Online Journal | Justin Plank | January 2025
Background
Every year, the United States spends an estimated $173 billion treating obesity-related diseases like diabetes and heart disease, more than the annual budgets of 42 U.S. states combined. Yet, medications like Wegovy and Ozempic, which could help address these issues, remain priced at over $1,300 per month, putting them out of reach for millions who need them most (CDC, 2024).
GLP-1 receptor agonists, such as Wegovy, Ozempic, and Mounjaro, have gained significant attention for their effectiveness in weight loss and their potential to reduce obesity-related health conditions. However, their exorbitant costs and disproportionate accessibility highlight critical inequities, as higher-income individuals are far more likely to benefit. This paper examines the economic implications of GLP-1 medications, focusing on pricing strategies, disparities in access, and their broader impact on the healthcare system.
Economic Factors
Pricing and Market Dynamics
The GLP-1 market currently operates as a duopoly dominated by pharmaceutical giants Novo Nordisk and Eli Lilly. The battle of Novo’s Ozempic and Wegovy versus Eli Lilly’s Mounjaro and Zepbound has created massive barriers to competitors’ entry. Eli Lilly has adopted a pricing strategy that undercuts Novo Nordisk, offering Zepbound at a lower price for uninsured patients, with some paying as little as $399 per month. However, these discounts are not widespread, and affordability remains a significant challenge. A 2024 study found that 69% of U.S. adults lacked insurance coverage for GLP-1 medications, leaving many to bear substantial out-of-pocket costs (Long, 2024).
These outrageous costs reflect the media portrayal of a specific group who can afford these drugs, the rich. To inspect demand in markets, we often look at willingness to pay as the driver of consumer decisions. However, the current U.S. system relies largely on the patient’s ability to pay, not their willingness to pay, which is not ethical. In addition, these lofty prices upwards of $1,300 are unique to the U.S., as countries like Germany and Japan have managed to offer drugs like Wegovy at retail prices of only $280 (U.S. Senate, 2024).
While high costs currently limit access for many, increased competition and the introduction of generic versions of GLP-1s are expected to drive prices down. Since its launch, the price of Ozempic has decreased by 40%, and financial analysts project prices to decrease by over 10% annually by 2027 (Murphy, 2024). Despite these trends, access remains a major barrier, particularly for low-income individuals who are uninsured or underinsured, highlighting the need to bridge the gap of affordability in the future.
Racial Disparities in Access
One of the most concerning aspects of the GLP-1 market is the racial disparities in access. Black and Latino Americans are disproportionately affected by obesity, but studies show that these groups face significant barriers to accessing GLP-1 medications. For instance, Black patients are 19% less likely to be prescribed these drugs than white patients, and Latino patients are 9% less likely to receive prescriptions (Kaplan, 2024). With the thought that GLP-1’s would help resolve health disparities, differences in ability to pay may deepen existing health disparities and prevent marginalized communities from benefiting from these potentially life-changing drugs.
The high cost of GLP-1s is a key factor in this disparity. Wegovy’s introductory list price was over $1,300, making these drugs financially inaccessible for many people in these communities. Additionally, limited insurance coverage, especially among Medicaid beneficiaries, compounds this issue. If these disparities are not addressed, they could further widen the gap in health outcomes between different racial groups (Artiga & Hill, 2024).
Healthcare Costs
The widespread use of GLP-1 medications also has significant implications for healthcare costs. While the upfront price of these drugs is high, they may save money in the long run by reducing the prevalence of obesity-related diseases, such as diabetes and heart disease, which are much more costly to treat. If weight loss through GLP-1s helps prevent more expensive long-term health problems, such as strokes, heart attacks, or diabetes complications, it could lead to substantial savings for healthcare systems. Policymakers are increasingly recognizing these potential savings and are exploring the idea of expanding coverage for these drugs under programs like Medicare, which could reduce long-term healthcare spending (Goldman & Ward, 2024).
However, the ongoing treatment costs for these medications raise concerns about the sustainability of their widespread use in the healthcare system, especially given the risk of weight regain without continued use. For example, covering medications like Wegovy could cost health plans hundreds of millions annually for only a small portion of their members (Siskind, 2024). This financial burden highlights the importance of balancing affordability with effective resource allocation.
