With the advent of remarkably effective weight-loss drugs, America’s high obesity rate and astronomical prescription drug prices appear to be on a catastrophic collision course, one that threatens to “bankrupt our entire health system,” according to a new Senate. report that modeled the economic impact of drugs in different adoption scenarios.
If just half of obese adults in the United States started taking a new weight-loss drug, such as Wegovy, the collective cost would be about $411 billion a year, according to the analysis. That’s more than the $406 billion Americans will spend in 2022 on all prescription drugs combined.
While the majority of spending on weight-loss drugs will occur in the commercial market – which could easily lead to higher health insurance premiums – taxpayer-funded Medicare and Medicaid programs will also experience an extraordinary financial burden. In the scenario where half of obese adults take the drug, the cost of these federal programs would rise to $166 billion per year, rivaling the total drug costs in 2022 of $175 billion.
In total, by 2031, total U.S. spending on prescription drugs is expected to reach more than $1 trillion annually thanks to weight-loss drugs. Without them, projected baseline spending for all prescription drugs would be just under $600 billion.
The analysis was conducted by the Senate Health, Education, Labor, and Pensions (HELP) Committee, chaired by staunch drug pricing critic Bernie Sanders (I-Vt). And it’s easy to overturn a common argument about the high prices of blockbuster weight-loss drugs. That is, because of their high effectiveness, the drugs will improve people’s health in a variety of ways, including controlling diabetes, improving cardiovascular health and potentially more. And, with these improvements, people generally won’t need as much health care, reducing health care costs across the board.
But even though these medications appear to have many potentially life-changing overall health benefits, drug prices remain too high to be fully offset by savings in health care utilization. The HELP committee’s analysis cited a March Congressional Budget Office (CBO) report that concluded: “At their current prices, (obesity drugs) would cost the federal government more than it would save by reducing d other health spending, which would lead to an overall increase in the deficit over the next 10 years. Additionally, in April, the CBO chief said drugmakers would have to cut the prices of their weight-loss drugs by 90 percent to “achieve a ballpark goal” of not increasing the national deficit.
The HELP committee report proposes a relatively simple solution to the problem: Drugmakers should set their prices in the United States to match the relatively low prices they have set in other countries. The report focused on Wegovy because it currently accounts for most U.S. prescriptions in the new class of weight-loss drugs (GLP-1 drugs). Wegovy is made by Novo Nordisk, based in Denmark.
In the United States, the estimated net price (after discounts) of Wegovy is $809 per month. In Denmark, the price is $186 per month. A study by Yale researchers estimates that drugs like Wegovy can be manufactured profitably for less than $5 per month.
If Novo Nordisk set its U.S. prices for Wegovy at the same level as the Danish price, spending on treating half of U.S. adults with obesity would increase from $411 billion to $94.5 billion, a saving of ‘approximately 316.5 billion dollars.
Without a drastic reduction in prices, Americans risk either losing access to medicines, incurring higher overall health care costs, or some part of both. The HELP committee report highlighted how this recently happened in North Carolina. In January, the State Employees Health Plan Board of Trustees voted to end all coverage of Wegovy and other GLP-1 drugs because of their cost. Estimates suggest that if the plan continued to cover drugs, the state would have to nearly double health insurance premiums to offset the costs.
News Source : arstechnica.com
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