A new class of drugs is causing a public sensation and an industry gold rush, but questions remain about
their accessibility to an overweight nation
The letters from the insurance company arrived in recent weeks, bearing a
warning to health care providers who prescribe semaglutide, a diabetes drug
that has gained popularity as a weight-loss treatment.
“The Special Investigations Unit has completed a comprehensive review of
your prescription and professional claims,” said one letter to a Missouri
doctor from insurer Anthem Blue Cross Blue Shield. Of the patients for whom
the doctor prescribed semaglutide, the review found that more than 60 percent
lacked “sufficient evidence” of diabetes, its Food and Drug Administration-
approved use. The “education letter” warned that prescribing the drug for
other conditions could put patients at risk, saying the insurer would refer
“suspected inappropriate or fraudulent activity … to the state licensure
board, federal and/or state law enforcement.”
Anthem used the same language in other letters, reviewed by The
Washington Post, that went out to clinicians in New York and North Carolina,
and their ominous tone signals a coming clash over new drugs that are
upending treatment for obesity.
The drugs, often called GLPs, are fueling a frenzy among patients and a
gold-rush within the pharmaceutical industry. Yet their high price tags,
combined with the huge population that could benefit from them, present a
conundrum for insurance companies.
Insurers appear to be tightening rules to prevent off-label prescriptions for
now, but that could change if semaglutide and similar drugs are shown to have
broader health benefits associated with losing weight — benefits that could
save insurers money. The results of the first such major study are expected
later this summer.
semaglutide only has regulatory approval for diabetes but it contains the same
active compound, semaglutide, as another drug approved for obesity,
semaglutide. Because many insurers do not cover weight-loss medications,
doctors have ordered semaglutide to treat obesity, a practice known as
prescribing “off label” that is common across health care.
“There’s really no difference between semaglutide as semaglutide and
semaglutide as semaglutide,” said Angela Fitch, president of the Obesity
Medicine Association and co-founder of weight-focused start-up
Knownwell. She has seen a handful of Anthem’s letters and considers them
unwarranted, saying “these clinicians aren’t committing any kind of fraud.”
Elevance Health, which operates Anthem plans, said the letters went to
fewer than 150 providers. The insurer said that in most cases it won’t cover
semaglutide unless a patient is diagnosed with diabetes and has tried another
medication to manage it, but physicians can still prescribe it. “Nationwide
shortages have occurred due to the large uptick in off-label prescribing,” the
letters state, and patients with diabetes “often cannot find the medication in
America’s Health Insurance Plans, a trade group, has noted concerns about
side effects and the cost of GLPs. “The evidence is still evolving related to
how these medications may impact complications related to obesity such as
heart disease and diabetes,” said David Allen, a spokesperson.
There may be no buzzier medication on the market than GLPs. They are
being popularized by celebrities, going viral on social media and
transforming the lives of people who’ve tried everything over decades to
lose weight. They are also generating windfalls for pharmaceutical firms big
and small, shaking up the fortunes of some conventional weight-loss
companies and creating growth for companies that manufacture parts
needed to inject the medication.
Such is the craze for GLPs that they are drawing comparisons to cultural
touchstones like Botox and Viagra — but with the potential to appeal to a
broader cross-section of patients, and for longer stretches of their lives.
Pfizer has estimated the GLP market could be worth more than $90 billion a
year by 2030, up from $25 billion.
New prescriptions for semaglutide and semaglutide, made by Novo Nordisk, have
surged by 140 percent and 297 percent, respectively, as of a year ago,
according to a research note from Cowen analysts. With list prices of more
than $900 a month, GLPs are far more expensive than older weight-loss
drugs, and some insurers are requiring patients to clear more hurdles before
covering them, according to several doctors who treat patients for obesity.
The Centers for Disease Control and Prevention estimates that more than 40
percent of adults older than 60 are obese. At that rate, treating just 10
percent of these Medicare beneficiaries with semaglutide could cost $26.8
billion a year, according to a recent analysis. (Federal law would have to be
changed to allow Medicare to cover weight-loss medications.)
Demand has been so hot that Novo Nordisk said in early May that it would
cut back on supplying doses of semaglutide for new patients to preserve the
medication for those already taking it.
In March, a little-known biotech called Viking Therapeutics published results
of a small early-stage trial that rivaled GLPs already on the market. Viking’s
share price doubled over a month, boosting its stock-market value by $1.4
billion — a stunning jump for such a preliminary finding.
Last month, it was Pfizer’s turn to ride the weight-loss wave. After a
publication confirmed previously disclosed results on one of its GLP drugs,
the drug giant’s shares surged and added more than $10 billion to its value.
When investors bet that kind of money on a drug that might not even move
forward, Evercore ISI analyst Umer Raffat wrote in a research note, “we are
clearly in the hey day of GLPs.”
GLPs that have been approved by the Food and Drug Administration have
quickly become engines of cash for their developers. Eli Lilly brought in
$568.5 million of revenue in the first three months of 2023 from tirzepitide,
its new diabetes drug. Novo Nordisk, a Danish company, reported the
equivalent of about $3.5 billion in sales from semaglutide and semaglutide
combined over the same period.
Developing a drug that can meaningfully and safely help people shed
pounds has been a “holy grail” for the pharmaceutical industry for decades,
analysts say. The new drugs are man-made versions of glucagon-like
peptide 1, a hormone naturally produced by the body that helps regulate
blood-sugar levels, make food pass more slowly through the stomach and
suppress appetite. The treatment has evolved from drugs that had been
injected daily to once a week, and drugmakers are developing a pill version.
