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One interesting development to keep an eye on is the potential financial complexity that new weight loss drugs could bring to the government. These drugs, like Novo Nordisk’s Wegovy, are not currently covered by Medicare. However, it is highly likely that this will change in the near future. Estimates suggest that if a small percentage of Medicare patients opt for these treatments, the cost could range from $14 billion to $27 billion. This cost is comparable to the recently approved Alzheimer’s drug, Aduhelm, which also poses a threat to Medicare spending on prescription drugs.
Currently, drugs for weight loss are not covered by Medicare due to a law passed in 2006. However, there is a push from lawmakers to change this. Interestingly, Medicare Part D does cover Novo Nordisk’s Ozempic for diabetes, which operates similarly to Wegovy and promotes significant weight loss. The government is deliberating over the implications of these drugs for Medicare solvency.
While the cost of these weight loss drugs may initially seem prohibitive, there is potential for substantial cost savings in the long run. Early estimates suggest that reducing obesity rates and related health conditions could lead to savings of $175 billion to $245 billion within the first decade alone. However, this hinges on private insurers offering coverage and a significant decrease in obesity among Medicare patients. Nonetheless, there remains a considerable amount of uncertainty, and any savings are likely to take years to materialize.
In addition to the rise of these groundbreaking weight loss drugs, there is also a growing demand for digital health services that aid in weight loss. This may seem counterintuitive since the drugs are effective on their own. So, why would people need additional services like Weight Watchers? There are a few reasons for this. Many patients prefer to have personalized programs from experts such as dieticians to monitor their health, nutrition, and fitness. Employers may also require enrollment in supervised diets and fitness plans. Moreover, ongoing support is crucial to ensure that patients stay committed to the drugs. If they discontinue usage, weight regain is likely. Various digital health companies like Every Health, Ro, Hims & Hers, Calibrate, Form Health, Amazon’s One Medical, and Teladoc are competing for customers in this sector. Venture capitalists are investing heavily in this industry as well. WeightWatchers, recognizing the potential of this market, recently acquired start-up Sequence for $132 million. This company connects patients with prescribing doctors, although there are concerns about the ease with which prescriptions are being issued.
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