New research from the University of Chicago reveals that two leading medications for obesity treatment—semaglutide (Wegovy; Novo Nordisk) and tirzepatide (Zepbound; Eli Lilly)—are priced too high to be considered cost-effective by current healthcare standards, despite their significant clinical benefits.
The study, published in JAMA Health Forum, found that tirzepatide's price would need to be reduced by more than 30% and semaglutide's by 82% to achieve the widely accepted cost-effectiveness threshold of $100,000 per quality-adjusted life-year (QALY) gained.
Substantial Clinical Benefits Overshadowed by High Costs
Lead investigator Dr. Jennifer H. Hwang from the University of Chicago emphasized that while these newer agents offer "amazing" long-term health benefits compared to older weight-loss medications, their current pricing structure remains problematic.
"The cost [of the medications] is the primary factor for cost-effectiveness," Hwang told TCTMD. "If you look at the long-term health impact and see how many diabetes and obesity cases are averted, they're still somewhat expensive [within] a generally accepted effectiveness threshold in the United States."
The comprehensive analysis evaluated the lifetime health benefits and cost-effectiveness of four anti-obesity medications combined with lifestyle modification versus lifestyle changes alone. In addition to semaglutide and tirzepatide, researchers examined two older medications: phentermine-topiramate (Qsymia) and naltrexone-bupropion (Contrave).
Impressive Health Outcomes Despite Cost Concerns
The microsimulation model, based on data from 4,823 individuals representing 126 million US adults, projected that over a lifetime, tirzepatide would prevent:
- 45,609 cases of obesity per 100,000 people
- 20,854 incident cases of diabetes per 100,000 individuals
- 10,655 cardiovascular disease events per 100,000 people
Similarly, semaglutide would avert:
- 32,087 cases of obesity per 100,000 people
- 19,211 incident cases of diabetes per 100,000 individuals
- 8,263 cardiovascular disease events per 100,000 people
The incremental quality-adjusted life years (QALYs) gained compared to lifestyle modifications alone were 0.35 with tirzepatide and 0.25 with semaglutide, resulting in incremental cost-effectiveness ratios (ICERs) of $197,023 and $467,676 per QALY, respectively.
Current Pricing Structure
For the analysis, researchers estimated drug prices using SSR Health data that reflected rebates and discounts across Medicaid, Medicare, and commercial insurers. The mean yearly net prices used were:
- Semaglutide: $8,412
- Tirzepatide: $6,236
- Phentermine-topiramate: $1,786
- Naltrexone-bupropion: $420
To achieve cost-effectiveness at the $100,000/QALY threshold, tirzepatide's annual price would need to drop to $4,334, while semaglutide would need to be reduced to $1,522.
Expert Perspectives on Long-Term Value
Dr. Daniel C. Malone from the University of Utah, who has also studied the cost-effectiveness of anti-obesity medications, noted that the challenge lies in the timing of costs versus benefits.
"You have an upfront investment of several thousand dollars and the benefits don't occur for many years," Malone explained. "For most of these agents, therefore, by the time you discount those future events back in terms of quality-adjusted life-years, and also in terms of the economic value of those costs, it's challenging for new products to be cost-effective."
Market Competition and Future Price Trends
Both researchers believe that increased competition between drug manufacturers will eventually lead to lower prices—a process that has already begun. Eli Lilly recently reduced the price of various tirzepatide doses for direct purchasers, a move matched by Novo Nordisk. Additionally, oral GLP-1 receptor agonists in development could further drive down prices for injectable formulations.
"The sand is shifting underneath the feet of people like myself and others that do these analyses," said Malone. "These products tend to have downward pressure on price over time, and we're obviously seeing that."
Additional Benefits Not Captured
Hwang acknowledged that recent studies have shown semaglutide and tirzepatide positively impact other conditions, including obstructive sleep apnea, osteoarthritis-related pain, and nonalcoholic fatty liver disease. These benefits weren't factored into the microsimulation model but could improve the anticipated cost-effectiveness of treatment.
"The flip side [is that] we simulated the maximum benefit, meaning we had everybody experience the maximum weight loss and also cardiovascular [benefit], and had that sustained for a lifetime," said Hwang. "I know some might argue that there are additional health benefits, but I don't think it would really change our numbers drastically."
Historical Precedent for Price Reduction
Malone drew a parallel to statins, noting that when atorvastatin first entered the market for LDL cholesterol lowering, it was priced around $5 per tablet. Today, atorvastatin and other statins are available for pennies a day. While semaglutide and tirzepatide are early in their patent life, experts believe they won't always command such premium prices.
Broader Implications for Healthcare Systems
David Kim, a health economist at the University of Chicago and senior author of the study, summarized the dilemma: "There's no doubt that the drugs are demonstrating tremendous health benefits. The problem is the price is too high."
For employers and government programs considering coverage of these medications, the question remains whether the drugs will effectively pay for themselves in the long run by preventing expensive medical complications. As market dynamics evolve and more data emerges on long-term outcomes, the cost-effectiveness equation may shift, potentially expanding access to these transformative therapies.
