When Jimmy Kimmel hosted the Academy Awards this year, he cleverly joked about Hollywood’s reliance on the diabetes medication Ozempic for weight loss. Novo Nordisk, the company behind Ozempic, has seen a surge in demand thanks to celebrity endorsements. However, the drug’s reputation as a “skinny jab” has made it difficult to convince health systems and insurers to cover its cost.
To change this, Novo Nordisk recently published headline trial data that they believe will sway payers. In the trial, Wegovy (the weight loss version of semaglutide) was shown to reduce the risk of serious cardiac events by 20%. This breakthrough proves that the drug not only aids weight loss but also improves heart health, which can ultimately reduce healthcare costs.
As a result, shares in Novo Nordisk and its main competitor Eli Lilly reached record highs. Analyst Evan Seigerman even added billions of dollars to his sales estimates for weight loss and diabetes drugs. He now predicts that the entire market will be worth $130-140 billion. These drugs are seen as a potential solution to the staggering $170 billion in annual healthcare costs related to obesity in the US.
However, health insurers and public payers are hesitant to cover the drugs due to the high costs. The conflict between patient advocates, doctors, and plan sponsors is intensifying. James Gelfand, president of the ERISA Industry Committee, describes it as a “war zone” on LinkedIn.
Semaglutide, originally developed to treat diabetes, has shown promising results for obesity treatment. Participants in the trials lost an average of 15% of their body weight with the weekly injection, compared to just 2% with diet and exercise alone. Eli Lilly’s similar drug tirzepatide has also demonstrated significant weight loss benefits.
While the drugs have side effects like nausea and gastrointestinal problems, many people are willing to tolerate them for the potential impact on their size and health. Novo Nordisk invested in a large trial to gather proof of the drugs’ impact on heart health, blood pressure, lipid balance, and inflammation. The initial results were impressive, showing a 20% reduction in the risk of heart attacks and strokes.
Novo Nordisk hopes that this data will help them compete with Eli Lilly’s upcoming weight loss drug and convince payers to cover the cost. Analysts believe that the trial results will build confidence in the drugs’ benefits, despite ongoing safety concerns. The hope is that coverage will expand to include more patients, especially those with comorbidities and high BMIs.
Currently, less than half of all US commercial insurers cover Wegovy, and Medicare is prohibited from covering obesity medications. Public health systems in Europe also have restrictions on who qualifies for the drug. However, after the heart trial data, financial analysts believe there will be pressure to change this reluctance. Not covering a potentially life-saving drug like Wegovy would be deemed unethical.
Novo Nordisk and other drugmakers have been lobbying Congress to reverse the ban on Medicare coverage for obesity drugs. The new trial data may help in this effort by proving the long-term cost savings on hospitalizations for heart attacks and strokes. Although passing legislation is challenging, there is hope that Medicare will cover Wegovy for people with cardiac conditions.
Overall, the release of the trial data has significantly impacted the perception of weight loss drugs and their potential as a medical treatment for obesity. Novo Nordisk is optimistic that broader coverage will be achieved, allowing them to reach more patients in need. The ultimate goal is not only to save on healthcare costs but also to improve the overall health and well-being of individuals struggling with obesity.
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