In last week's blog post, we delved into the what and why behind the current surge in interest and demand for GLP-1s. And it's clear that these medications have significant potential to not only meaningfully improve patient outcomes, but also to reshape the business models underlying chronic care today. But sizing the full, eventual impact of these drugs remains difficult, given a large number of unknowns/lingering unanswered questions, and the fast pace of change when it comes to continued clinical innovation, as well as the shifting reimbursement and coverage landscape.
So in today's blog, we'll share the short-list of factors that we think will ultimately shape the magnitude of the impact of GLP-1s. For each factor, we'll share: 1) Why it matters, 2) the current state, and 3) the future outlook.
The eight factors that will determine the impact of GLP-1s
Influencing factor #1: The efficacy of GLP-1s
Why it matters: This is the obvious one, but efficacy (for example, measured by lower blood sugar levels or magnitude of weight loss) will ultimately influence patient demand for GLP-1s (both in terms of initial demand as well as continued adherence), as well as physician willingness to prescribe these drugs.
Current state: Medium-high Current evidence suggests that GLP-1s are more effective than alternative medications and/or lifestyle modifications when it comes to both management of type 2 diabetes, as well as ability to drive weight loss. Research has indicated that these medications can enable patients to lose 15-20% of their body weight—two to three times the amount achieved with previous medications. That said, not all patients experience such drastic results, and lack of efficacy is cited as a top driver behind discontinued use of these drugs among both patients and physicians.
Future outlook: Likely to improve Drugmakers are continuing to develop the next generation of GLP-1s; for example, by creating new formulations that act on other receptors in addition to GLP-1 receptors to significantly increase the medication's effectiveness, in some cases doubling the weight reduction patients experience.
Influencing factor #2: The tolerability/safety of GLP-1s
Why it matters: Even if GLP-1s prove to be highly effective, lack of tolerability or the presence of uncomfortable—or even dangerous—side effects, could make it difficult for patients to actually take these medications.
Current state: Medium-low A large minority of patients currently taking GLP-1s report at least modest, uncomfortable side effects such as GI symptoms. The injectable nature of the most popular (and effective) versions of these drugs is also a major deterrent. In fact, over half of patients stop taking the drugs within three months.
Future outlook: Likely to improve This is a major focus area for drugmakers in the development of the next generation of weight loss drugs. In particular, the development of oral formulations is a top priority, as is minimizing adverse effects such as muscle mass loss and GI symptoms.
Influencing factor #3: The clinical scope of GLP-1s
Why it matters:Â The more clinical indications these drugs are approved for, the larger the size of the potential user base.
Current state: Medium Currently, the use of GLP-1s is approved for type 2 diabetes and obesity. The FDA also recently approved the use of some of these drugs for the treatment of heart disease—specifically, for the reduction of adverse cardiovascular events such as heart attacks. These disease states alone represent a large addressable market: 10% of U.S. adults have type 2 diabetes and over 40% have obesity.
Future outlook: Likely to increase Novo Nordisk is actively seeking approval for the use of its GLP-1 medications in the treatment of chronic kidney disease. Research is ongoing on the potential role of GLP-1s in treating liver diseases and even neurological conditions such as Alzheimer's disease.
Influencing factor #4: The longevity of GLP-1s
Why it matters: With long-term adherence currently difficult, the more effective these drugs are across the long-term—especially after discontinuation—the larger their potential impact.
Current state: Very low Because GLP-1s mimic the role of hormones (which, one metabolized, lose their efficacy), users generally must be actively taking these drugs to maintain their impact. Many patients report weight gain following discontinuation of the medications.
Future outlook: Neutral New and upcoming formulations of these drugs continue to mimic the role of hormones, meaning that they are unlikely to have more permanent effects than current formulations. Digital health companies are attempting to meld the use of GLP-1s and lifestyle modification, especially in cases where a patient would like to discontinue the use of these drugs. It remains to be seen how these types of "tapering" approaches will work in the real world.
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Influencing factor #5: The price of GLP-1s
Why it matters: Financial tolerability to patients will influence adherence, and price point will also impact payer willingness to cover the drugs (thereby improving financial tolerability for patients).
Current state: Medium The price of these medications (roughly $1,000 per month before insurance) is not particularly high on a unit basis compared to many other drugs on the market. But the fact that patients must take these drugs into perpetuity to maintain their effects makes the potential cost base quite large.
Future outlook: Neutral As more drugmakers continue to bring these types of drugs to market, competition could enable lower list prices, or at least keep them from increasing further. On the other hand, continued effort to improve efficacy, tolerability, and minimize side effects could allow drugmakers to justify higher prices for newer generations of these drugs.
Influencing factor #6: Risk contracting prevalence for GLP-1s
Why it matters: Willingness of drugmakers to accept risk-based contracts could increase payer willingness to cover the drugs.
Current state: Low There is little evidence to suggest that value-based contracts are prevalent for these medications.
Future outlook: Likely to increase Risk- and outcomes-based contracting iis becoming more prevalent in the drug space in general. Some insurers—such as Cigna—have begun to cap annual price increases for GLP-1s specifically in order to minimize employer cost exposure.
Influencing factor #7: Insurance coverage of GLP-1s
Why it matters: With the financial burden of these drugs for patients a major concern (especially given the need to take them into perpetuity), payer coverage of GLP-1s will have a major influence on how widespread their use becomes.
Current state: Medium Over half of employers cover GLP-1s for type 2 diabetes, and a third cover the medications for both diabetes and weight loss. Medicare covers GLP-1s for diabetes and cardiovascular health.
Future outlook: Likely to increase The share of employers covering GLP-1s continues to increase every year, with no signs of slowing. Medicare and Medicaid are currently prohibited by law from covering drugs for the purposes of weight loss, but there has been some legislation introduced to try and change these laws.
Influencing factor #8: Equitable access to GLP-1s
Why it matters: Broad access to these drugs, regardless of race/income/socioeconomic status, would promote higher uptake.
Current state: Medium-low Research has indicated that GLP-1s uptake is currently lower among Black, Hispanic, and low-income communities (despite higher prevalence of obesity and diabetes among these populations). An ongoing supply-demand gap has also "favored" more privileged patients with the time and financial resources to seek these drugs out from non-traditional sources such as compounding pharmacies and online prescribing platforms.
Future outlook: Neutral-to-slightly positive Ongoing work to minimize health disparities could influence disparities in access to GLP-1s specifically. Expanded coverage by Medicare and Medicaid (as noted above) could play a substantial role here as well.
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Want more on GLP-1s?
Check out last week's blog post, where we broke down the current state of GLP-1s.
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