Rising Healthcare Costs Highlight Potential Savings from Ozempic


Healthcare expenditures are increasingly dominating the federal budget, with projections from the nonpartisan Congressional Budget Office indicating that in the next 30 years, healthcare costs will make up $1 out of every $10 of the nation’s annual economic output.

Fortunately, innovations in the private sector could help mitigate these costs, notably the drug semaglutide, commonly known as Ozempic. Approved in 2017 by the Food and Drug Administration for adults with Type 2 diabetes, Ozempic has gained widespread popularity for its effectiveness in combating obesity. Even those who haven’t used the drug have likely heard its commercial jingle, “Oh, Oh, Oh, Ozempic,” which riffs on David Paton’s 1974 hit song “Magic.”

The injectable drug Ozempic. (AP Photo/David J. Phillip)

Ozempic challenges the skeptics who claim that weight loss can only be achieved through traditional means like regular exercise and a balanced diet. Clinical trials have shown that Ozempic results in at least 10% weight loss per year for its users over a period of four years. This weight loss, driven by reduced hunger, also leads to a 9% decrease in grocery spending, according to a Morgan Stanley analysis.

Beyond the weight loss benefits, Ozempic also reduces the risk factors for numerous major causes of death in the United States.

In May, Novo Nordisk announced groundbreaking clinical-trial data showing that patients receiving weekly Ozempic injections were 24% less likely to experience major kidney disease events, 29% less likely to die from heart attacks and other cardiovascular events, and 20% less likely to die from any cause compared to participants receiving a placebo over several years. Previous studies have indicated that Ozempic-class drugs may also treat or alleviate sleep apnea, polycystic ovary syndrome, fatty liver disease, and cancer risk, the progression or risk of Alzheimer’s and Parkinson’s, and alcohol use disorder.

What do all of these conditions have in common? They are not only chronic or potentially fatal, but they are also expensive to treat and detrimental to the productivity of those affected. Considering Ozempic merely as a weight loss solution overlooks its potential as a proactive measure against leading causes of death and disability, which could improve workforce health and provide taxpayers with a net return on investment.

Expectedly, Ozempic has drawn criticism from Sen. Bernie Sanders (I-VT) and his supporters, who criticize Novo Nordisk for pricing a monthly supply at over $900. Given that Medicare coverage for all obese beneficiaries would cost around $250 billion annually, this is roughly double the current annual prescription drug expenditure for Medicare. CBO Director Phillip Swagel estimates that the drug’s price would need to drop by 90% for federal coverage to be deficit neutral.

It’s true that the U.S. pays more for drugs like Ozempic to help recoup the costs of medical R&D, which for Novo Nordisk totaled $5 billion last year. Despite its current image as a quick fix for celebrities aiming to shrink down to ultra-slim sizes, widespread taxpayer support for Ozempic’s preventive treatment could grow as its genuine health benefits become better understood.

A study by the University of Southern California Schaffer Center for Health Policy found that Medicare coverage of Ozempic could save $175 billion in a decade and $700 billion over 30 years, mostly from reduced spending on hospital, hospice, home care, and nursing home services under Medicare Part A. Offering a decade of coverage could halve the obesity rate among beneficiaries and provide $1 trillion in net societal benefits from reduced disability.

Wanting Ozempic to be accessible to all doesn’t necessitate making it affordable immediately. By allowing the market to recoup R&D costs naturally and subsequently bring prices down, it could become both economically justified and crucial for insurers to support Ozempic’s widespread use.

Tiana Lowe Doescher
Tiana Lowe Doescher
Commentary Writer. Tiana is also an on-air contributor for The First on Pluto TV. She previously interned for National Review and founded the USC Economics Review. She graduated from the University of Southern California with a B.S. in economics and mathematics.

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