Getting the government out of the way so that market forces and innovation can set the course is the best recipe for a less obese and healthier world.
Getting the government out of the way so that market forces and innovation can set the course is the best recipe for a less obese and healthier world.
I nnovation got us into the obesity epidemic. And it can get us out — so long as policy-makers don’t get in the way.
A new class of weight-loss drugs such as Ozempic or Wegovy, known as GLP-1 agonists, is transforming how Americans treat obesity, with vast potential benefits for both patients and taxpayers. But just as we’re beginning to understand the promise and enormous value of these therapies, lawmakers like Bernie Sanders are warning that the drugs could “bankrupt our entire health care system” and urging that bureaucrats take over and the government impose strict price controls.
That would be a colossal mistake. GLP-1s will almost certainly pay for themselves many times over, even at current prices — and those prices will certainly drop considerably in the coming years as drug companies compete for market share. Setting prices on these innovative medicines would backfire by discouraging scientists from developing cost-saving drugs in the future.
Life-long politicians without business experience, such as Sanders, typically fail to realize that encouraging private competition, rather than using price controls set by bureaucrats, is the best form of consumer protection.
America’s obesity crisis is centuries in the making. Advancements in agriculture have made it so easy to grow crops that a mere 2 percent of the population now produces enough food to make us obese. Agricultural innovation is the ultimate source of the growth in obesity, as historically, even though a majority of GDP was devoted to agriculture, it was infeasible to produce enough calories to even escape starvation.
And while new technology and automation across virtually every industry have led to greater productivity and income, they have also made labor more sedentary than at any point in history. Indeed, you used to get paid to exercise at work rather than paying to do so during your leisure time, as we do today. The combination of these factors led us to the current moment, in which nearly three in four American adults are either obese or overweight. Alternative explanations such as genes and identifying obesity as a disease may interact with these economic changes but cannot alone explain the obesity rates exploding the last few decades as compared with, say, 1,000 years ago.
Obesity is a serious health condition, putting people at greater risk of high blood pressure, type 2 diabetes, breathing problems, joint problems, gallbladder disease, strokes, and some types of cancer. It’s also associated with anxiety, depression, and low self-esteem.
That all makes the new GLP-1 drugs enormously valuable and the huge demand for the medicines hardly surprising. Indeed, 24 years ago, my colleague Richard Posner and I predicted that life-sciences innovation would lift us out of the obesity crisis given the large market size that would reward innovators. Now that it’s doing so, the government shouldn’t stand in the way.
Some have argued that making Ozempic and other GLP-1 agonists available to everyone will drive us to financial ruin. But the opposite is true: These drugs will reduce the enormous economic and health-care burden of obesity.
Recent clinical trials revealed that giving these drugs to patients with type 2 diabetes and chronic kidney disease cut the risk of heart attacks by 18 percent and all-cause mortality by 20 percent. On a human level, these new medicines are great news for patients — and their loved ones — who live better and longer lives. And on a societal level, they’re great news for employers and taxpayers, since people will remain more productive longer, and also require less tax-funded health care.
Without these new drugs, the cost of obesity and related illnesses will remain staggeringly high. Chronic diseases due to obesity cost the United States $1.72 trillion in 2016, according to a Milken Institute study; adjusted for inflation, that’s about $2.2 trillion today.
This implies that a rise in spending on obesity drugs will, in time, result in cuts in overall health-care spending for those taking the drugs. This will be even more true when competition lowers prices of the drugs further. Existing GLP-1 drug makers already offer discounts of anywhere from 48 percent to 78 percent off the list prices of their products. And the larger market size for GLP-1 medicines is prompting development of more competitors. Pharmaceutical companies Novo Nordisk and Eli Lilly may have hit the market first, but firms such as Amgen, Roche, and Pfizer are racing to create their own versions.
This competition, rather than misguided price controls set by bureaucrats, will lead to lower prices for patients and their health plans. We’ve seen this model play out in medicine many times, such as for hepatitis C treatments. When Gilead Sciences introduced Sovaldi — a breakthrough that led to today’s cures for over 90 percent of hepatitis C cases in a single course of treatment — in 2014, demand was enormous, but it came with concerns about high per capita cost. Within a few years, these concerns dissipated as competitors developed similar treatments and prices dropped. Effective pharmaceutical treatments meant fewer liver transplants so that overall health-care spending fell. Medicaid is expected to save $43 billion thanks to these drugs.
If policy-makers strive for letting the market operate free of interference, the same scenario will play out with GLP-1 agonists. Getting the government out of the way so that market forces and innovation can set the course is the best recipe for a less obese and healthier world. Medical innovation, not regulation, is the best route to fight the innovation-induced obesity epidemic.