A new series of four intelligence memos by Rosalie Wyonch, senior policy analyst with the C.D. Howe Institute, take a closer look at Ozempic and related diabetes medications that are increasingly being prescribed for weight-loss and other on and off-label uses.
“The media attention gives us a teaching moment to help illuminate the behind-the-scenes dynamics that affect international pharmaceutical markets, insurance companies, public healthcare systems and government finances,” Wyonch writes in the first of the series, entitled Ozempic: A microcosm that can teach us a lot about healthcare markets.
“The class of medications is not new, their effectiveness for weight loss in non-obese patients, as well as their potential to improve fertility, reduce cardiac risks and reduce the risk of kidney failure have all increased the attention and discussion of this class of medications.”
Wyonch notes that the market expansion through new indications and off-label prescribing can create surges in demand that increase financial risks for drug plans. “Additional uses for a medication are a good thing – the uncertainty and resources that go into developing new drugs and treatments are massive and finding effective treatments within existing approved products is beneficial,” she adds in the second installment, Ozempic: Disruption and drama in pharmaceutical markets and insurance. “Dynamics, however, can also lead to unexpected and significant costs.”
They add that the potential market for weight loss drugs is at least triple the size of the type 2 diabetes market. “It is also worth noting that Ozempic costs about $1,500 a year per patient, compared to the $100 annual cost for metformin, its leading alternative. The Ozempic stampede for weight loss is already causing shortages for some diabetes patients and significant, unexpected costs for insurers.”
In a discussion about access, she adds that conditions on insurance coverage can conserve limited supplies, help prioritize diabetes patients and reduce the spending risk posed by consumer’s desire for weight loss solutions, “but they are not a complete solution and come with some downsides related to higher administrative costs,” she states. “As new drugs designed for obesity treatment enter the market and pharmaceutical manufacturing expands to meet demand, supply pressures will likely ease. The financial pressure on insurance providers, however, will continue to require adjustments to coverage and premiums to manage the rapidly growing number of claimants and associated costs.”
