Let’s Talk About Obesity Drugs

New Approval Just Dropped

While the tech world talks about AI, the entirety of healthcare has been talking about GLP-1 agonist drugs like semaglutide, which have different brand names like Ozempic, Wegovy, and Rybelsus. Yes yes I’ve heard the “GPT vs GLP” pithy line a million times, let’s all move on with our lives.

Most drugs in this class have been approved for diabetes. Recently, Eli Lilly saw the approval of Zepbound, a drug that sounds suspiciously like a movie title where a dog is the protagonist. Zepbound’s active ingredient is tirzepatide and it was recently approved for obesity; previously it was only approved for diabetes under the brand name Mounjaro (which sounds like the dog’s smaller animal sidekick).

Being approved explicitly for obesity opens new doors for how this drug is marketed and covered by insurance. And there are a whole lotta of other “tides” coming like retatrutide, dapiglutide, etc. along with different formulations of existing drugs (STAT has a great tracker here). It’s clear that this area is going to boom, and we should be renaming pharma pipelines “tide pods”.

I’ve been having lots of conversations with different folks about these drugs, usually in a total non-sequiturs like “hey my name is nikhil, GLP-1s amirite *stares*”. I figured I’d write a newsletter about the stuff on my mind with these drugs, and see if any newsletter readers had their own thoughts.

The basics about the obesity drugs

I’m not a doctor, scientist, literate, etc. so I don’t want to speak too much about the mechanism or clinical data. But at a high level:

• GLP-1 agonists aren’t a new drug class and have been used by diabetics for nearly two decades. We have a decent understanding of the long-term safety profile. However, the new drugs coming out are in much higher doses, often combined with other agonists, and target different patient profiles than diabetics.
• For Zepbound, more than half of patients lost 20%+ of their body weight. Participants had to have a body mass index of at least 30 or 27+ with one weight-related complication (e.g. high blood pressure). You can see the study here.
• Most patients seem to plateau after losing that amount of weight. And currently, patients who start on these drugs have to stay on them indefinitely because they usually gain the weight back very soon after stopping the drugs. This is not too different from other chronic diseases like hypertension, but it’s excellent fodder for the “pharma is evil and wants to hook you on drugs” narrative.
• Novo Nordisk’s study also showed that semaglutide lowers the risk of major cardiovascular issues by 20% and the chronic kidney disease trial was looking so good it was stopped early.

• The main side effects of these obesity drugs are gastrointestinal (GI) like nausea, diarrhea, and vomiting that seem to subside over time. But what good things in life don’t have a small chance of diarrhea? In rats and snitches, they’ve seen thyroid tumors appear that they’re not sure if it’s a causal relationship with the drugs. There also seems to be a decrease in muscle mass and bone density, especially for patients with predispositions to things like osteoporosis. For older patients, losing muscle mass is particularly risky. One emerging weird side effect seems to be the urge to go on podcasts and talk about the drug as an expert.
• As a result of the above, adherence is an issue. Prime Therapeutics found that 2/3 of patients aren’t taking the drugs after one year, the University of Texas is stopping coverage of the drug because <46% of the people taking them actually keep using them.
• Currently, you have to inject these drugs but there are small molecule pill versions coming down the pipeline. I could never give myself a needle, my skin is too supple.

I’m sure I’m missing stuff, but that seems to be the high level. These drugs do extremely well for patients who have struggled with obesity. It’s rare for charts to be aphrodisiacs, but that’s how good the results from these trials have been. When you talk to people, it’s clear that for those who struggle with their weight, this has been a blessing and some underlying mechanism in their brain has changed.

I hear four pushbacks around these drugs themselves:

