The obesity epidemic continues to grow in the United States and around the world, putting millions at risk of developing chronic health conditions like diabetes, heart disease, and kidney disease.
In response, pharmaceutical companies have developed new medications aimed at helping people lose weight and improve related health outcomes. However, experts see major challenges ahead before these drugs can be widely adopted as obesity treatments.
Robust Data Lacking for Many Proposed Uses
Drugs like Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro belong to a class called GLP-1 receptor agonists. They were originally approved as diabetes medications, working by increasing insulin production and reducing appetite. More recently, patients and doctors have used them off-label for weight loss.
But physician Kavita Patel believes the data is still limited for many proposed uses beyond diabetes control. Patel, an NBC News medical contributor, pointed to Novo Nordisk’s FLOW trial results announced this week.
The trial showed Ozempic delayed progression of chronic kidney disease in Type 2 diabetics. Patel called this “among the strongest supporting evidence” so far for secondary uses of Ozempic.
In contrast, Patel said data is lacking for hypothesized benefits like treating Alzheimer’s disease or alcohol addiction. “Those trials…are nowhere near as robust as the data we have on [FLOW], on sleep apnea, cardiovascular risks, on diabetes control — double-blind placebo, randomized controlled trials that are incredible,” she stated. “We have a long way to go for that. I’ve seen a lot of miracle drugs before.”
Insurance Coverage Poses Major Barrier
Beyond efficacy, Patel sees major hurdles related to insurance coverage. Currently, patients often pay high out-of-pocket costs when using GLP-1 drugs for weight loss instead of diabetes.
“Right now, we are seeing active employers, entire states that are declining to cover on the weight loss indication,” she explained.
But if the FDA approves Ozempic for chronic kidney disease, Patel believes insurers may expand coverage. “We’ll see a final package of data that will be so compelling, that it would be wrong not to cover this,” she said.
Jared Holz, healthcare analyst at Mizuho Securities, agreed that insurance barriers may limit adoption even as more patients try GLP-1 drugs. “The payers, at some point, are going to be saying, ‘We get it, but we cannot pay for these at this volume without seeing the benefit, which may be 10 years from now, 20 years from now, 30.’ We have no idea when the offset is going to be,” he noted.
Supply Shortages Raise Questions About Growth Potential
Novo Nordisk and Eli Lilly shares have skyrocketed recently, driven by the hype around their GLP-1 drugs. But Holz pointed out a “valuation disconnect” between these companies and their pharmaceutical peers.
“We haven’t seen this kind of valuation disconnect between the peer group, maybe in the history of the sector,” he remarked.
However, the current supply shortages of Ozempic and Mounjaro raise doubts if the growth is sustainable. “The companies can’t make enough, I don’t think, to actually put out revenue that’s going to appease investors, given where the stocks are trading,” said Holz.
FDA Approval for Kidney Disease Could Be Game Changer
Despite the challenges, FDA approval of Ozempic for chronic kidney disease could be a game changer according to experts. It would likely compel insurers to cover the drug more broadly. This could dramatically increase adoption and revenue for Novo Nordisk.
Of course, doubts remain about whether the weight loss effects will persist long term. And if insurers eventually limit coverage, it could dampen growth projections. Still, analysts see major potential for GLP-1 drugs to disrupt the pharmaceutical sector.
The coming years will determine if Novo Nordisk, Eli Lilly and other drugmakers can overcome the hurdles to mainstream adoption. In the meantime, millions of obese patients are left waiting for expanded access to potentially life-changing medications.