Could Covering GLP-1s Pay Off?

The question may seem simple: Could paying for weight loss medications — especially the pricey glucagon-like peptide 1 receptor agonists (GLP-1s), tirzepatide (Zepbound) and semaglutide (Wegovy) — be more cost-effective than paying for obesity care and the complications of obesity, such as cardiovascular disease and diabetes?

It’s a question that’s getting an increased amount of attention.

And for good reason — more than two in five US adults have obesity, according to the Centers for Disease Control and Prevention, and costs to treat obesity, in 2019 dollars, approached $173 billion, including productivity losses. Adults with obesity have annual healthcare costs of $1861 more than those at healthier weights.

Among recent developments:

• A proposed new rule, announced on November 26 by the Biden administration, expands coverage of anti-obesity medication for Americans who have Medicare and Medicaid. If it takes effect, an estimated 3.4 million Medicare recipients and about 4 million adult Medicaid enrollees could get access to the medications.
• As Medicare coverage goes, private insurers often follow. Observers predict that if the Centers for Medicare & Medicaid Services (CMS) covers anti-obesity drugs, more private employers may soon do the same. Recently, however, some private plans have done the opposite and dropped coverage of the pricey GLP-1s, which can cost $1000 a month or more out-of-pocket, citing excess costs for their company.
• Among the analyses about the value of weight loss on healthcare cost savings is a report published on December 5 in JAMA Network Open. Emory University experts looked at privately insured adults and adult Medicare beneficiaries with a body mass index (BMI) of ≥ 25 (classified as overweight). The conclusion: Projected annual savings from weight loss among US adults with obesity were substantial for both employee-based insurance and Medicare recipients.
• Besides helping obesity and obesity-related conditions, access to GLP-1s could have a favorable effect on productivity, others claim. That’s one focus of a 5-year partnership between the University of Manchester, Manchester, England, and Eli Lilly and Company. Called SURMOUNT-REAL UK, the study will evaluate the effectiveness of tirzepatide in weight loss, diabetes prevention, and prevention of obesity-related complications in adults with obesity. It also aims to look at changes in health-related quality of life with weight loss and with changes in employment status and sick days.

CMS Proposal

In a statement announcing the proposal for Medicare and Medicaid to offer weight loss drugs, the White House noted that “tens of millions of Americans struggle with obesity” but that currently Medicare only covers the anti-obesity medications for certain conditions such as diabetes. The new proposal would expand that access to those with obesity. As of August, just 13 states cover GLP-1s in Medicaid programs, and North Carolina was the latest to do so.

Organizations advocating for health equity and recognition that obesity is a chronic disease came out in strong support of the proposal.

Kenneth E. Thorpe, PhD, a health policy expert at Emory University in Atlanta, who coauthored the recent analysis finding that weight loss offsets healthcare costs on an individual basis, told Medscape Medical News: “If finalized, this broad new coverage [by Medicare and Medicaid] would have a profound impact on the ability of Americans to access these novel medications that could significantly reduce obesity-related healthcare spending and improve overall health.”

The proposal “is modernizing the coverage of Medicare and Medicaid for obesity treatment,” agreed John Cawley, PhD, professor of economics and public policy at Cornell University in Ithaca, New York, who has researched the direct medical costs of obesity in the United States. “In this HHS rule, they talk about the scientific and medical consensus that having obesity is a chronic condition.”

The proposal requires a 60-day comment period that ends January 27, 2025, taking the timeline into the beginning of the Trump administration. Cawley and others pointed out that Trump’s pick for Health and Human Services Secretary, Robert F. Kennedy Jr, has been an outspoken opponent of the anti-obesity medicines, suggesting instead that Americans simply eat better.

Expert Analyses: Emory, Cornell, Southern California

So would paying for the pricey GLP-1s be smart in the long term? Analyses don’t agree.

Weight loss among those with obesity produces healthcare cost savings, said Thorpe and Peter Joski, MSPH, an associate research professor at Emory University. The two compared annual healthcare spending among privately insured adults and adult Medicare beneficiaries with a BMI of ≥ 25, using data from the Medical Expenditure Panel Survey — Household Component from April 1 to June 20, 2024.