1. Pushback 1: Obesity is a food system issue and these drugs are curing a problem that should be cured by fixing our food system. These don’t feel mutually exclusive to me; we can still aim to do things like improve food deserts, reduce corn subsidies, etc. even if these drugs exist. In fact, reducing consumption might force the food system to respond in a way the government has not.
2. Pushback 2: A healthier way to achieve these goals is diet and exercise to lose weight. We should focus on making that easier vs. using pharmaceuticals for the rest of your life. But that’s true of lots of diseases - you could manage high cholesterol with diet, but we don’t force people to do that when medications like statins exist. Having options for treatments and letting patients + doctors choose the right one for their needs is important. Plus, you still need diet and exercise when you’re on GLP-1s, so maybe this is a good kickstart to healthy behaviors that people can maintain long-term and wean off the meds over time if they want.
3. Pushback 3: There’s no such thing as wonder drugs for obesity and we’ll discover something awful about them, so we shouldn’t be rolling this out so quickly to the entire population especially with past obesity drugs that had pretty awful downstream effects we discovered later (e.g. fenfluramine). What we’re now forced to ask ourselves is whether the unknown risk of the long term effects of these drugs is worth it relative to the known long-term effects of obesity. I don’t think there’s a correct answer here, and everyone will have different ideologies around this. I think that’s why it’s important to make sure that we’re giving these drugs to patients where that risk-benefit calculus is more clear (e.g. morbidly obese patients).
4. Pushback 4: It reinforces body image fixation and the associated psychological issues, especially amongst young people. I don’t have a great answer to this and I’m not an expert, but it seems like we have these problems independent of GLP-1s. It also seems like an area where we’d want more guardrails around consumer marketing and prescribing for pharma companies, especially when it comes to kids. I’m not trying to see Ozempic Barbie hitting the shelves.

I think GLP-1s are interesting because of how competition + massive consumer demand are breaking conventional norms in the healthcare system and potentially give us the opportunity to make some changes. A few particular areas of interest are below.

The consumer go-to-market + competition

It’s not everyday you see multiple biologic drugs targeting the same disease entering a gigantic market at the same time. Usually you have a handful of players in a small market and their goal is to work on getting insurance coverage, doctors buy-in to prescribing the treatment, and patient awareness of the drug. I wrote about this dynamic here.

The rules for GLP-1s seem to be very different. There was a massive amount of consumer awareness for weight loss before pharma had actually gotten approval for those drugs to be marketed for that. A combination of celebrities talking about it and people documenting their journeys on Tik Tok basically created a massive groundswell for these drugs, which then created a ton of pressure for off-label prescribing (aka approved drugs being prescribed for unapproved diseases/indications). How many drugs do you know that have word of mouth effects? A fat joint at a party, that’s about it.

When more of these drugs inevitably get approved by the FDA to be marketed for obesity, I think we’re going to see much more creative distribution. For example, we’re seeing fitness clubs like Lifetime offering GLP-1s, Weight Watchers acquired a company centered around GLP-1s, at this point even McDonald's HQ is at least thinking about including it in the combo. In healthcare, we’ve tried to make “consumerism” a thing for decades. GLP-1s have so much consumer demand that it’s actively converging the worlds of real consumer companies and healthcare.

The closest analog I could think of for obesity drugs are the new class of migraine drugs like Nurtec, Emgality, and Aimovig. All of these drugs basically hit the market at the same time a few years ago.

While most of the other drugs had a pharma giant behind it, Biohaven was a much, much smaller company pushing their migraine drug, Nurtec. They flooded the zone with a lot of consumer marketing - celebrity endorsements from Khloe Kardashian and Serena Williams, a Twitter campaign that let users make their feed more migraine friendly, partnerships with Thirty Madison for their migraine brand, and aggressive Tik Tok campaigns that were so cringe and compliance-d out they actually gave me a migraine. A genius customer expansion strategy.

Nurtec managed to get more than 50% of the market and was bought by Pfizer. I think the GLP-1 manufacturers are going to get similarly creative in working with consumer companies to increase their brand awareness and market share. There’s gonna be a Zepbound arena, and there’s going to be a biosimilar Ozempic on Wish.com or some shit.

Picking the right patients + support

It’s clear these drugs are not good for everybody, but no one seems to be quite sure who the drugs actually work for. Many people feel severe GI side effects like chronic nausea or ulcerative colitis. Many patients end up clinically malnourished by skipping too many meals while others actually gain weight because they see the drugs as a “free ticket” to eat whatever they want. There are murmurs of side effects like exacerbation of suicidal ideation, as well as positive effects like people saying other addictions have subsided. There are worries that kids are being put on this drug without understanding what’s happening to them.

