’s Ozempic and Lilly’s Mounjaro, which got FDA approval in May — are covered by Medicare, the federal health-insurance program for older adults and people with disabilities. Medicare doesn’t cover Wegovy or other FDA-approved weight-management therapies, including Vivus’ Qsymia.
“If we have a drug that is Wegovy that is for weight loss, and it’s not covered, but we have a drug that is Ozempic, and it’s for diabetes, the exact same drug is covered,” said Holly Lofton, a physician who works in obesity medicine at NYU Langone Health in New York City. “There’s not a drug issue. There’s a ‘we don’t want to treat this patient’ issue. That comes from stigma or discrimination or lack of knowledge about obesity as a condition.”
A decades-old law prohibits Medicare from covering prescription drugs to treat weight gain or weight loss. That means the roughly 49 million people in the U.S. who get their prescription drug coverage from Medicare would have to spend more than $1,300 a month for a Wegovy prescription, putting access far out of reach for many. Even for people with private health insurance, these drugs may not be covered. Less than 10% of people have commercial health insurance that covers weight-management therapies like Wegovy.
But an aggressive lobbying push in Washington and quiet support in different parts of the Biden administration indicate that the longstanding rule is being reconsidered. The House Appropriations Committee in June described Medicare coverage for obesity drugs as a “matter of health equity.” The Office of Personnel Management, the federal government’s human resources department, this year reiterated that obesity drugs can’t be excluded from insurance plans for federal workers. “The bottom line is that we follow the science and, in this instance, the science is telling us that we should recommend uptake of anti-obesity drugs more strongly than we did previously,” an OPM spokesperson told MarketWatch.
This line of thinking suggests that “additional federal coverage may not be far behind,” said UBS analyst Colin Bristow.
Ted Kyle runs ConscienHealth, an obesity advocacy organization. “That momentum comes from people having a better understanding of what we’re dealing with,” he said. “Ten years ago, policymakers would come out and say, ‘Fat people need to eat less and move more.’”
A vanity drug or an outdated policy?
Until recently, the medical community often blamed obesity on a lack of willpower or a mismatch between calories consumed and calories burned. The American Medical Association now considers obesity a disease, and doctors describe patients as having overweight or obesity, not as being overweight and obese, and refer to weight management, not weight loss.
But that shift in thinking is still relatively new — the American Board of Obesity Medicine, which certifies physicians who work in this field, was set up in 2011 — and challenges remain. A story published last spring in The New York Times reported that a health insurer had declined to cover Wegovy for a patient on the grounds that it’s a “vanity drug.”
“That feels so stigmatizing,” said Diana Thiara, medical director of the University of California San Francisco’s weight management program.
The Medicare ban on covering weight-loss drugs, which was part of the implementation of the Medicare Part D program in 2003, likely results from that same stigma. It also followed the fenfluramine phentermine (“fen-phen”) crisis of the late 1990s, in which the stimulants fenfluramine and dexfenfluramine, prescribed for short-term use for weight loss, were pulled from the market when it was discovered they could cause heart-valve damage that in some cases resulted in death.
The newest class of weight-management drugs — as well as therapies like Qsymia and Currax Pharmaceuticals’ Contrave, which were approved about a decade ago — are not stimulants. Wegovy, which is the first new weight-management drug to have been approved since 2014, is a glucagon-like peptide-1 (GLP-1) agonist, while tirzepatide is a GIP (glucose-dependent insulinotropic polypeptide) and GLP-1 receptor agonist. When paired with physical activity and calorie reduction, they help slow digestion and increase the release of insulin so that patients end up feeling full faster and for longer.
“These actually are now very physiologic,” Lofton said. “Most of them [are] hormones that we’re giving people to adjust their gut and brain pathways to send different messages about hunger and fullness and desire to eat.”
Medicare does pay for bariatric surgery and behavioral weight-loss therapy. Over the years, legislative fixes to the medication ban have been proposed, including the Treat and Reduce Obesity Act, which has been introduced several times over the past decade, most recently in March of 2021. Lilly and Novo are both lobbying to change the Medicare language, and physicians, including NYU’s Lofton, have also been calling on lawmakers to do so.
So far, those efforts have not been successful.
“Medicare is behind the times, and it’s hampered by its own outdated policies,” said Dorothea Vafiadis, director of the National Council on Aging’s Center for Healthy Aging. “If you look at the CMS stated commitment, they are designed to close gaps in healthcare access, quality, and outcomes for underserved populations. And this really kind of flies in the face of that commitment.”