The researchers looked at 3774 adults insured with Medicare and 13,435 with employer-sponsored insurance. Overall, those with private insurance with a weight loss of 5% spent an estimated average of $670 less on healthcare. Those with a weight loss of 25% spent an estimated $2849 less on healthcare. Among those with Medicare who had one or more comorbidities, a 5% weight loss reduced spending by $1262 on average; a 25% loss reduced it by an estimated $5442, or 31%.

Thorpe called the savings substantial. In an email interview, Thorpe said, “So yes, weight loss for people living with obesity does lower healthcare costs, as my research shows, but it also lowers other costs as well.”

These include costs associated with disability, workers’ compensation, presenteeism/absenteeism, and everyday costs, he said. He contends that “those other costs should factor into decisions about preventing and treating obesity of payors and policymakers and enhance the case for cost-effectiveness of treating obesity.”

Other research suggests it’s important to target the use of the anti-obesity medications to the BMI range that would get the most benefit. For people just barely above the BMI threshold of 30, no cost savings are expected, Cawley found in his research. But he has found substantial cost reduction if the BMI was 35-40.

However, as Cawley pointed out, as the drugs get cheaper and more options become available, the entire scenario is expected to shift.

The Congressional Budget Office View

In October, the nonpartisan Congressional Budget Office issued a report, “How Would Authorizing Medicare to Cover Anti-Obesity Medications Affect the Federal Budget?” Among the conclusions: Covering the anti-obesity medications would increase federal spending, on net, by about $35 billion from 2026 to 2034. Total direct federal costs of covering the medication would increase from $1.6 billion in 2026 to $7.1 billion in 2034. And it said total savings from improved health of the beneficiaries would be small, less than $50 million in 2026 and rising to $1 billion in 2034.

Covering the medications would cost $5600 per user in 2026, then down to $4300 in 2034. The offset of savings per user would be about $50 in 2026, then $650 in 2034.

Expert Analysis: USC Schaeffer Center

“The costs offsets come over time,” said Alison Sexton Ward, PhD, an economist at the University of Southern California’s Leonard D. Schaeffer Center, Los Angeles, and an expert on the topic. “If we look at the average annual medical cost over a lifetime, we do see cost offsets there.”

However, treating obesity means people will live longer, “and living longer costs more,” she said.

She took issue with some of the calculations in the CBO report, such as not considering the effect of semaglutide’s patent expiring in 2033.

In a white paper published in April 2023, Sexton Ward and her coauthors modeled potential social benefits and medical cost offsets from granting access to the newer weight loss drugs. The cumulative social benefits of providing coverage over the next decade would reach nearly $1 trillion, they said. Benefits would increase if private insurance expanded coverage. “In the first 10 years alone, covering weight loss therapies would save Medicare $175 billion-$245 billion, depending on whether private insurance joins Medicare in providing coverage for younger populations.”

While much focus is on Medicare coverage, Sexton Ward and others pointed out the need to expand coverage to younger ages, with the aim of preventing or delaying obesity-related complications.

Lilly UK Trial

A spokesperson for Lilly declined to comment further on the UK study, explaining that the study was just launching.

Besides tracking weight loss, researchers will evaluate the effect of the weight loss on sick days from work and employment. Obesity is shown to affect a person’s ability to work, leading to more absenteeism, so treating the obesity may improve productivity.

Beyond Health: The Value of Weight Loss

“I love the idea of studying whether access to obesity medications helps people stay employed and do their job,” said Cristy Gallagher, associate director of Research and Policy at STOP Obesity Alliance at the Milken Institute School of Public Health, George Washington University, Washington, DC. The alliance includes more than 50 organizations advocating for adult obesity treatment.

“One of our big arguments is [that] access to care, and to obesity care, will also help other conditions — comorbidities like heart disease and diabetes.”

However, access to the anti-obesity medications, by itself, is not enough, Gallagher said. Other components, such as intensive behavioral therapy and guidance about diet and exercise, are needed, she said. So, too, for those who need it, is access to bariatric surgery, she said. And medication access should include other options besides the GLP-1s, she said. “Not every medication is right for everybody.”

Cawley, Gallagher, Thorpe, and Sexton Ward had no disclosures.