One might ask: How do I look in these jeans? That’s debatable. The fact that the prevalence of obesity has increased by nearly 40% in adults in the last 20 years and has nearly quadrupled in children and adolescents over a 40-year span is not up for debate.
Size labeling for women’s jeans and other clothing has shifted downward while weight has shifted upward. What used to be a women’s size 12 in 1958 is now a size 6. Women’s sizes 0 and 00 were introduced about 20 years ago, and size 000 was introduced amidst some controversy about 7 years ago. What’s going on? Clothing manufacturers are responding to consumer demand for “feel-good” vanity sizing. When enough women do not purchase clothing because the labeled size does not look and feel the way they want it to, sizing will shift downward — again.
The big fat problem
Payers are aware of the problems of both obesity and medical interventions associated with it. In the real world, weight loss is challenging because biological, psychosocial, and environmental factors are at play. Because of uncertainties with long-term outcomes and the durability of the clinical benefit, ICER’s 2015 technology assessment of surgical-, device-, and medication-based treatments concluded that strong evidence lacked for any intervention.
Using a payer’s scale, let’s weigh Saxenda’s value proposition for illustrative purposes.
In three 56-week trials, Saxenda (liraglutide) 3 mg plus lifestyle modification (“treatment”) was compared with lifestyle modification alone (“placebo”) in patients whose body mass index (BMI) was ≥30 or as low 27 if they had diabetes or at least one weight-related comorbidity. To help us quickly get our arms around the issue, let’s put safety issues aside and only focus on the positive efficacy results.
Across the studies, the largest differences from placebo (i.e., treatment minus placebo) for the percentages of patients achieving greater than or equal to 5% and 10% weight loss were approximately 33% and 19%, respectively. If a payer used these results to figure the all-important number needed to treat (NNT), then it may estimate that three patients would need to be treated for one of them to achieve a 5% reduction in body weight, and would need to treat five patients to achieve a 10% reduction in just one patient.
Saxenda’s list price is reported to be $1,297.13 per month. To make the math simple, let’s assume the manufacturer offers payers a discount of around 23%, lowering the net cost of Saxenda to $1,000 per month. In that case and using the NNT values above, payers would spend approximately $3,000 per month for one patient to achieve a 5% reduction in body weight, and more than $5,000 per month for one patient to achieve a 10% reduction.
From the payer’s perspective, under these conditions, does Saxenda yield an ROI? Nope. If your plate is full and you want to cut some fat, consider skipping to the next section. Otherwise, please read on.
In 2010, obesity was estimated to raise medical costs by $3,508 per person per year. That’s almost $300 per month per obese patient. Now, let’s take another giant leap and assume that a 5% weight loss offsets all the medical costs related to obesity. Using our rough NNT estimates, payers covering Saxenda would spend approximately $3,000 per month for a $300 medical cost offset. Back-of-the-envelope calculations like these help to illustrate why Saxenda’s value proposition does not resonate with many payers. What’s more, accounting for the cost of the adverse events (AEs) and discontinuation due to AEs would only further erode the value proposition.
From a payer’s perspective, the “right” price for Saxenda is less than $300 per month, yet its true cost is 10 times that amount. Some large payers say they might voluntarily cover Saxenda if the cost were $100 per month.
Coverage of obesity drugs is limited. Many commercial plans simply exclude coverage of weight-reduction medications. Commercial plans covering obesity drugs typically do so only when employers purchase a rider for that optional coverage and typically require that prior authorization criteria be met (e.g., BMI ≥30, or BMI ≥27 with specified obesity-related risk factors such as coronary heart disease, dyslipidemia, hypertension, sleep apnea and type 2 diabetes). If the Treat and Reduce Obesity Act is enacted, then Medicare will cover obesity drugs — but such coverage would be due to politics, not sound economics given current pricing.
Tipping the scale
When our jeans no longer fit, we have three options: A) lose some weight so that the jeans fit better, B) do nothing and remain uncomfortable, or C) get a larger size. Payers have similar options with obesity. While payers typically provide members with a modest amount of education about obesity and lifestyle modification, most payers and purchasers have largely accepted the swelling costs of obesity. But some payers offer additional support, including coaches, digital tools to measure and monitor weight, reminders, feedback, and/or social support. More payers could follow their lead.
The solution is not more measurement. There are HEDIS measures for BMI assessment for children, adolescents, and adults, and for counseling children and adolescents about nutrition and physical activity. Performance on these measures has steadily improved — even as waistlines grow. And the solution is not more evidence. If payers had real-world evidence that obesity treatments could save them money, then they would voluntarily cover the treatments.
Changing and sustaining exercise-and-diet behavior is difficult and complex. The behavioral economist Dan Ariely uses a rocket metaphor to describe the best way to get people to change their behavior: minimize friction and maximize fuel (i.e., motivation). Perhaps payers could do more by reimbursing providers for the weight loss they help their patients achieve and by creatively incentivizing patients to lose weight (e.g., offer overweight members a new pair of jeans if they can fit into a smaller size).
A big part of the problem is the cost of treatments, and there is only so much payers can do about that. If obesity drug pricing were to shift downward sufficiently, coverage would shift upward. Fat chance.
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