We clearly need to get more specific with the patients that get this drug, have better systems to support them when they’re on it, and employ better means of tracking what’s happening during and after treatment. Some thoughts and areas of improvement:

Overly large starting market - The initial trials for these drugs seem to be purposefully as broad as possible (most likely to gain market share as quickly as possible). With so many people taking it, it's inevitable that we’re going to see some people that respond terribly and a lot of the discussion will focus on those cases. Later versions of GLP-1 agonists will start targeting more specific patient subgroups and compete on things like maintaining lean muscle.

Until then, it’s pretty much the Wild West - prescriptions are given based on insurance coverage vs. whether it’s the right method to tackle their weight.

We need to get way more granular in figuring out which patients get this drug. There seem to be real long-term nutrition questions for people who are not morbidly obese. I’m going to reiterate the point of doing a better risk-benefit calculus for patients vs. prescribing it on a whim.

Wraparound services - Since adherence to these drugs is so bad, the support systems for patients taking them seem important especially in the first week where a lot changes at once. Being able to monitor side effects, dietary changes, and check biomarkers between visits will probably become more important since the day to day experience for people on these drugs fluctuates (based on reddit). Many non-MDs like coaches and nutritionists will specialize in just GLP-1 management, since it won’t be feasible for docs to be constantly monitoring their patients while they’re on these drugs.

Some mix of dietitians, nutritionists, physicians, cognitive behavioral therapy, and even patient community or peer liaisons should be a part of this drug regimen for the first couple of months. No more companion diagnostics, we’re getting companion COMPANIONS boiii.

I can already see certain payers making wraparound services a part of their coverage approvals. For example, Connecticut’s state health plan is trying this:

"Since July, state health plan members seeking drugs like Novo Nordisk’s Ozempic and Wegovy for weight loss must first take part in a clinical lifestyle management program called Flyte, which offers online tools for weight management. Participants can meet with providers and receive personalized care plans. Those providers might prescribe one of the medications, which the state health plan would then cover, or recommend a different course of treatment.” - Politico

Post-market monitoring - For all the talk of real-world evidence, basically all the chatter of this drug seems to be backchannels. Patients are talking about their experiences online or in small friend groups, doctors are chatting with each other about what they’ve anecdotally been seeing, etc.

The systems for trying to monitor adverse events are way slower than what people are actually saying and feeling. Plus, it’s not easily accessible by patients/docs who are looking for answers to these questions. I’d be curious if any of the AI scribing companies like Nuance and Abridge are capturing this data at a larger scale and/or in real-time. Maybe the wraparound services can group people into online forums where they can verified but anonymously talk about their progress on the drug. Then we can mine side effect insights from these small groups in a de-identified way.

We need way better systems of tracking side effects patients are experiencing and make it easier for regular people to see them. Pharma is not exactly incentivized to root out adverse events happening in the real-world after the drug is approved - bad news means they have to notify the FDA and prevent future prescriptions for a certain population.

Either way, I think before we roll this drug out to millions more people, we should be able to see all the downstream effects patients are noticing about themselves while on the drug. Then we can make sure that people who aren’t good fits for the drug can avoid it. Those “precision medicine” keynote speakers are absolutely foaming at the mouth right now.

Coverage

Let’s talk about pricing and coverage, since that seems to be the topic du jour. The list price of these drugs look to be $1000+ per month which headlines have fixated on. However, this is only the list price of the drug - the reality is pharma companies pay a massive rebate to whoever is covering these drugs (health insurer/employer). From what I’ve heard + read in a Credit Suisse report these rebates end up being 50-75% of the list price, making the drugs about $200-$300 per month if you’re covered and the rest mostly going to the insurer or employer.

Which exposes how wacky this entire coverage dynamic is:

1) Why the fuck is it so hard to figure out how much this drug costs? I’m having to piece this together by reading this AEI report, DMing random Twitter accounts, or whispering “list price” into a mirror three times and the drug channels guy appears. The nonsensicalness of how PBMs cover drugs and get massive rebates is on full display here. A $200-300/month price is much more palatable, that’s basically what the average person is spending on OnlyFans per month.

2) In the US, most people get drug coverage from their employer. For a drug that you have to potentially be on indefinitely, it gives employers a weirdly high amount of leverage to get you to stay. This survey found that more than half of people would stay at a job they didn’t like if it covered their obesity treatment! 44% would actually CHANGE jobs to get coverage. I mean I guess I’ve stayed at jobs for dumber reasons, like being told “this equity will be worth something”.

