Monday, March 4, 2024

The problem at hand is quite intimidating: New and powerful drugs that can help the 100 million American adults suffering from obesity are available but come with high costs. This raises concerns about how the nation can afford lifelong treatments for such a large population, with prices ranging from $900 to $1,300 every four weeks. Some experts, like Dr. Walter C. Willett from Harvard T.H. Chan School of Public Health, have cautioned that these drugs could increase the country’s healthcare expenditure by 50%. However, one critical aspect often overlooked in these discussions is that the drugs’ list prices differ significantly from the prices that companies receive after negotiating deals with health insurers or pharmacy benefit managers. While net prices are generally undisclosed, there are data sources that can be used to estimate them. A recent paper published by the American Enterprise Institute revealed that the net prices for these new obesity drugs are substantially lower than their published list prices. Economists anticipate that as more than a dozen companies enter the market with their obesity drugs, competition will drive prices down significantly, as has happened with other costly drugs. While the drugs’ prices are currently unaffordable for many, there is hope for future affordability. Manufacturers are currently benefiting from high demand, with Novo Nordisk, the maker of Wegovy and Ozempic, projected to earn billions of dollars in revenue. However, these revenue predictions are based on the drugs’ net prices. According to economists Benedic N. Ippolito and Joseph F. Levy, the estimated net prices for these drugs are much lower than the list prices, indicating significant discounting. The estimated net prices for these drugs are approximately $700, $300, and $215 every four weeks for Wegovy, Ozempic, and Mounjaro, respectively. These prices represent substantial discounts compared to their list prices. However, economists caution that these figures may change over time due to fluctuating prices and prescriptions. The question remains, though: what is the value of weight loss to patients and society? Obesity itself is costly as it leads to an increased risk of diseases like diabetes and heart disease, resulting in excess yearly health costs of $1,861 per person and $172.74 billion in annual expenses. While a study by the Institute for Clinical and Economic Review concluded that Wegovy was not cost-effective a year ago, experts suggest that the drug’s estimated net price alters this assessment. However, there are concerns about the high budget burdens associated with the drug. It is still uncertain where the cost of these drugs will go in the future, as competition and uptake in the market could impact prices significantly. Nevertheless, the expectation is that with reduced obesity rates, there will be a decrease in expensive obesity-related health problems. The recent study by Novo Nordisk showing that Wegovy reduces the risk of heart attacks, strokes, hospitalizations for heart failure, and heart disease deaths by 20% solidifies the drug’s potential benefits. Nonetheless, the drugs’ net prices remain unaffordable for many potential patients. Medicare does not cover Wegovy due to legal restrictions, and few state Medicaid programs provide coverage. While 80% of private insurers cover Wegovy, it is still unaffordable for many insured patients due to co-pays and deductibles. This pricing issue creates disparities in access, with poorer patients being unable to afford these drugs. The hope is that with more companies developing their own obesity drugs, competition will increase, leading to lower prices. This pattern has been observed in drugs for hepatitis C, where prices dropped significantly after the introduction of competing drugs. As more companies enter the market, pharmacy benefit managers have greater leverage to negotiate lower net prices. Similar circumstances may arise with Wegovy as more competitors emerge. In conclusion, while the current prices of obesity drugs are high, there is optimism that increased competition will lead to more affordable options in the future.

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