Zepbound and Other Weight-Loss Drugs Get More Good News. Why It’s Too Soon to Celebrate.
All of the optimism about GLP-1 drugs overlooks the question of who will pay for it all.
The news keeps getting better for the new GLP-1 weight-loss drugs from Eli Lilly and Novo Nordisk.
Tuesday, Lilly announced a discounted version of its GLP-1 drug Zepbound that will compete with pharmacy-compounded imitators sold by telemedicine services like Hims & Hers Health.
Last week, Lilly unveiled new data showing its drug can prevent the onset of type-2 diabetes. That builds on positive trials over the past year in sleep apnea and heart failure. Early evidence has suggested GLP-1 drugs could also help with addiction and Alzheimer’s disease.
Meanwhile, the Food and Drug Administration now lists the status of Eli Lilly’s Zepbound and Mounjaro as “available,” after nearly two years of shortages.
The increased supply has renewed the focus on GLP-1s as a game-changing treatment that can put a significant dent in obesity and other diseases. In recent weeks, Wall Street analysts have sharply increased their near-term estimates for Lilly sales.
But all of the optimism overlooks a key factor: the healthcare system’s ability to pay for it all. Zepbound has cost nearly $13,000 a year.
As Barron’s warned nearly a year ago, the cost of new GLP-1 drugs from Eli Lilly and Novo Nordisk threatens significant strain on the U.S. healthcare system. Not long ago, the problem looked set to peak in 2027. Now, it’s arriving ahead of schedule.
“It did come sooner than expected,” Leerink Partners analyst David Risinger says of the increase in Lilly’s supply.
The analyst consensus estimate now puts combined sales of Zepbound and Mounjaro at $18.3 billion this year, according to FactSet, up 19.6% from just one month ago and 50% higher than the $12.2 billion estimate at the start of the year.
For next year, analysts forecast combined Zepbound and Mounjaro sales of $28.7 billion, up 19.1% from their month-ago estimate.
From Lilly’s perspective, the supply issues are largely in the rearview mirror. “We can fulfill orders as they’re received,” Lilly CEO David Ricks told investors in early August. That day, the company raised its full-year revenue guidance by $3 billion, citing what it called “increased confidence regarding production expectations.”
“There’s not an abundance of supply,” Ricks said. “But the product is flowing, and it’s flowing at a pretty high rate.”
Analysts and investors may be getting ahead of themselves, though. On the ground, patients still face extraordinary obstacles in getting the drugs.
Dr. Caroline Apovian, co-director of the Center for Weight Management and Wellness at the Brigham and Women’s Hospital in Boston, estimates that 40% of patients who she thinks should be able to access the weight-loss drugs are denied coverage by their insurance.
The FDA has approved Zepbound for patients with a body-mass index of 30, or with a BMI of 27 and one weight-related condition. But some insurers are limiting coverage to patient’s whose BMI is over 40, Dr. Apovian said, a condition known as Class III obesity, formerly referred to as morbid obesity.
In April, North Carolina’s public employee health plan stopped covering GLP-1 drugs as weight-loss treatments, saying that continuing to do so would have doubled the monthly premium paid by all plan subscribers.
Other types of plans are handling the issue by simply refusing to pay for the drugs. The healthcare policy group KFF said in June that just 1% of plans offered on Affordable Care Act marketplaces cover Wegovy, the brand name under which Novo’s drug is sold as a weight-loss treatment.
A Lilly spokesperson said that the company is seeing improvements in coverage, and over half of employers in the U.S. have opted into covering obesity medicines. Novo executives told investors early this month that more than 50 million people in the U.S. have Wegovy coverage.
When it comes to Medicare, the federal government is officially barred from paying for weight-loss drugs. In practice, that restriction could be loosened as Zepbound and Wegovy get approved for additional conditions including a common form of heart failure and sleep apnea. Medicare is already allowed to pay for Wegovy for some patients to reduce the risk of heart attack and stroke. It’s hard to say how the Medicare market will play out.
The discount versions announced Tuesday are available by mail-order from Lilly, at $400 and $550 a month for different doses. The vials are low-doses and require a separate needle. But at a 50% to 60% discount to the auto-injector version, Lilly hopes they’ll assuage insurers’ concerns about GLP-1 drug costs.
“Expanding coverage and affordability of treatments is vital to people living with obesity,” said James Zervos, CEO if the Obesity Action Coalition, in Lilly’s release.
Most of the recent clinical data around GLP-1s has been impressive, but a recent study resurfaced a troubling concern that the drugs could be causing suicidal ideations in some patients. Other studies, and investigations by regulators, had previously set aside links to suicide. But a new analysis of side effects reported worldwide identified a possible connection between Novo’s drug and suicidal thoughts, raising the question once again. Continued concerns could curtail the uptake of the drugs.
Novo says it stands behind the safety and efficacy of its GLP-1 drugs when used as indicated and taken under the care of a licensed healthcare professional.
For now, investors are largely overlooking the potential worries about the drugs and whether the system can shoulder the cost.
Shares of Lilly are up 21% over the past three months and 64% this year. It’s moving closer to a $1 trillion market value; in the U.S., it would be the first non-tech company to join the exclusive club.
Novo, meanwhile, has become the largest company in Europe. Its American depositary shares are up 30% this year.
Weight-loss drugs have taken the market, and world, by storm. Their impact could be huge, but the billions in revenue have to come from somewhere and, so far, no one is ready to foot the bill.