Generics usher in an era of affordable and effective weight-loss treatments

Affordable weight-loss possible thanks to generics: ©Dan Leonard

Roughly 12% of American adults have tried a "GLP-1" drug, the revolutionary class of medications that can treat obesity and diabetes. That percentage is set to soar thanks to cheaper generic versions of early GLP-1 drugs now hitting the market.

Teva Pharmaceuticals just launched the first generic GLP-1 available to Americans. It's a generic version of the diabetes treatment Victoza -- which recently went off-patent -- and is expected to be 13.6% cheaper than the brand-name drug before rebates. After factoring in discounts, brand-name anti-obesity drugs already sell for 48% to 79% below their nominal "list" prices, so Teva's drug will presumably come with even deeper discounts to gain market share.

Other generic versions of Victoza are on the way. This summer, the FDA tentatively approved one from Hikma Pharmaceuticals, and drugmakers Vitaris and Sandoz plan to release competing alternatives. Patents for the second-generation GLP-1 drugs -- which are making headlines for their weight loss properties and broader health benefits -- will expire within a decade: Eli Lilly's Trulicity in 2027, and Novo Nordisk's Wegovy and Ozempic in 2032.

New generics entering the market will mean big savings for patients, since generics promote competition and generally push drug prices down. According to the FDA, the list price for a brand-name drug drops by an average 39% when just one generic enters the market, and even more, up to 80-90%, once multiple generics are available. We've seen this same dynamic play out as part of the life cycle for many high-profile medicines. A monthly supply of HIV medicine cost more than $1,000 when first introduced; today, a generic version retails for $60.

This phenomenon provides a good reminder to anyone concerned about the cost of GLP-1s -- namely, that medications get much cheaper over time, but their benefits persist.

Obesity and type 2 diabetes are closely linked -- and both exact a tremendous toll on this country. The obesity epidemic alone costs America more than $1 trillion annually due to higher healthcare spending and lost productivity. It's also deadly -- one of the leading causes of preventable death in the United States. It's associated with 236 different conditions, including diabetes, heart disease, and cancer.

By improving health outcomes and avoiding costly obesity-related complications, GLP-1s can significantly reduce the overall cost of health care. One analysis by researchers at the University of Southern California found that Medicare could save nearly $175 billion within 10 years if it fully covered weight-loss drugs. The nation as a whole could realize as much as $1 trillion in savings if all eligible Americans could access them. The burden of chronic disease could undergo an unprecedented reduction.

The favorable cost-benefit analysis is leading more employers to cover GLP-1 drugs for weight loss. Even Medicare is budging, providing the drugs for some patients struggling with excess weight and heart disease. As prices inevitably come down with competition from generics, the benefits of GLP-1s will only become clearer.

None of this would have been possible without the right incentive structure. Without the strong intellectual property protections that encouraged the development of GLP-1 drugs in the first place, there would be no treatments for generic drug makers to reproduce. We would be stuck permanently with the ill effects of obesity and associated disease.

It also wouldn't have been possible without the Hatch-Waxman Act, which streamlined the approval process for generics while preserving necessary incentives for risk-bearing brand-name drug makers.

Thanks in large part to Hatch-Waxman, which will celebrate its 40th anniversary in September, nine in 10 U.S. prescriptions are filled with generic drugs. This is one of the greatest health policy success stories of our time.

A new era of declining U.S. obesity is on the horizon. As more generic GLP-1s enter the market, we have a unique opportunity to finally end the obesity and diabetes epidemics, saving both lives and dollars.

Dan Leonard is executive director of We Work for Health, which brings together business, labor, biopharma, and patient advocacy leaders to support policies and initiatives that foster innovation in healthcare.