Eli Lilly’s weight-loss drug tirzepatide has shown substantial potential in a large phase 3 study, the results of which were published on Thursday, April 28.
Tirzepatide combines a GIP (glucose-dependent insulinotropic polypeptide) receptor and a GLP-1 (glucagon-like peptide-1) receptor agonist in a single new molecule. The drug is administered once a week by subcutaneous injection.
The investigational compound is the first drug of its kind to provide greater than 20% weight loss on average, compared to placebo, in a phase 3 study. Average weight reductions increased as the dosage amount of the active ingredient increased.
The overall safety and tolerability profile of tirzepatide was similar to other incretin therapies that have been approved for the treatment of obesity. That said, the reported side effects were considerable, especially as the dosage levels increased. The most common adverse reactions were nausea (~30%), diarrhea (~20%), constipation (~15%) and vomiting (~10%).
If tirzepatide is approved, it could become a blockbuster drug. However, this is not a sure thing. It will need to overcome pricing and reimbursement hurdles that have plagued obesity treatments for decades.
Also, the drug would be in direct competition with Wegovy (semaglutide) from Novo Nordisk. In June of last year, the Food and Drug Administration (FDA) approved Novo Nordisk’s obesity drug Wegovy, a GLP-1 receptor agonist, which is also given once a week by subcutaneous injection. skin. Wegovy is a higher dose version of the diabetes drug Ozempic.
At the time, Wegovy became the most effective weight-loss drug on the market, helping patients lose an average of about 15% of their body weight, nearly double the rates demonstrated by previous prescription products.
Wegovy represented a turning point in the pharmacological treatment of obesity. In the past, drugs for obesity suffered from a negative adverse effect profile and relatively poor efficacy. As a result, weight-loss drugs have always struggled to gain traction. Not only did they not find many takers, but they also had great difficulty obtaining insurance coverage. For example, Medicare excludes coverage for all drugs prescribed for obesity. And, unlike the vast majority of other outpatient pharmaceuticals, weight-loss drugs are not a mandatory benefit in the Medicaid program. Additionally, when covered by Medicaid plans, obesity drugs are often subject to extensive use of prior authorization coupled with step changes. Finally, coverage by commercial payers of weight-loss drugs has been wildly variable.
With Wegovy, insurers have apparently changed their tune, at least to some extent. With the exception of Medicare, which still prohibits obesity drug coverage, a large number of commercial and Medicaid payers cover Wegovy, albeit with great variability. A relatively favorable efficacy profile likely contributed to the product’s fortunes with some payers.
In 2021, Novo Nordisk made about $1.2 billion from sales of Wegovy and its former weight loss treatment Saxenda (liraglutide). The company did not provide a specific revenue breakdown. But, it goes without saying that at present, Wegovy sells more than Saxenda. Indeed, according to Novo Nordisk, the number of physicians prescribing Wegovy recently eclipsed Saxenda.
Demand for Wegovy actually exceeded supply, which reinforces the idea that reimbursement has been less of a problem than with previous obesity drugs. A bigger hurdle for Wegovy may have been manufacturing quality issues, as this hampered supply. Once that issue is resolved, Novo Nordisk hopes to be on track to meet its 2025 sales target for all of its obesity treatments of $3.7 billion, most of which would be represented by Wegovy.
Tirzepatide is set to compete directly with Wegovy. Its effectiveness seems to be even better than Wegovy. The relevant question for payers then becomes the net price of tirzepatide (after rebates). Obviously, at this point, we don’t know how much tirzepatide would sell for if approved. Assuming tirzepatide has an equal net price, that would make it more cost-effective than Wegovy. On the other hand, in the eyes of the payers, a higher net price should be justified by a proportionally greater profit. No one can guess how much price premium the payers would be willing to spend.
Complicating matters further for all obesity medications, no matter how effective, is the fact that payers can be short-sighted when it comes to their assessment of cost and effectiveness. In some ways, this reflects churn. Each year, about 25% of the American population changes their health plan. This implies that many payers do not necessarily take a long-term view of drug cost-effectiveness.
Ideally, all payers would take a longer-term perspective. With so much unsubscribing, that’s not likely. In addition, some payers continue to bundle obesity drugs with lifestyle drugs. It is difficult to dislodge this myopic view.
The benefits of weight loss go beyond fat reduction. As a result, weight loss can lead to a lower prevalence of diabetes, fewer heart attacks and strokes, and less joint pain.
Combined with diet and exercise, the new generation of obesity drugs can certainly help with weight loss. The question remains, payers at all levels – and particularly in the public sector; Medicare and Medicaid – are you careful enough to consistently provide them with favorable coverage?