For those who are overweight or obese, medications known as glucagon-like peptide-1 agonists, or GLP-1s, have become very popular as weight loss treatments. Taken in accordance with instructions on the label and an appropriate diet and exercise regimen, GLP-1s are effective at lowering a person’s weight. Given the various co-morbidities associated with obesity, including diabetes and cardiovascular disease, intuitively, it would seem that GLP-1 use for weight loss would be cost-effective and possibly reduce overall medical costs despite the increase in prescription drug spending. But thus far, the data don’t show this.
According to an analysis published last week in the Journal of the American Medical Association Health Forum, improved health outcomes notwithstanding, weight loss medications were not found to be cost-effective over a lifetime of projected use. The study’s authors suggest that lack of affordability of medicines like Zepbound and Wegovy limits access for many who would benefit. In order to be cost-effective, the net price of tirzepatide (Zepbound) would need to decrease by 30%, while semaglutide’s (Wegovy) price would have to drop by 82%. Net prices are negotiated between drug makers and insurers or pharmacy benefit managers, with list prices (before any discounts or rebates) serving as the starting point of negotiations.
Researchers evaluated four medications used for obesity: The newer drugs, tirzepatide and semaglutide, and two older ones, phentermine-topiramate and naltrexone-bupropion. Tirzepatide is branded as Zepbound as a weight loss therapeutic and Mounjaro as an anti-diabetic. Similar to tirzepatide, semaglutide also has Food and Drug Administration-approved diabetes and obesity indications, in addition to marketing authorization for a cardiovascular use and one for sleep apnea. Its brand names include Rybelsus, Ozempic and Wegovy.
Tirzepatide and semaglutide were found to generate greater lifetime health gains than phentermine-topiramate (Qysmia) and naltrexone-bupropion (Contrave). However, they’re not cost-effective at their current net prices of approximately $6,200 and $8,400 per year, respectively (list prices are considerably higher). Specifically, at between roughly $200,000 and $460,000 for every “quality-adjusted life-year,” they were well above a $100,000 per QALY threshold. This implicit line of demarcation, if you will, is sometimes used by insurers to distinguish between medical interventions that are considered cost-effective from ones that are not. QALYs are measures of benefit that account for both the quantity and quality of life lived. They’re frequently employed to assess the value of medical technologies, including pharmaceuticals.
Results from the latest published research comport with findings from other studies. For example, a peer-reviewed study posted this past autumn projected that semaglutide-based products would be about $440,000 per quality-adjusted life year gained.
The relatively poor cost-effectiveness figures may help explain why payer coverage restrictions for GLP-1s used for obesity continue to be a hurdle for patients who seek access. According to Becker’s Hospital Review, some insurers and self-funded employers across America are dropping coverage altogether or imposing strict limits in 2025, reflecting the financial and operational challenges posed by the high-cost medications.
Going forward, the net price of semaglutide-based products could decrease further in 2027 as Medicare selected Ozempic and Wegovy for price negotiation under the Inflation Reduction Act’s drug pricing provisions. This in turn would improve the cost-effectiveness numbers.
Yet United States insurers would still face the problem of churn, or enrollee turn-over, as they migrate from one health plan to another. GLP-1s cost payers money upfront, but with member churn it’s unlikely a typical insurer will have the same enrollee ten years from now to realize potential cost-effectiveness or savings. About 20% of members disenroll from a commercial insurer each year. In addition, churn in insurance programs such as Medicaid is much greater.
The cited JAMA study’s authors made note of the uncertainty that remains regarding issues such as patient adherence. Indeed, further compounding the cost burden issues for insurers is the fact that patients are often non-persistent. In a study carried out by the PBM Prime Therapeutics, only 25% were still on Wegovy or Ozempic two years after they started. And in a Blue Cross Blue Shield Association white paper posted last summer, the number was even lower, 15%.
Also, Prime Therapeutics released a study in October stating that “findings indicate in the real world that individuals taking GLP-1 therapies without diabetes [over a two- year period] will see no medical cost offset.” In other words, GLP-use did not lower other medical costs.
Echoing this result, the Congressional Budget Office states that there does not appear to be any direct empirical evidence pointing to a medical cost offset. Surprisingly, this includes accounting for the positive impact GLP-1s have on heart disease. Data from a large, randomized clinical trial named SELECT indicated cardiovascular protective benefits from taking the GLP-1 weight loss therapeutic Wegovy for a sub-population with preexisting cardiovascular disease. In the trial, Wegovy decreased relative risk by 20% of a composite primary endpoint measure which included death from cardiovascular causes, non-fatal myocardial infarction and non-fatal stroke. But the data didn’t show Wegovy lowered the risk of cardiovascular death by a statistically significant margin. Additionally, the absolute risk reduction is small, which translates into a comparatively high number needed to treat of 67. This means that 67 people with (severe) cardiovascular risk need to be on Wegovy consistently to avoid one cardiovascular event, for example, a heart attack.
All these research findings don’t imply GLP-1s aren’t valuable products. They certainly deliver value to those who are persistent long enough to achieve clinically meaningful weight loss while adhering to lifestyle modifications. But this doesn’t necessarily equate with the products being cost-effective, at least not at their current net prices. This can limit insurance coverage and prevent equitable access.
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