3) For a drug that presumably improves long-term health outcomes AND essentially gives a patient reasons to stick with health coverage, you’d think that all of the payers would be fighting each other to try and attract patients who want to be on this drug. I remember a time when I was filled with that kind of optimism and happiness broadly.

But right now it’s the opposite and most payers are trying to figure out all the ways to NOT cover it. This gets to the core of the current problem with the US health insurance market - because people continuously churn off plans when they switch employers, income status, etc., plans don’t want to invest in a high upfront cost thing like GLP-1s when they won’t reap the benefits of reduced downstream costs like less cardiovascular events. I’m pretty confident this will change as the drug shows cost benefits within 12-18 month windows, or when an employee holds the head of HR hostage to get it covered.

4) Until there’s coverage to use these drugs for obesity, patients are paying the cash price per month to get faster access. Generally speaking, people that can pay $1000/month for these drugs are not the people that would benefit the most from them. The Sweetgreen in FiDi probably has the highest density of Ozempic users in the country.

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I think this might actually be an area where we see GLP-1 drugs try to compete with each other by offering outcomes-based rebates to employers/payers to get better formulary coverage or reimbursements if patients don’t adhere to the drug. To continue the analogy of the migraine drug market from earlier, several PBMs like Express Scripts offered reimbursement to the plans if patients got off their migraine meds in 90 days. I can see the different GLP-1 manufacturers trying to get creative and offer some kind of value-based guarantee for their drug.

But I think this is also a great opportunity to try and fix some of the reimbursement challenges at a system level since consumers have so much leverage right now. Low hanging fruit would probably be to change how the PBM rebate mechanism worked. Either outlaw rebates in some capacity (e.g. remove the exemption PBMs get for kickbacks) or have the rebates go directly to the patient at the point of sale for the pharmacy. This idea seems to be getting some traction.

Parting thoughts

This is the first drug that tackles something virtually all people (for better or worse) think about - their weight. Nothing else in healthcare has the vanity and health pull of losing weight, and that consumer demand is going to hopefully force the healthcare system to respond to things like coverage, patient selection, and more.

A few other thoughts that didn’t fit neatly into buckets.

• One of the big issues surrounding this drug is the shortages. Can someone explain to me what the main barriers to scaling manufacturing are? We did manage to scale up COVID vaccine manufacturing extremely quickly, but are also still experiencing shortages with Adderall so I'm confused about capacity building and the limitations. I’m curious why Novo or other manufacturers still have such shortages, other than it requires work and they’re European.
• Additionally, because of the shortages, people are going to shady compounding pharmacies that try to make their own different versions of GLP-1s. I’d be very careful going down this route, as there have been some pretty bad stories of people using untested versions of this. I do wonder if compounding can eventually be helpful here since titrating doses of these drugs might actually have better results, but that requires more oversight from the clinical teams prescribing the drug.

• Someone that bought Novo stock early told me “the best way to figure out off-label prescribing trends is to talk to rich people in New York”. This is not financial advice, but honestly makes me wonder what other drugs I should be keeping tabs on.
• I’m surprised at the number of people willing to jab themselves with a needle. I always thought that would be a barrier to people taking these drugs, but that doesn’t seem to be the case. Auto-injectors were a big part of this, and goes to show that improving the delivery mechanism for a drug does add a lot of value.
• “My pockets fat, yours be on Zepbound” is a banger rap lyric that I’m willing to give for free.
• One of the running memes in finance Twitter are stocks that are going to benefit from the GLP-1 wave. Airlines are going to save millions from lighter passengers, Walmart is claiming people are buying less food because of the drugs, and I’m long Charmin toilet paper. I think a lot of this is exaggerated, but this paper looks at how many CPG categories have “power consumers”. The top 20% of consumers represent ~85% of light beer consumption - and we get them all together for the sickest pong tournament of all time. If the overlap of these consumers and Ozempic users are high, it only takes a small portion of consumers to affect sales.

This newsletter was really just an excuse for me learn about the new obesity drugs. But I’d love to hear from you all what you think about these drugs, personal experiences with them, or if any questions are on your mind.

Thinkboi out,

Nikhil aka. “The real, very slim shady”

Twitter: @nikillinit

IG: @outofpockethealth

Other posts: outofpocket.health/posts

Thanks to Malay Gandhi and Elliot Cohen for reading drafts of this

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