Discussion
In the short term, the high price of GLP-1 medications poses a significant challenge for many people, particularly those from lower-income backgrounds and marginalized communities. Even with discounts and rebates offered by companies like Eli Lilly, the costs are restrictive for a large portion of the necessary population. However, history suggests that there is promise for greater access. When HIV treatments first launched, their costs were similar to those of GLP-1s, at almost $1,000 a month. Now, generic versions sell for $69 monthly or less (Goldman & Ward, 2024).
In the long term, while the immediate costs of providing access to GLP-1s may be high, the potential savings from preventing obesity-related diseases could offset these costs. For public health programs like Medicare, expanding access to these drugs could result in significant savings by reducing the prevalence of conditions like diabetes, heart disease, and stroke, as well as potential benefits for depression, sleep apnea, Alzheimer’s, and substance use disorders. However, these potential savings must be carefully weighed against the short-term financial burden.
Conclusion
GLP-1 medications hold significant promise in tackling obesity and related health issues, offering the transformative potential for health improvements. However, the steep costs and unequal access create substantial hurdles. Overcoming these challenges could lead to long-term healthcare savings and improved overall health outcomes. Achieving broader access will require innovative pricing models and expanded insurance coverage, particularly for marginalized communities. Policymakers must carefully weigh immediate costs against the future benefits, ensuring that these life-changing medications are available to all who need them.
Works Cited
Artiga, Samantha, and Latoya Hill. “What Are the Implications of New Anti-Obesity Drugs for Racial Disparities?” KFF, 24 July 2024, www.kff.org/policy-watch/what-are-implications-of-new-anti-obesity-drugs-racial-dispari ties/.
Centers for Disease Control and Prevention. “About Obesity.” Obesity, 23 Jan. 2024, www.cdc.gov/obesity/php/about/index.html.
Goldman, Dana, and Alison Ward. “Medicare Coverage of Weight Loss Drugs Could Save the U.S. Billions of Dollars.” USC Schaeffer, 3 Apr. 2024, healthpolicy.usc.edu/article/medicare-coverage-of-weight-loss-drugs-could-save-billions-of-dollars/.
Kaplan, Karen. ““Miracle” Weight-Loss Drugs Could Have Reduced Health Disparities. Instead
They Got Worse.” Los Angeles Times, 15 Apr. 2024, www.latimes.com/science/story/2024-04-15/how-miracle-weight-loss-drugs-made-health -disparities-worse.
Loftus, Peter. “The Price War in Weight Loss Drugs is Here” The Wall Street Journal, Sep. 20,
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Long, Joshua. “Can I Afford Ozempic, Wegovy, Mounjaro, or Zepbound?” Bariatric Surgery | the Bariatric & Metabolic Center of Colorado, The Bariatric & Metabolic Center of Colorado, 26 Mar. 2024, bariatricsurgeryco.org/weight-loss/can-i-afford-ozempic-wegovy-mounjaro-or-zepbound/. Accessed 4 Dec. 2024.
Muller, Madison. “Ozempic, Wegovy, Mounjaro Are More Expensive in US than in Other Countries.” Bloomberg.com, Bloomberg, 17 Aug. 2023, www.bloomberg.com/news/articles/2023-08-17/weight-loss-drugs-cost-far-more-in-us-th an-other-nations. Accessed 19 Dec. 2024.
Murphy, Alexandra. “5 Reasons Ozempic’s Price Could Drop.” Beckershospitalreview.com, 23 Sept. 2024, www.beckershospitalreview.com/glp-1s/5-reasons-ozempics-price-could-drop.html.
Siskind, Adam, et al. 3 Health Plan Strategies for Balancing Cost and Access with GLP-1s. “Why Is Novo Nordisk Charging Americans with Diabetes and Obesity Outrageously High Prices for Ozempic and Wegovy? | the U.S. Senate Committee on Health, Education, Labor & Pensions.” Senate.gov, Senate Committee on Health, Education, Labor and Pensions, 24 Sept. 2024, www.help.senate.gov/hearings/why-is-novo-nordisk-charging-americans-with-diabetes-a nd-obesity-outrageously-high-prices-for-ozempic-and-wegovy.