Suppose you were teleported to Copenhagen, Denmark this instant. A look around would yield a scene far different from what we are accustomed to in a modern U.S city. People whisking by on bikes in paved, platformed bike lanes, mothers strolling their babies out in the open, and not a fast food restaurant in sight. 18.4% of Danes are obese, according to a study published in the European Journal of Public Health.
The prevalence of Danish obesity represents less than half of that in the U.S. I mention Denmark because (1) I had the pleasure of spending a month there this past summer, and (2) Novo Nordisk, the company with the most popular weight loss treatment in the U.S, is headquartered there.
The Danish company made headlines last month after releasing the results for an oral version of its weight loss treatment semaglitude. Semaglitude belongs to a class of drugs known as glucagon-like peptide (GLP)-1 receptor agonists that work by targeting the part of the brain that regulates appetite and fullness.
According to Novo Nordisk’s Phase 3 trial results, oral semaglitude, taken once per day in adults with obesity, resulted in a 15.1% decline in body weight at 68 weeks. Lending further support to Novo Nordisk’s efficacy profile, the company reported that Wegovy, the company’s weekly injectable version of semaglitude, decreased the risk of cardiovascular events in patients by 20%.
In recent years, the global weight loss market has expanded rapidly. Axios finds that “global sales of all obesity drugs [are] expected to total $30 billion.” With such rapid growth, it is critical to understand the market landscape for weight loss treatments.
In today’s post, I will provide a brief competitive landscape on the treatment of weight loss.
FDA Approved Medications to Treat Overweightness and Obesity
Novo Nordisk has been the name of the game in treating obesity. Historically, the Danish company made a name for itself in treating diabetes but has since gone on to expand the indications for its diabetes treatments to target weight loss.
In 2014, the FDA approved a supplemental indication for Novo Nordisk’s Saxenda (liraglutide). Saxenda, originally approved under the brand name Victoza, treated type 2 diabetes in patients 12 and older. Under the new indication in 2014, the FDA approved the use of Saxenda for chronic weight management in patients with at least one weight-related comorbidity.
Saxenda proved to be a commercial success, with the medication grossing $918 million in 2020. On the back of Saxenda’s success, Novo Nordisk further bolstered its pipeline with the FDA approval of Wegovy in 2021. A once-weekly injectable, Wegovy has been engrossed in controversy as result of its high list price and insurance coverage issues.
In addition to Wegovy, Novo Nordisk also produces Ozempic and Rybelsus. Like Wegovy, Ozempic is a weekly injection, but it is only FDA-approved for the treatment of type 2 diabetes. Likewise, patients with type 2 diabetes take Rybelsus once per day for glycemic control. .
Competitor Eli Lilly also produces a medication targeting type 2 diabetes. Tirzepatide, marketed under the brand name Mounjaro, is a weekly injection that, according to its clinical trial, resulted in a 22% weight loss in patients after 72 weeks.
Ozempic, Rybelsus, and Mounjaro are commonly prescribed for weight management, however since they are currently indicated for the treatment of type 2 diabetes, this is an off-label use.
Historically, the FDA has been reluctant to approve weight loss medication because the agency has viewed it as a vanity drug. In other words, the agency believed that these medications had no impact on the underlying health of patients. However, as weight loss has indeed been determined an important target in the management of type 2 diabetes in obese patients, this view could be evolving. .
Safety Profile
GLP-1 receptor agonists have a relatively robust safety profile. The most common side effects for the GLP-1 class include nausea, vomiting, and a delay in gastric emptying. A delay in gastric emptying presents problems for patients needing to undergo surgery with empty stomachs. The medication delays digestion, which causes the stomach to remain full, despite a fast, which then can lead to lung problems.
Price, Other Costs, and Insurance Coverability Issues
Despite their tangible health benefits, weight loss medications do not come cheap. Weekly injections of Wegovy cost $1300 per month; Ozempic injections cost $935 per month. Eli Lilly has yet to price orforglipron, their oral non-peptide GLP-1 receptor agonist specifically for weight loss, as it is still in clinical development.
