Can Ozempic be a breakthrough drug and overpriced at the same time?

Can Ozempic be a breakthrough drug and overpriced at the same time?

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Millions of Medicare patients could soon be prescribed Wegovy — and it’s going to cost taxpayers a lot of money.

Last month, Medicare announced that it will cover the new class of anti-obesity drugs, including Wegovy and Ozempic, for patients at risk of stroke or heart attack. It’s a watershed moment for a novel class of medications, one sure to amplify debates about their long-term value — and whether their high price tags are worth it.

Heart disease is the leading cause of death in the United States, responsible for 1 in every 5 deaths. As of 2017, 42 percent of Medicare enrollees 65 and older had at least one heart condition — meaning that the federal government’s decision will likely dramatically increase the number of Medicare enrollees who are prescribed these drugs. One analyst recently predicted “millions” of new prescriptions if heart-related indications were covered.

Medicare spending on semaglutide-based drugs — the active ingredient in Wegovy and Ozempic — already stood at $5.7 billion in 2022 and is poised to grow exponentially. (That number is before accounting for federally mandated rebates that reduce the actual costs; real spending numbers are lower, but they’re notoriously difficult to pin down.)

But the drugs are extraordinarily expensive, with Wegovy’s list price around $16,200 for a one-year supply. Some experts say we don’t know enough about the long-term benefits to justify paying that cost on taxpayers’ dime.

Why it’s so hard to figure out if Wegovy and Ozempic are really worth it

Historically, government health insurance plans like Medicare and Medicaid have covered any FDA-approved drugs that treat a condition covered under the program’s benefits — in this case, heart disease. But in recent years, as novel treatments for various health conditions have been debuting with astronomical list prices, policymakers have begun restricting coverage.

A decade ago, for example, some state Medicaid programs struggled to afford a new generation of hepatitis C cures. In 2021, when the FDA approved a new Alzheimer’s drug with limited clinical evidence, Medicare sought to restrict coverage to constrain its spending on an unproven treatment.

In 2022, Congress gave Medicare the authority to negotiate drug prices directly with pharmaceutical companies for the first time, giving the program more sway to align its payments for prescription drugs with the actual value those drugs provide. But Wegovy and Ozempic present a particularly difficult case. Obesity is a national health crisis, one affecting tens of millions of Americans, and weight-loss drugs have never been covered by Medicare. But there is growing data that these drugs also reduce heart disease risk — one clinical trial involving more than 17,000 patients found Wegovy significantly reduced the chances of an adverse cardiovascular event such as heart attack or stroke. Just 6.5 percent of participants who received Wegovy experienced an acute cardiac emergency, compared to 8 percent of patients who took a placebo.

Still, a recent analysis by the Congressional Budget Office projected that if semaglutide-based medications become more widely available, they “would cost the federal government more than it would save from reducing other health care spending — which would lead to an overall increase in the deficit over the next 10 years.”

But beyond that window, it was unclear what budgetary effect they’ll have. There is too much uncertainty about the drugs’ long-term ability to improve people’s health and avert other health care spending on diseases linked with obesity.

That is the usual ruthless cost-benefit analysis used by policymakers: Does the drug save the government money or not? There’s little room in government balance books for, say, a person’s improved self-esteem or increased ability to enjoy physical activity after losing weight.

“Prevention efforts are often sold as saving money, given the potential to reduce health problems and costs in the future. The potential for net savings from prevention can be compelling, but it’s not always backed up by evidence for many interventions,” said Larry Levitt, executive vice president at the health policy think tank KFF. “But we don’t focus enough on the potential to improve people’s lives through prevention, which is an important goal in its own right, beyond the dollars and cents.”

Ozempic and similar drugs are still in early stages, and a lot will change in the coming years. New iterations of the drugs are in the pipeline. The prices could change, too. In a decade or so, under current patent law, generics manufacturers will be able to produce cheap versions of semaglutide, which should lead to price reductions. Experts expect Medicare to try to negotiate prices with the manufacturers of Wegovy and Ozempic, given the projected increase in prescriptions after the recent coverage decision.

But while anti-obesity drugs have been welcomed as a breakthrough for one of the country’s biggest and most persistent public health crises, plenty of questions remain about their long-term effectiveness.

The medications are extraordinarily powerful at controlling patients’ appetite and therefore aiding weight loss; in clinical trials, patients lost an average of 15 percent of their body weight in little over a year.

But that’s only as long as patients continue to take them — once a patient stops the drug, the benefits go away. And medication adherence is a struggle across the US health system.

And even if people do adhere to regular doses, taking Wegovy or Ozempic long-term may prove prohibitively expensive. Even Medicare enrollees can pay up to $2,000 out of pocket annually for their prescription drugs, depending on their specific plan.

The available evidence suggests patients will gain back some or all of the weight they had lost if they stop taking semaglutide. The whiplash of losing and then regaining weight may even be worse for a person’s health than if they had never lost the weight in the first place, Stacie Dusetzina, a health policy professor at Vanderbilt University, told me. Doctors call it “weight cycling.”

“That actually is pretty concerning,” Dusetzina said.

Given the evidence that people struggle to maintain weight loss over time, some experts have called for putting less emphasis on losing weight for people who are obese or overweight and more on improving their access to medical care.

How much should we pay to add a year of life?

The quality-adjusted life year (QALY), the most common metric that policymakers use to project the value of a treatment over time, aims to account for both the length of time that a drug might extend a person’s life and the quality of life that the person will enjoy during that extra time. Analysts can then tabulate how much money would need to be spent on a treatment in order to give a patient an additional year of high-quality living.

But it’s not a very precise instrument; QALY has long been criticized as oversimplified, failing to account for the nuanced considerations that an individual patient might have about their own health. That lack of precision is evident in recent attempts to evaluate semaglutide’s long-term value.

Wegovy manufacturer Novo Nordisk recently estimated that prescribing semaglutide to add one QALY to a patient’s life would cost anywhere between $23,500 and $144,000. The reason for such a wide range is the broad spectrum of alternative treatments for the same condition. Compared to receiving no other treatment, semaglutide added one QALY at a cost of $27,000. That’s a good deal — policymakers typically value one QALY at between $100,000 and $150,000.

But when you start comparing Wegovy to other treatments on the market, including older and cheaper anti-obesity medications, the cost to add a QALY is much higher.

Other projections have even less rosy expectations about the drug’s value, suggesting that it’s significantly overpriced. The Institute for Clinical and Economic Review, an independent think tank known for its cost-benefit analyses, concluded that Wegovy would be worth an annual price between $7,500 and $9,800 per patient — substantially less than the current list price — for the health benefits it yields.

We are at the start of a real-world experiment. It’ll take years of studying uptake, adherence, and clinical outcomes to get a better idea of how much value Wegovy, Ozempic, and their successors actually provide.

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