DOSE OF REALITY: BIG PHARMA’S EGREGIOUS GLP-1 WEIGHT LOSS DRUG PRICES COULD COST MEDICARE $35 BILLION

CBO Confirms Cost of Blockbuster Obesity Drugs at Current Prices Would Significantly Outpace Savings from Other “Health-Related Spending”

An analysis from the nonpartisan Congressional Budget Office (CBO) further underscores how Big Pharma’s egregious prices on GLP-1 prescription drugs for weight loss are unsustainable. In the report, CBO found the cost implications for Medicare coverage of anti-obesity medications (AOMs), including blockbuster brand name GLP-1s, would be massive.

CBO found expanding Medicare coverage for these medications at their current price “would increase federal spending, on net, by about $35 billion from 2026 to 2034.” The analysis found that over this time, “direct federal costs of covering AOMs would increase from $1.6 billion in 2026 to $7.1 billion in 2034.” In addition, CBO found that the savings from covering these AOMs “would be small—less than $50 million in 2026 and rising to $1.0 billion in 2034.”

Per user, the cost of Medicare covering these medicines at their current price is also significantly more than the projected savings, according to CBO, “with reductions in health-related spending per user [being] less than the estimated federal cost per user.” In fact, per user “the average direct federal cost would be roughly $5,600 in 2026, decreasing to $4,300 in 2034. And average offsetting federal savings would be about $50 in 2026, reaching $650 in 2034.”

The latest analysis confirms an earlier prediction from CBO in March that covering GLP-1 weight loss drugs “at their current prices, would cost the federal government more than it would save from reducing other health care spending.”

In a June 2024 report, CBO explained that even under current coverage standards, Medicare will pay an additional $36 billion for these drugs over the next ten years. CBO explained that regulatory changes made by the Food and Drug Administration in March 2024 significantly expanded eligibility for GLP-1s under current Medicare coverage requirements, massively increasing taxpayer costs under the status quo.

Other studies have also projected significant cost implications associated with Medicare coverage of GLP-1 drugs.

Prices of GLP-1s Unsustainable for U.S. Health Care System

In August, a study published in the Annals of Internal Medicine by re­searchers from Brigham and Women’s Hos­pi­tal, found that if Medicare Part D coverage for high-priced GLP-1 weight loss drugs expanded for new classifications such as cardiovascular disease, it could cost the U.S. health care system upwards of $145 billion.

During a December 2023 hearing in the U.S. Senate Committee on Health, Education, Labor & Pensions (HELP), expert witness Kasia Lipska, M.D., M.H.S, Associate Professor of Medicine at the Yale School of Medicine explained how Big Pharma’s egregious pricing practices on this new category of drugs present staggering potential costs.

“The price tags for these new medications are simply outrageous,” Dr. Lipska said. “Ozempic, the brand name for Semaglutide approved for type 2 diabetes and marketed by Novo Nordisk, has a U.S. list price of over $900 per month. Wegovy, the brand name for the same drug approved for obesity, is $1,300 per month…”

“…If Medicare were to fully cover Wegovy for all of its beneficiaries with obesity for one year, we as American taxpayers would end up with a $268 billion invoice,” Dr. Lipska stated. “To give you some perspective, that’s 70 percent of all the money that was spent on prescription drugs in the U.S. in 2021. And could we stop at one year? Probably not. What we know about Semaglutide, and the related medications is that they work while people take them. However, as soon as they stop, their weight comes back, so patients are looking at a potentially lifelong treatment, and we could be facing the most expensive subscription service in the history of medicine.”

Big Pharma Already Hiking Prices On GLP-1 Products

In addition, the brand name drug companies who market these drugs have already begun hiking prices. In January, Novo Nordisk increased prices on its Ozempic product, approved for type 2 diabetes, by 3.5 percent. Novo Nordisk increased the price of Ozempic by 4.9 percent in 2023 and in 2022 by 4.8 percent. Eli Lilly increased prices on its Mounjaro GLP-1 type 2 diabetes product earlier this year by 4.5 percent and in 2023 by five percent.

Big Pharma’s Egregious Pricing of GLP-1 Drugs in the U.S.

An August 2023 analysis from the Peterson-KFF Health System Tracker found that list prices for several blockbuster GLP-1 drugs, including Novo Nordisk’s Ozempic, Wegovy and Rybelsus products, as well as Eli Lilly’s Mounjaro, are significantly higher in the U.S. compared to other wealthy countries.

Brand name drug maker Novo Nordisk, for example, has set the U.S. list price for a monthly supply of Ozempic at $936 in the U.S., versus $169 in Japan. This means the company is charging patients 5.5 times more in the U.S. than in Japan for the same drug.

For Wegovy, the U.S. list price is $1,349, while the next highest price in a comparable country is $328 in Germany, again meaning U.S. patients pay more than four times more than the next comparable country for the same prescription drug.

Egregious GLP-1 Prices to Increase Health Care Costs for Employers

According to new research from the Business Group on Health and professional services firm Aon, health care costs for employers are expected to increase next year driven by Big Pharma’s egregious prices for blockbuster GLP-1 drugs and out-of-control prices on gene and cell therapy treatments. “GLP-1s and multimillion-dollar gene therapies,” are the “major culprits,” according to coverage of the analysis in Axios.

Research firm Aon anticipates companies’ health care costs will increase by nine percent next year. The Business Group on Health expects costs to increase by close to eight percent.

56 percent of respondents in the Business Group on Health’s survey expect GLP-1s to be a “great” or “very great” driver of increased costs. Meanwhile, 46 percent of respondents expect high-cost cell and gene therapies to be a “great” or “very great” driver of costs. These were the leading two answers in the survey over the next closest response by 20 percentage points.

Read the full analysis from the Congressional Budget Office HERE.

Read about how Big Pharma’s egregious prices on GLP-1 diabetes and weight loss drugs are leading to unsustainable costs for the health care system HERE.

Read more on bipartisan, market-based solutions to hold Big Pharma accountable HERE.