High drug prices can often cause controversy, but they are not without justification on the part of the innovators. The process of drug discovery to clinical trials to product launch typically costs innovators upwards of $1 billion dollars. Thus to hedge against the risk of lackluster sales and make up for the price of R&D, innovators typically charge higher drug prices.
For payors, the combination of high prices and the prevailing view that weight loss is a vanity issue has spurred coverage reluctance. However, the three fold increase in the number of people with diabetes in the past three decades in the americas according to the PAHO speaks to the idea that weight loss is not a vanity issue.
From a purely economic standpoint, payors seek to cover conditions that offer positive net present values. Net present value is the idea that the present value of future cash flows will outweigh the upfront costs. For payors, this idea manifests itself in reimbursing for the treatment of a patient’s condition with the expectation that the patient’s health improves and goes back to paying premiums, future cash flows in this case. Weight management therapies present a real risk for payors. According to Hall et al., “more than half of the lost weight was regained within two years, and by five years more than 80% of lost weight was regained.”
Here, because an obese patient will likely regain a sizable portion of the weight lost, he or she will likely get back on the weight loss medication, which means that insurers will continue to lose money. Also, the fact that patients regain the weight relatively quickly further harms their bottom line because losses are more present (they have to pay for the reusage of the medication sooner instead of later).
As a result, Medicare has refused to cover weight loss treatments and some employer insurance plans have followed suit. Nevertheless, Novo Nordisk has gained momentum in recent weeks, citing the fact that Wegovy reduces the risk of heart attack, stroke, and heart attack-related death by 20% in patients with existing cardiovascular disease. Major cardiovascular deaths (MACE) are the primary endpoint of Wegovy’s study.
Eligibility and Access
As mentioned in the Alzheimer’s market landscape, eligibility and access are unfortunately not one in the same. Patients are eligible for Wegovy, according to its FDA approval, if he or she is obese “or overweight with at least one weight-related condition (such as high blood pressure, type 2 diabetes, or high cholesterol).”
Patients who have weight issues are likely to have comorbidities such as high blood pressure, type 2 diabetes, and high cholesterol, so in theory a large swath of the population is eligible for this treatment. In fact, the World Health Organization finds that 650 million adults are obese and 1.3 billion are overweight.
However, the high costs of these treatments has dissuaded payors from covering them and thus has limited access.
Standard of Care
Ultimately, for the treatment of a condition, each innovator vies to be the standard of care. As the standard of care, the treatment is most likely to be endorsed by medical societies, written as a part of guidelines, prescribed by providers, and the dominant in the market.
So far, advantage Novo Nordisk. Novo Nordisk is the first mover in this space, having the first FDA approved treatment. Likewise, Wegovy’s trial results demonstrating effectiveness against MACE also improves its view among key stakeholders.
However, the battle is not that simple. In addition to being a first mover, ease of use and duration to be effective also impact whether a treatment becomes the standard of care. And for Eli Lilly, orforglipron, a once a day pill for the treatment of weight loss, has disrupter potential.
Let’s start with effectiveness. According to orforglipron’s Phase 2 trial results, participants “lost up to 14.7% of their body weight after 36 weeks.” In comparison, participants in the placebo lost 2.3% of their body weight.
Although in this trial orforglipron produced slightly less weight loss than Novo Nordisk’s (14.7% versus 15.1%), it accomplishes this result in a little over half of the time. Moreover, instead of a weekly injection, orforglipron is a daily oral.
The impact of orforglipron’s differentiation should not be understated. Since the treatment accomplishes similar weight loss in less time, insurers will be more likely to cover it because the drug will cost less over the long haul. Likewise, medical societies and providers will be more likely to endorse the treatment because it presents less of a burden on patients.
Bottom Line
Overall, the weight management therapy landscape presents to be highly competitive with a few players taking the lead. Once Medicare begins covering these treatments, a flood of competitors will likely enter the market.
Snowfish supports companies analyzing the market landscape. To learn more, please reach out to info@snowfish.net .
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