What recent rhetoric on the cost of diabetes and anti-obesity medicines gets wrong

A new activist-funded study published in JAMA Network Open (JNO) is fueling misleading rhetoric around the cost of diabetes and anti-obesity medicines. Despite reports that suggest otherwise, the study attempts to show the cost to simply produce a copy of these medicines, not the actual cost to discover, research, develop, obtain FDA approval of, and manufacturer at scale new, innovative medicines.

Yet, that hasn’t stopped some from using the findings to paint an inaccurate picture of the market. These scare tactics and political theater from those using the study should be seen for what they are: attempts to further political goals by misleading the public about the importance of breakthrough innovative medicines and the cost savings they bring to society.

Here are the facts:

1. The study fails to account for the substantial risk and cost it takes to bring new medicines to market. The cost to copy a medicine doesn’t reflect the costs of researching and developing a new one and doesn’t cover failure costs. Bringing a new medicine to market takes $2.6 billion and 10-15 years. Most never make it that far. In fact, only 12% of medicines that go to clinical trials get approved by the FDA. Without companies taking on the risk and investment to innovate, these medicines would not exist. 

“In terms of limitations, I'm not accounting for innovation, yes, that's true…but that's not what the study was about.” – JAMA Network Open study coauthor

2. The study doesn’t represent the actual costs invested to manufacture these medicines. By the author’s own admission, the study doesn’t show what it takes to produce these innovative medicines and ignores the significant investment companies are making to stand up or expand manufacturing capacity in real time. 

“I'm not trying to say, ‘what does it cost Novo Nordisk today to manufacture the drug?’” – JAMA Network Open study coauthor

3. The study ignores significant price concessions that dramatically lower net prices. Rebates and other discounts lower the cost of the most commonly used insulins by 84% on average. A recent analysis of prominent anti-obesity medicines found savings for these medicines can lower the cost by up to 79%. 

4. Medicare spending on diabetes medicines is likely far lower than what is being reported. In fact, new data on net spending — factoring in the substantial rebates and discounts on these medicines — shows that Medicare spending on three prominent GLP-1s, used in the treatment of diabetes, in 2022 was less than half of what the recent and widely-reported KFF data suggests.

5. Medicines have the potential to drive significant savings to the health care system and avoid economic losses. The impact of the obesity and overweight epidemic has been widely documented in the U.S. with an estimated annual cost of $1.72 trillion (9.3% of U.S. GDP) in medical costs and loss of productivity. Over the next 10 years the combined Medicare and Medicaid spending on obesity and related chronic illness will total $4.1 trillion. Medicines that treat and prevent obesity have the potential to drive significant savings.  If Medicare and private insurers started covering medicines to address obesity, it could greatly improve health, reduce the burden of chronic disease and save Medicare $245 billion over 10 years. 

If policymakers want to meaningfully lower costs for patients, they must take on the insurer and PBM practices that are driving up costs and making it harder for people to get the medicines they need. We need to get rebates and discounts directly to patients to lower what they pay at the pharmacy counter, reform misaligned incentives in the PBM market, and expand access to innovative medicines that treat and prevent diseases instead of allowing insurers to continue to deny patients any coverage for revolutionary medicines.