Weight-loss medicines like Wegovy and Saxenda are taking America by storm -- and keeping insurance executives and public health officials up at night due to large patient populations that could have their lives transformed by these medicines.
Both drugs are part of a wider class of medicines known as GLP-1 agonists, which can help obese patients shed 20% or more of their body weight in just a few months -- and keep the pounds off. For many people who've struggled with their weight, GLP-1s are nothing short of life-changing and can dramatically improve overall quality of life.
Over 40% of Americans suffer from obesity, which predisposes them to a long list of chronic and life-threatening health conditions. Fortunately, there's increasing evidence that in addition to reversing the rising tide of obesity, GLP-1 agonists may significantly reduce patients' risk of heart attack, stroke, and even cancer.
Barring invasive and often expensive procedures like gastric bypass and sleeve gastrectomy, GLP-1 agonists are the most effective weight loss tools we have at our disposal.
But they aren't cheap. And public health officials increasingly question whether insurance plans should cover these medicines -- and under what circumstances.
It's a debate worth having. But with potentially millions of Americans' health on the line, it's critical that we all share the same basic set of facts.
Unfortunately, some groups are circulating inaccurate claims about the price of these medications -- and if these falsehoods gain traction with policymakers, the resulting misinformed decisions could have dire consequences for American patients.
Consider a cost-benefit assessment conducted by the Institute for Clinical and Economic Review, a nonprofit that analyzes the cost-effectiveness of medicines. Last year, ICER concluded that Wegovy, at an estimated net price of over $13,000 annually, is of "low" long-term value.
Ignore, for the moment, the problem of issuing such a definitive conclusion about the long-term value of a class of medicines that only recently hit the market.
The bigger problem is that ICER's estimated net price for the drug is wildly off-base.
Typically, manufacturers give enormous discounts to middlemen in the drug supply chain to ensure their treatments are included on insurers' list of covered drugs. In 2022, drug manufacturers offered $223 billion in rebates and discounts off the nominal "list" prices of brand-name medicines -- nearly half the official total spending on prescription drugs.
But ICER evidently assumed that, given the popularity of GLP-1s, the discounts on this class of drugs would be negligible, and that the true "net" price of treatments like Wegovy would be very close to the nominal "list" price.
They were wrong.
As a recent analysis by a team at the American Enterprise Institute shows, the average discount compared to list price for Wegovy in the U.S. market is 48%. In other words, the actual cost for a yearlong prescription for Wegovy is closer to $6,500 -- half of ICER's net price estimate of $13,000-plus.
When presented with the new estimate from the American Enterprise Institute, ICER's chief medical officer somewhat sheepishly acknowledged to the New York Times that the drug is likely cost-effective.
In fact, the current net price of the weight-loss treatment is lower than the $7,500-$9,800 range at which ICER said Wegovy would be cost-effective in 2022.
Incidents like this are all too common. In today's drug pricing debates, people too often refuse to acknowledge systemic problems that stand in the way of patient affordability. It's convenient to blame "Big Pharma" because the narrative is easy and does not require critics to look at other actors in the supply chain.
In reality, spending on prescription drugs as a percentage of total healthcare costs has held constant at about 14% for years. And medicines tend to become cheaper over time as branded competitors and eventually generics enter the market. Nothing else in our health care system has been getting less expensive over time.
We need to reframe the debate about healthcare costs in this country. Yes, innovation is expensive -- but it's often worth it. Let's stop blaming the innovators.
John Murphy is the Chief Policy Officer at the Biotechnology Innovation Organization. BIO is the world’s largest advocacy association representing member companies, state biotechnology groups, academic and research institutions, and related organizations across the United States and in 30+ countries.
