Lilly's Obesity Drug Could Bolster Weight-Loss Market

(Bloomberg Opinion) --A new drug from Eli Lilly & Co. appears to be a powerful weight-loss aid. If further studies can confirm it works and show that its effects last, health insurers should pay for the treatment. Coverage would greatly expand access to weight-loss drugs and, in turn, the market for them.

In a recent study, Lilly's drug, a weekly injection called tirzepatide, helped people lose about one-fifth of their body weight. That 20% mark surpassed the performance of Wegovy, a similar drug from Novo Nordisk, which in studies has enabled weight loss amounting to 15% of body weight in people without diabetes.

In Lilly's trial, volunteers who took the two highest doses and also followed a diet and exercise plan shed about 50 pounds. Others who followed the same regimen with a placebo lost only about 5 pounds. Lilly's drug also seemed to be reasonably well tolerated -- an important characteristic in a field where side effects often cause people to stop taking drugs.

If these favorable results hold up in further trials, Lilly's drug, once approved by the Food and Drug Administration, could make fast inroads in a market with significant growth potential.

Thanks to the pandemic and its attendant anxiety and inactivity, the share of the U.S. population eligible for weight-loss drugs has expanded. Nearly half of Americans gained weight in 2020, a recent study found. And the baseline numbers were already high. In 16 states, at least 35% of adults are considered obese, according to the Centers for Disease Control and Prevention.

Until recently, people who wanted to shed more pounds than they could manage through diet and exercise alone had few options. The weight-loss field has been plagued by products that offer minimal results along with potent side effects ranging from unpleasant to dangerous. For years, the most commonly prescribed drugs were amphetamine derivatives that can be addictive and cause high blood pressure. Few drugs have been tolerable for long-term use, and when people stop taking them, the pounds come right back. Despite a sizable potential market, many drug companies have stopped even trying to find new treatments.

Yet people have clearly wanted better options. After the launch of Wegovy in June of 2021, Novo Nordisk couldn't keep up with demand. Potential patients turned to Reddit to share advice on where to find the drug and how to get it covered by insurance. Alarmingly, they also shared tips for trying to get the same effect from Novo Nordisk's diabetes drug Ozempic by fiddling with the dosage. Ozempic contains a different dose of the same ingredient found in Wegovy, and it is more readily covered by insurance.

The insurance issue has been a major obstacle for obesity drugs. Spotty coverage is one of the main reasons that only 3% of Americans who try to lose weight use prescription medicines to help. Note that Medicare does not cover Wegovy, which carried a price tag of about $1,627 per month when it launched. Lilly has not said what it will charge for its drug, but analysts expect it will add many billions in annual revenue.

It's reasonable for insurers to weigh the value of drugs that might be used by such a broad swath of the population. But Lilly's data adds to a growing body of evidence that this new class of drugs is safer and far more effective than the many weight-loss drugs that came before.

What would help encourage insurers to pay for obesity drugs is evidence that their effects can be maintained over many years, and that the weight loss, in turn, prevents problems such as diabetes and heart attacks and leads to other health improvements.

If insurers can be convinced that obesity drugs offer such lasting benefits, people might not have to fight so hard for access. And once weight-loss treatments are affordable, the market will have plenty of room to grow.