The Future of Anti-Obesity Drugs
The U.S. healthcare system doesn’t deal well with success. For decades, doctors decried the “obesity epidemic” while researchers chased an effective treatment. The good news is that those effective treatments have finally arrived — in the form of GLP-1 receptor agonists. GLP-1 receptor agonists are a success story of the innovation ecosystem, delivering breathtaking patient and societal benefits in fighting obesity. Moreover, early indications suggest these therapies may also treat a range of other deadly diseases. Early-stage clinical data has demonstrated the potential importance of the anti-inflammatory role of these drugs in treating serious conditions such as Alzheimer’s, Parkinson’s, Dementia, and Multiple Sclerosis.
But industry critics such as Vermont Senator Bernie Sanders are already demanding sharp price cuts that would reduce incentives for essential research and clinical trials, while signaling to the industry and investors that innovative medicines which address significant unmet needs aren’t valued. Sanders’ demands are based on a fundamental misunderstanding of the economics of innovation that are responsible for producing these game-changing treatments.
Cutting prices too much or too fast would be short-sighted. Drug companies have been directing more of their financial resources to research and development. According to the Bureau of Economic Analysis, private sector spending on pharmaceutical research and development totaled $120 billion in 2022, up 60% over the previous five years. That increase is almost twice the growth of overall spending on drugs in the U.S., net of rebates and discounts.
Private sector spending on the research and development of new therapies covers not just lab research but also the expensive and exhaustive clinical trials required to establish the safety and efficacy of prescription medicine. These trials are especially important for treatments intended to be used by large numbers of Americans from diverse backgrounds. The trials are also essential to broaden the uses for existing and new drugs to ensure more patients have access to therapies that improve and even extend lives.
The GLP-1 receptor agonists are a great example of this broadening process. After being originally approved for diabetes, their approved uses were extended to weight loss, with huge economic and health impacts. Obesity rates in the U.S. are startlingly high, with nearly 1 in 4 adults projected to have severe obesity by 2030, according to the New England Journal of Medicine. Patients living with this chronic disease often suffer from other related conditions that can be even more debilitating, and the disease disproportionately impacts communities of color. According to the Milken Institute, the cost of treating obesity and the myriad conditions related to it exceeds $1.4 trillion annually in the U.S.
Moreover, the GLP-1 receptor agonists are now being studied for addressing other cardiovascular and neurological problems. The potential economic impact of being able to slow the progression of Alzheimer’s, for example, could be in the trillions of dollars. That’s the opposite of bankrupting the health care system.
It’s important to note that the essential clinical trials are not paid for by the government. Instead, the pharmaceutical industry relies on revenues from its current generation of innovative medicines to fuel research and development of next-generation therapies — a rigorous, costly, and time-intensive process.
Drug pricing is complex — too complex — but any public policy response should balance affordability concerns with the real patient need to fund future innovation. Arbitrary, government-mandated price cuts threaten to scramble the existing market for innovative therapies while undermining the long-term sustainability of medical research. Policymakers should focus on fostering a regulatory environment that encourages competition, transparency, and responsible pricing practices. That will ensure groundbreaking treatments remain available for patients who need them while incentivizing continued investment in the development of tomorrow’s treatments and cures.
These extraordinary breakthroughs should encourage policymakers to embrace progress, not stifle it.
Dr. Michael Mandel is Vice President and Chief Economist at the Progressive Policy Institute in Washington DC and senior fellow at the Mack Institute for Innovation Management at the Wharton School (UPenn).
