Growth of GLP-1s has implications for multiple stakeholders

By George Van Antwerp, managing director, Deloitte Consulting LLP, and Jay Bhatt, D.O., managing director of the Deloitte Health Equity Institute and the Deloitte Center for Health Solutions, Deloitte Services, LP

GLP-1 drugs—named for the hormone they mimic—can help regulate blood sugar, slow digestion, and decrease appetite. They have been used as a treatment for Type 2 diabetes since 2005,¹ but only one has been approved for weight loss.² Given the off-label popularity of the drugs for weight loss, some manufacturers are seeking fast-track approval from the Food and Drug Administration (FDA) for a weight-loss indication.³

It has become nearly impossible to turn on the TV, open a magazine, or scroll social media without seeing an ad for or news story about prescription weight-loss drugs. Given the breadth and cost of obesity worldwide, these products could have a profound impact across the health care ecosystem—from pharmaceutical companies to pharmacies, employers, health plans, and weight-loss companies…as well as for the individuals who use them.

Can GLP-1s help address a trillion-dollar issue?

Seven out of 10 adults and three out of 10 children in the United States are overweight or obese, according to the Centers for Disease Control and Prevention.⁴ Total annual medical costs for obese adults are an average of $1,861 higher than medical costs for people with healthy weight.⁵ That amount increases to $3,097 for a severely obese adult.⁶ But obesity is not unique to the U.S. By 2035, half of the world’s population—about four billion people—will meet the definitions of being over-weight or obese, according to an estimate from the World Obesity Federation. If that happens, costs related to care and lost productivity could top $4 trillion a year, according to the report.⁷

Consider a 40-year-old male whose body mass index (BMI) categorization moves from obese to overweight. The average lifetime savings could top $18,000 in direct medical costs and lost productivity. The savings could be more than $31,000 if that person is able to maintain a healthy weight, according to researchers from Johns Hopkins University.⁸ Obesity‐related absenteeism and presenteeism costs U.S. employers an estimated at $4.3 billion annually.⁹

Part D currently prohibits coverage of weight-loss drugs

GLP-1s are covered under Part D plans for non-weight-loss indications, but are not covered for weight loss.¹⁰ However, bipartisan legislation could authorize Medicare Part D coverage of medications used for the treatment of obesity or weight-loss management in overweight individuals with related comorbidities.¹¹ If 10% of Medicare beneficiaries with obesity used a GLP-1, the annual cost to Medicare would likely be between $13.6 billion (based on a 19% obesity rate from traditional Medicare diagnoses in 2021) and $26.8 billion (based on a 41.5% obesity rate from survey data for adults ages 60 and older), according to a study from the New England Journal of Medicine.¹² These estimates do not account for potential reductions in Medicare spending that could occur if weight-loss drugs reduce medical spending associated with other illnesses, such as heart disease.¹³

GLP-1s could impact multiple stakeholders

There could be significant cost implications for patients who stay on a GLP-1 as a lifetime medicine. However, adherence to long-term medications is only about 50%.¹⁴ This is why GLP-1 medications should be seen as a part of a comprehensive weight-loss solution. Along with a GLP-1, most patients likely also need a weight-loss strategy that includes nutrition and physical health literacy. There should also be considerations for cultural differences in diet and the role of food in social interactions. Without a broad approach to weight-loss, patients could gain back the weight once they stop taking the drug.

While the medication is only available via injection today, oral medications are likely on the way. This may help open the research pipeline into other weight-loss drugs. Here is a look at how GLP-1s could impact pharmaceutical manufacturers and other stakeholders in the health care ecosystem:

• Pharmaceutical companies: Wall Street analysts anticipate the market for GLP-1 drugs could reach up to $100 billion within a decade.¹⁵ Companies that develop effective weight-loss treatments could quickly become an acquisition target for larger drug manufacturers that want to expand their portfolios or to enter the obesity-drug space. In July, Eli Lilly and Co. announced plans to acquire privately held Versanis Bio to strengthen its market position in weight-loss treatments.¹⁶ In August, Novo Nordisk, which already manufactures GLP-1s, said it would acquire Inversago Pharma, a Canadian drug manufacturer that is developing obesity and diabetes treatments.¹⁷

Strategic suggestion: Pharmaceutical companies should try to focus on three key areas to support ongoing adoption of GLP-1s:

1. Long-term drug-adherence strategies

2. Education that helps ensure that patients can keep weight off even if they titrate off the medication

3. Collaboration with employers and regulators

• Employers: The vast majority of large employers (92%) cover GLP-1s for diabetes, according to the results of a recent survey conducted by the Business Group on Health.¹⁸ While less than half of respondents (46%) cover the drug for weight loss, an additional 3% intend to add it for the 2024 plan year and 13% more said they were considering it for the following year. One downside is the cost. At this point, the drugs are relatively expensive.¹⁹ There are also concerns about potential side effects.²⁰

Strategic suggestion: Fully insured health plans, self-funded employers, and government payers should develop and implement customized clinical programs that include a range of options for weight loss (e.g., bariatric surgery, GLP-1s, and traditional weight-loss programs).

• Weight-loss companies: Some organizations that have long focused solely on exercise and diet for weight-loss are beginning to recommend GLP-1s to some members. Weight Watchers (now known as WW) recently launched a digital health platform that will connect members to clinicians who can prescribe medications for chronic weight management.²¹ The new drugs could encourage people to eat healthier foods. But they could also have the opposite effect if people are able to keep weight down while making poor food choices.

