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GLP-1 drugs like Ozempic and Wegovy have revolutionized the management of diabetes and obesity. Millions of Americans are experimenting with them. Celebrities like Oprah are sharing their experiences. Duke Sanford School of Public Policy faculty member Jonathan Zhang is an economist who works on health policy, health economics and public finance. His research shows that GLP-1 drugs live up to their promise in everyday medical care. But the study also finds that, at least in the short run, they do not reduce overall health care spending.
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Conversation Highlights
Responses have been edited for clarity.
On studying GLP-1 drugs
As a health economist, it's always exciting to be able to research new medical innovations and new government health policies. And whether that's innovations like GLP-1s or studying health policies like Medicaid, it's always exciting to be at the frontier, researching some of these things. My co-authors and I were fascinated by the large and impressive randomized controlled trial impacts of GLP-1s. These impacts span so many domains of health. And we read anecdotes or early suggestive evidence that look at the impacts (of the drugs) on things like addiction, mental health, Alzheimer's, cancers, and even fertility. So, we knew we had to study this.
why the study focused on veterans
In November 2020 the VA added GLP-1s, specifically Ozempic, to its national formulary. This rapidly expanded access to veterans, so you saw providers, specifically primary care providers or family doctors, who started prescribing this drug at much higher rates. From a data standpoint, the Veteran Health Administration was key for us. It's a health setting where GLP-1s are covered, and they're generally quite affordable for veterans who are eligible. So, it almost approximates a world where GLP-1s become widely available and affordable, which is really, I think, where the policy discussion is going towards, so it's a nice simulation or a laboratory experiment for that.
On GLP-1s and positive health outcomes
We find that we are able to replicate the randomized control trials. We were surprised because this is a very diverse population. We have 1.4 million veterans in our sample. They come with many different comorbidities, and a very diverse range of ages. We find that for the average patient they are able to keep the weight off.
On predictions that the drugs might make healthcare costs go down
If you think about improving weight, that should lead to reductions in spending, and that's what many cost projection studies actually predict, is that as you get lighter, there's a gradient between obesity and spending. There’s even a suggestion that these drugs would eventually pay for themselves because the hospitalizations and the health system spending would go down. But across the four studies including ours that I'm aware of, we don't see this in the short term, and I say short term because this drug has only been around for a few years.
Implications for policymakers
I think the most important implication for policymakers is that we shouldn't be making GLP-1 coverage decisions based on the promise that they're going to pay for themselves. Very few drugs pay for themselves, and it's a bit unfair and I think premature to evaluate GLP-1's effectiveness or cost-effectiveness, or even whether it offsets spending based on the criteria, just because we've seen that it treats so many things so well.
Because it treats so many things so well, there's a hypothesis that it might offset the cost and even pay for itself, but we need to remember that the benefits of drugs typically are not for them to pay for themselves. It would be nice if it could offset these costs, whether that's in three years or ten years or twenty years, but that shouldn't distract from all the potential benefits of GLP-1s.
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About Policy 360
Policy 360 is a series of policy-focused conversations. This episode is hosted by Manoj Mohanan, interim Dean of the Sanford School of Public Policy at Duke University. New episodes premiere throughout the academic year. Guests have included luminaries like Nobel Peace Prize Winner Maria Ressa and former director of the World Bank Jim Yong Kim, as well as researchers from Duke University and other institutions. Conversations are timely and relevant.