The excitement for using diabetes medications to lose weight is having a predictable economic effect — high prices for those drugs.
Ramstad: Slim chance, but demand for weight-loss drugs may crack Big Pharma
It may be too much to hope for, but diet drug dynamics could be what finally breaks the pharmaceutical industry's pricing control in U.S.
This could be the last straw with Big Pharma, drugmakers whose profits are propped up by Americans paying far more than anyone else in the world for prescriptions.
Demand for weight-loss drugs may be so high — and the tradeoff of long-term improvement in Americans' health so beneficial — that it leads to a fundamental change in drug pricing.
I began to think so after comments made last week by executives at Minnetonka-based UnitedHealth Group, the nation's largest health insurer, about the high prices of drugs known by their class name, GLP-1.
Sales of GLP-1 drugs are surging as more and more Americans use them to lose weight. Globally, they jumped to $35 billion in sales last year from $9 billion in 2021. They will far surpass that this year.
The GLP-1 drug Ozempic is now the No. 2 selling nondiscounted drug in the country, after Humira, used for arthritis.
Most GLP-1 drugs await FDA approval for weight loss, but doctors can still prescribe them for "off label" use. That leaves drugmakers free to set prices as they wish. Unlike in many countries, the U.S. government doesn't set drug prices. Insurers don't negotiate prices for people to use drugs in unapproved ways.
Ozempic costs about $900 a month in the U.S., compared to $83 in France and $169 in Japan, countries where regulators set prices.
If the U.S. prices don't come down, insurers and employers that insure their employees are going to be caught. People trying to lose weight will press for coverage of GLP-1s. The costs would have to be passed on in the form of higher premiums.
Andrew Witty, UnitedHealth's CEO, told analysts on Friday, "Our clients are struggling with the list prices that have been demanded of these products in the U.S., which are running at about 10 times the level of price paid in Western Europe. So overall, I'd say that our focus is to try and find a way to make this a sustainable and affordable space for our clients."
Pharmaceutical makers have long fought to keep the pricing power they have in the U.S. And their prices have long been a problem recognized by regulators and lawmakers like Minnesota U.S. Sen. Amy Klobuchar.
Now, drug prices are creating alarm all around the health care industry.
"It is the number one conversation that we have with employers and that we have internally — how are we grappling with prescription drug costs," said Jennifer Danielson, chief health plan officer at Bloomington-based HealthPartners, which provides insurance and runs one of the state's biggest medical systems.
Americans last year spent $1,432 per capita on prescription drugs, more than twice the average of people in 41 developed countries, according to the Organization for Economic Cooperation and Development. The No. 2 Germans spent $400 less per capita.
The pharmaceutical business walks a high wire between the financial need to recover the costs of innovation and the moral and ethical imperative to help sick people, even those who can't afford to pay much.
Witty invoked that tension when he described the pricing of weight-loss drugs last week. "Innovation that is not affordable is not innovative," he said.
However, many new treatments of cancers, chronic inflammatory diseases and other difficult health conditions are very expensive. Biologics and biosimilars, as well as cell and gene therapies, can reach into the millions of dollars.
None of those matches the possible demand for weight-loss drugs, though. The Centers for Disease Control and Prevention says 4 in 10 American adults, or about 104 million people, are obese. Minnesota ranks 25th in obesity rate, up from 43rd in 2000, the Star Tribune reported earlier this week.
The concentration of producers and suppliers is another reason for high prices — and for shortages of medications, including GLP-1s. The White House last month reported shortages for 15 chemotherapy drugs in the U.S.
In what some saw as a first step toward price regulation, Congress last year gave Medicare, the largest purchaser of prescription drugs, authority to negotiate drug prices.
The Department of Health and Human Services identified the first 10 drugs for negotiation last month. No GLP-1 drugs were on the list. Farxiga, Fiasp, Jardiance and Januvia, all used to control Type 2 diabetes, were.
"As a country, we haven't found a bottom to what price just gets absorbed into the way that health care purchasing is financed," Danielson said. "It's up to the purchasers to say, 'Enough. We can't afford this any longer.'"
Investors are betting that won't happen. On the same day that UnitedHealth executives sounded their cautionary note on GLP-1 pricing, Novo Nordisk, the Danish maker of Ozempic and similar drug Wegovy, raised its revenue and profit outlook for 2023. Its share price hit an all-time high.
It’s not proven that certain songs can roust people in comas, but doctors say it may help, and it can’t hurt.