Strategic suggestion: Traditional weight-loss companies should try to find the green space between their traditional approaches to weight loss and a drug-first strategy. Some patients may naturally gravitate toward the path of least resistance if drug therapy is a safe, affordable, and reliable option. At the same time, a lifetime of therapies could be cost prohibitive. A solution that combines diet, exercise, and other options to sustain lower BMIs could be more appealing to weight-loss companies and their members.

• Health plans:  About 60% of adults who are trying to lose weight, and 25% of those who aren’t currently trying to lose weight, would be interested in trying a safe and effective weight-loss prescription drug.²² However, just 16% said they would be interested in the drug if it was not covered by insurance. Some health plans are pulling back on their coverage of some GLP-1s.²³ Prices for GLP-1s can be 20 times higher, or more, than previous anti-obesity drugs, between $900 and $1,300 per monthly dose.²⁴ (Note, this is prior to any rebates or discounts given to payers, PBMs, or the government.) Numerous conditions (e.g., diabetes, high blood pressure, heart disease, some cancers, fatty liver, sleep apnea, arthritis) are linked to obesity.²⁵ However, while weight management and sustainable weight loss could drive significant health savings and improved health outcomes, quantifiable results will likely take time.

Strategic suggestion: Health plans should look for ways to work with providers and pharmaceutical manufacturers to develop a personalized approach to weight management that includes coaching, nutrition, exercise, bariatric surgery, and drug therapy. They should also consider access issues and other social determinants of health to make sure that off-label use doesn’t create systemic barriers where only high-income individuals can afford the out-of-pocket costs.

• Pharmacies: Reducing the prevalence of obesity could have a trickle-down impact on the sale of products that help manage diseases like diabetes. While numerous pharmacies have talked about the growth in topline from GLP-1s, they have been quick to point out a minimal (if any) impact on bottom line.²⁶ This double impact could reinforce the need for retail pharmacies to continue the shift from a fee-for-service model (i.e., being paid per prescription and making money on the spread on the drug) to a value-based model where they are focused more on cognitive services and delivering outcomes.

Strategic suggestion: Pharmacies should continue to broaden their approach to services to include lab, screenings, at-home testing, education and care management, and coordination with nutritionists. They should also look for ways to identify and guide patients through the complex process of losing weight in a healthy way.

Conclusion

Obesity has become an epidemic in the U.S. and around the world. Not addressing this issue could have serious long-term implications. While GLP-1s have the potential to have a meaningful impact on obesity, without lifestyle intervention it is unlikely they will reduce long-term costs or meaningfully alter the current trajectory. At the same time, this type of innovation and thinking is exactly what we need from the pharmaceutical industry. GLP-1s are a new arrow in the quiver, but there is still a lot to learn about long-term impact. This next phase in potentially addressing obesity is exciting, but we’re also working with clients to think broadly about how to understand the confounding variables—from social dynamics to genetics—that affect obesity.

Endnotes:

¹ GLP-1 receptor agonists in the treatment of type 2 diabetes, National Institutes of Health, April 2021; Glucagon-Like Peptide 1-Based Therapies for Type 2 Diabetes, American Diabetes Association, April 1, 2005

² GLP-1 agonists: Diabetes drugs and weight loss, Mayo Clinic, June 29, 2022

³ Eli Lilly releases data for a new weight-loss drug to tackle obesity, NPR, April 27, 2023

⁴ Data & Statistics: Overweight and Obesity, Centers for Disease Control & Prevention

⁵ Data & Statistics: Overweight and Obesity, Centers for Disease Control & Prevention

⁶ Obesity epidemic accounts for more than $170 billion, Forbes, March 31, 2021

⁷ Economic impact of overweight and obesity to surpass $4 trillion by 2035, World Obesity Federation, 2023

⁸ Losing weight can trim expenses over a lifetime, UPI, December 26, 2019

⁹ Occupation-specific absenteeism costs associated with obesity and morbid obesity, Occupational and Environmental Medicine

¹⁰ What could new anti-obesity drugs mean for Medicare?, Kaiser Family Foundation, May 18, 2023

¹¹ The Treat and Reduce Obesity Act, 118th Congress

¹² Mapping Medicare disparities by population, CMS, July 26, 2023; National Health and Nutrition Examination Survey, Centers for Disease Control and Prevention, June 14, 2021; Medicare Part D coverage of antiobesity medications, The New England Journal of Medicine, March 16, 2023

¹³ Medicare coverage of weight-loss drugs could significantly reduce costs, University of Southern California, April 18, 2023

¹⁴ Medication adherence: The elephant in the room, U.S. Pharmacist, January 19, 2019

¹⁵ Pill for Obesity Has Wall Street salivating, Wall Street Journal, June 26, 2023

¹⁶ Lilly completes Acquisition of Versanis Bio, Eli Lilly press release, August 14, 2023

¹⁷ Novo Nordisk to acquire obesity drug developer Inversago, Reuters, August 10, 2023

¹⁸ 2024 Large Employer Health Care Strategy Survey, Business Group on Health, August 22, 2023

¹⁹ Evidence Report on treatments for obesity management, Institute for Clinical and Economic Review, August 31, 2023

²⁰ GLP-1 agonists: Diabetes drugs and weight loss, Mayo Clinic

²¹ WeightWatchers jumps into the prescription weight loss drug business, CNN, March 7, 2023

²² Nearly half of all adults interested in prescription weight-loss drugs, Kaiser Family Foundation survey, August 4, 2023

²³ Insurance providers are ending coverage of weight loss drugs, healthline, August 8, 2023

²⁴ People can't get Ozempic, new weight-loss drugs because of broken healthcare system, Business Insider, April 23, 2023

²⁵ Health effects of overweight and obesity, Centers for Disease Control and Prevention

²⁶ Weight loss drugs boost retail pharmacy sales, CNBC, August 21, 2023

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