The National Council on Aging, along with obesity advocacy organizations such as the Obesity Action Coalition, receive funding from the drug companies that market or are developing weight-management therapies. So do Kyle and Lofton, among other physicians and advocates. These financial relationships, though common in U.S. medicine and public policy, also underscore the billions of dollars in sales that may be at stake for Lilly and Novo.
A $54 billion market
Companies are racing not only to develop the most effective weight-management drug but to market the one that can best improve outcomes for obese patients beyond losing weight.
Novo expects to have the first batch of data from its Phase 3 clinical trial — which will show whether Wegovy can reduce the risk of heart disease and stroke — by mid-2023, according to a spokesperson. (The company also makes Saxenda, an older weight-management drug that’s been shown to reduce body weight by about 5%.) Lilly, which is expected to soon file for FDA approval of tirzepatide as a weight-management therapy, also plans to launch a Phase 3 trial later this year to evaluate whether its drug can reduce morbidity and mortality.
If either study shows positive results, it could change the conversation with insurers and employers, because the value of an individual patient taking one of these medications will then be twofold. Not only will patients lose weight, but their comorbidities may improve, possibly averting costly medical care down the line.
Morgan Stanley predicts an obesity-drug market as large as $54 billion by 2030. UBS predicts $25 billion in peak sales for tirzepatide, which would make it “one of the bestselling drugs in history,” according to the bank’s analysts. SVB Securities puts peak sales expectations for tirzepatide, taking into account its potential use for both diabetes and obesity, a little lower, at roughly $21 billion. For context, Humira, AbbVie’s rheumatoid-arthritis drug, is the world’s top-selling drug, generating $20.7 billion in annual sales in 2021.
“Historically, [insurance] payers viewed obesity drugs like they did Botox for wrinkles. They viewed it as something that was a cosmetic drug that should not be covered by insurance,” said David Risinger, an SVB analyst. “There needs to be a rethinking of coverage when there are drugs that offer transformational health benefits for a disease, even if it’s common.”
If that’s the case, think of these drugs less like Botox and more like a new knee.
“No medication for weight loss to date shows reduction in morbidity and mortality from cardiovascular disease,” Thiara said. “[Insurers] say, ‘This is an older population. They’re not going to benefit from a longevity standpoint from treating their obesity. So, therefore, we’re not going to cover it.’ But there [are] other things, like quality of life, that matter. And Medicare covers other things like joint replacement or acid-reflux medication. They’re not necessarily reducing morbidity and mortality either. They’re just letting somebody who’s older enjoy their life.”
Lilly and Novo are both on track to spend more on lobbying in 2022 than either company has spent in the last three years. Lilly has lobbied this year in favor of the Treat and Reduce Obesity Act and Medicare coverage of treatments for Alzheimer’s disease, as well as against legislation that would cap insulin costs, spending $3.9 million in the first half of this year, after paying out $7.5 million in 2021.
Novo’s lobbying this year has primarily focused on getting Medicare Part D to cover obesity drugs through legislation like the Treat and Reduce Obesity Act, the Build Back Better Act, and the appropriations bill. The Danish drugmaker spent $2.2 million on lobbying in the first half of this year, after spending $3.6 million in all of 2021.
‘There’s no way that patients are going to be able to afford that’
Mississippi has one of the highest rates of obesity in the U.S. It’s also one of the poorest states, and its Medicaid program doesn’t pay for weight-loss surgery, which means there are few options for the 40% of adults in the state who are obese.
Fryoux, the University of Mississippi Medical Center obesity specialist, began prescribing Wegovy to her patients in mid-2021, right after it was approved. At that time, Novo offered a coupon that allowed people with insurance to pay $25 a month for a prescription for six months. (People who have Medicare Part D coverage aren’t allowed to use coupons provided by pharmaceutical companies.)
But by the end of last year, Wegovy was in short supply and the coupons ran out, leaving patients on the hook for at least $1,000 a month if they wanted to keep taking the drug.
“There’s no way that patients are going to be able to afford that — unless you’re a millionaire, I guess, or a celebrity,” Fryoux said.
So for now, she’s prescribing Ozempic – the formulation of the same drug that’s used for patients with diabetes – off-label to her patients with obesity, because Ozempic is covered by Medicare.
An earlier version of this story incorrectly described tirzepatide. It is a GIP and GLP-1 receptor agonist.