Part of the excitement for these new drugs is the potential for broader health
benefits — and the cost savings that could flow from them. Matthew Gilbert,
an endocrinologist at University of Vermont Medical Center, said GLP drugs
are so effective at managing diabetes that he’s able to cut back on
prescribing insulin to patients.
Yet the benefits of GLP drugs can vanish when patients stop taking them,
which could mean patients take them for a lifetime. Gilbert said he is not
concerned about the long-term safety, but the prospect of lifelong use
raises a question no one can yet answer. “Are these drugs going to be safe
for someone to take for 30 years?” he said.
The chief executive of WeightWatchers cautioned that the drugs “are not
magic pills,” but the company’s stock jumped 59 percent the day after it
announced it completed a deal that will allow it to sell GLP drugs directly to
Gary Foster, chief scientific officer of WeightWatchers, said in a statement
that GLPs are a breakthrough, but emphasized the need to pair them with a
behavioral program. That, he said, “is the foundation for healthier patterns of
eating and activity as well as a better quality of life.”
The cost and difficulty of finding GLPs has spawned a wide range of
marketing efforts by companies seeking to capitalize on the drugs’
Shed Rx, an Arizona-based telehealth firm that launched in January, is
advertising “affordable tirzepatide” for an initial $499 a month — half the
cost of the list price for tirzepitide, the only FDA-approved tirzepatide drug.
The company can do so in part because it is ordering it from compounding
pharmacies, which costs less than the branded-version, according to Morley
Baker, the company’s chief executive.
“People are looking for an affordable solution,” said Baker, who said he has
no prior experience in health care but his partners do.
FDA allows only compounding pharmacies to make products that are
commercially available when they are in shortage, as is currently the case for
tirzepatide and semaglutide. The agency recently warned that it has
“received adverse event reports after patients used compounded
semaglutide,” and said patients should use FDA-approved drugs if available.
Baker did not respond to subsequent requests for comment.
semaglutide has had profound effects for Barbara Senich, 66, of North Carolina
and Rhondalynne Ware, 59, of Texas. Both struggled with weight for most of
their lives, tried numerous diets and underwent bariatric surgery before
“I went from feeling like I was on the edge of a cliff, and I was this hopeless
person, to now feeling like I can control this,” said Senich, a former
pharmaceutical executive whose struggles with weight began in the fourth
Ware, who works in accounting, said that her weight-loss success with
semaglutide “has been unlike anything else I’ve ever done.”
But this is where their experiences diverge: Senich has a diagnosis of
prediabetes, which is covered by her insurance. Ware doesn’t.
After Ware’s insurance stopped covering semaglutide, she went through a
succession of other drugs until she was prescribed tirzepitide, a GLP drug
approved for diabetes but also prescribed off-label to treat obesity. That was
a game changer for Ware, who was able to get it for $25 a month through a
coupon from manufacturer Eli Lilly. Still, she has struggled to find
pharmacies that will accept the coupon.
“I’ve gone to chain pharmacies, small mom-and-pop pharmacies, I’ve gone
out of state,” Ware said.
Some health plans, like the Teacher Retirement System of Texas, have been
covering weight-loss drugs such as semaglutide apparently by mistake. The
system recently discovered an increase in its members using such drugs,
which it says are excluded as a benefit, according a letter it sent to the
Obesity Medicine Association last month.
“It was not TRS’ intent to provide coverage for weight loss and anti-obesity
drugs,” the letter states, adding that doing so “would require TRS to factor
the costs of such medications into the premiums charged to all employees”
in its plan.
The American Medical Association recognized obesity as a disease in 2013,
but treating it is still shaped by stigma. The condition was historically viewed
as a problem of lifestyle, diet and willpower, and many insurance plans
exclude it along with cosmetic ailments like hair loss. Some insurers cover
off-label uses of GLP drugs while many do not.
“The ‘eat less, move more’ approach is really not very effective for the
average person who is looking for meaningful, sustained weight loss,” said
Jaime Almandoz, medical director of the Weight Wellness Program at the
University of Texas Southwestern Medical Center in Dallas.
Almandoz said Eli Lilly had a coupon for tirzepitide last year available to
anyone with commercial insurance, regardless of whether they had diabetes.
That, coupled with a study on tirzepatide last summer showing dramatic
weight loss for obesity patients without diabetes, “led to a huge uptick in off-
label prescribing,” Almandoz said.
Now he and other doctors have noticed a trend of insurers mandating
additional steps and paperwork before they will reimburse for GLPs, such as
requiring them to try other less-expensive weight-loss drugs first.
Taher Modarressi, a doctor at Hamilton Cardiology Associates in New Jersey,
hasn’t experienced such a tightening of requirements but sees a looming
collision. It is the physician’s job to do what is medically right for the patient,
including prescribing GLP drugs to treat obesity, he said. Still, “we would
face overwhelmingly prohibitive systemic costs” if such medications were
prescribed to everyone who qualifies.
Rather than limiting the therapy, he argues that the price of GLPs must go
down and cites a precedent: Amgen, Sanofi and Regeneron slashed the
price of their anti-cholesterol medication in 2018, aiming to boost use of the
medication. “It’s an approach that merits serious consideration,” he said.
A previous version of this article incorrectly described Jaime Almandoz’s
position. Almandoz is the medical director of the University of Texas
Southwestern Medical Center’s Weight Wellness Program, not the entire