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When Will GLP-1 Prices Drop?

Depending on who you are, it’s either the $71 billion or $173 billion question. The first is the estimated total global market size for GLP-1s by 2032, and the second is the total cost of adult obesity to the U.S. healthcare system. With Tirzepatide (Zepbound™) now having FDA approval for obesity, rumblings have again started about whether there will be increased price pressure and perhaps a reduction in cost for GLP-1s, which could bring increased access.

Will a busy pipeline spur price competition? Probably not.

The pipeline for new GLP-1 medications is robust, with 50+ agents from Phase 1 to FDA-approved, and Novo Nordisk and Eli Lilly are currently the front runners. Much of the focus is on obtaining a new indication for obesity for already FDA-approved diabetes medications such as Tirzepatide (Mounjaro®) from Eli Lilly, which was recently approved for obesity under the brand name Zepbound™.

Tirzepatide is a novel dual GIP/GLP-1 receptor agonist and the Surmount 1 results showed an average 18% weight loss vs. 3% weight loss for placebo. On average, 45% of the study participants had 20% weight loss vs. one-third for the Step 1 results for semaglutide. Eli Lilly received approval for Mounjaro® in 2022 for diabetes and received approval this month for the indication of obesity under the new name Zepbound™. Could Zepbound's™ superior results over Wegovy® put price pressure on Novo Nordisk?

With the global weight management market size valued at $142 billion in 2022, there is plenty of market for these agents to play a role.

Will all this innovation lead to prices going down? Past experience would suggest probably not.

Pharmaceutical prices tend to be “sticky” and do not come down with competition. Historical examples of this are drugs like Gleevec® that had a high price at release that did not come down with competition. New entrants caused prices to increase as manufacturers raised prices to keep up.

Will the government step in to lower prices? Not any time soon.

In Europe, where many countries have national health insurance, the prices are lower, as the government fixes the price at a threshold. The United States has traditionally not legislated pricing for medications, that is until recently with insulin. Even though insulin has been around for 100+ years, the price of insulin continues to increase (see above re: sticky prices). New legislation at the state and federal level (Medicare) limits the co-pay that can be charged, but this does not address list prices.

New bipartisan legislation introduced in June 2022 includes a co-pay cap and provisions to encourage insulin manufacturers to reduce list prices. Measures like this have resulted in insulin prices coming down, and pharmaceutical companies providing rebates and saving cards to patients. Starting in 2024, Optum Rx announced it will limit out-of-pocket spend to $35 or less for select insulin products. Additionally, The Treat & Reduce Obesity Act of 2023 would allow Medicare to cover anti-obesity medication (AOM) coverage, but is unlikely to survive due to the high cost of medication and the lack of ROI for that spend.

However, in the Wegovy® clinical trial of more than 17,000 people, the drug cut the risk of cardiac complications by an impressive 20 percent.

The results are already placing pressure on providers and lawmakers to widen coverage for this drug, as well as similar blockbuster weight-loss drugs.

While preventive screening and counseling services are covered by all types of insurance under the Affordable Care Act, coverage for obesity treatment options varies substantially by state.

Under the Inflation Reduction Act of 2022, the federal government can negotiate drug prices directly with a manufacturer for Medicare. At the earliest, a negotiated price for Semaglutide (Wegovy®) would not be available for Medicare and Part D enrollees before 2027 and not before 2031 for Tirzepatide (Zepbound™).

What about when generics hit the market? Perhaps.

A basic patent protecting an active compound is usually set at 20 years from the filing date, though this timeframe is curtailed by years of testing to bring a drug to the market. Patents can be extended by applying for a Patent Term Extension (PTE). A 2023 analysis published in Nature found that half of companies successfully apply for a PTE for their patents.

In addition, the manufacturer can file a patent not just on the medication, but the delivery device such as the injection pen and dosing regimen. This can further extend the patent period beyond 20 years.

A 2023 study published in the Journal of the American Medical Association (JAMA) found that of 10 GLP-1 medications on patent, drug manufacturers listed 19.5 patents per product; 54 percent of patents were on the delivery device vs. the medicine.

The median duration of expected protection after FDA approval was 18.3 years. Novo Nordisk— who produced Ozempic®—has lost some patents, but likely won’t see generics until 2031. Their liraglutide recombinant injections (Victoza® and Saxenda®) have patents expiring at the end of this year and in the first half of 2024. According to SEC filings, Teva, Pfizer, and Mylan are expected to launch their generic liraglutide products as early as June 2024.

Generic manufacturers can challenge a patent and if they are successful, win the right to produce a generic formulation. No firm has been successful in challenging Novo Nordisk to date, but many have been filed. Mylan recently filed a challenge, which will be reviewed by the US Patent Office.

Once the drug loses all its patent protection and the exclusivity period ends, lower-price generics quickly take over sales. For consumers, this means cost savings and more access. Generic drugs behave more traditionally (vs. “sticky” prices) and competition typically results in prices dropping.

It appears that the only hope for prices going down is 1) Medicare negotiating a lower price directly with manufacturers in 2027 or 2) a successful patent challenge that results in generic manufacturing. But even with the high prices, GLP-1s are running off the shelves with shortages of Ozempic® and Wegovy® while Novo Nordisk announced it will cut back on supplying doses for new patients. Many people living with diabetes, who rely on semaglutide, have been unable to procure their medication, which could hopefully be remedied by Zepbound™ approval. Self-pay patients and the few who have coverage are depleting the supply, sometimes at the expense of those who need the meds for their diabetes.

GLP-1 agonist medications have had impressive initial outcomes. However, the long-term effects on a patient’s health beyond the trial timelines and on the costs to the healthcare system are still uncertain. Access remains a top concern and price is the main challenge for boosting access. As this technology continues to develop, it is critical to expand access so that all patients for whom these medications are a good fit can benefit from personalized treatment for obesity.

Want to learn more about GLP-1s? Watch Omada's video series, Navigating GLP-1s.

This Proof Points edition was originally published on LinkedIn on 11/21/23.