If you want to search Cost Curve back issues or link to anything you read here, the web links and archive are online at costcurve.beehiiv.com. You can subscribe there, too.
Bernie Sanders is out with a new report on how obesity medicines are going to bankrupt the health care system. (The “bankruptcy” language is not me hyperbolically summarizing Bernie. That’s the literal conclusion of the report.)
I could easily pour out a couple thousand works on how Sanders is off-base here, philosophically. How the obesity conversation is all wrong. How we have to acknowledge value** to have a smarter conversion about about paying for these treatments, rather than assuming that price cuts are the only answer.
But you’ve heard all of that from me before, and that gives the report too muchcredit. I don’t need to get into the philosophy bit because I can’t get past the “facts” that the document is built on. This is a hugely inaccurate report. The specifics are mostly wrong, and even when the specifics are technically right, they’re being used in a deliberately misleading way. And the omissions. Oh my.
So here is my not-nearly-exhaustive list of all the things Bernie has wrongthe is make. Some of this is kind of nit-picky, but if the report is shading the truth on the little things, what does that mean for the big things?:
He estimates a net price for obesity meds at $809 a month, based on North Carolina figures. That’s wrong. “Secret” documents from North Carolina have the net price of Wegovy at lower than $800 … and falling. AEI, in a report that is probably out of date, has Wegovy’s net price as less than $800. Zepbound is available for non-covered patients at $550 a month. And all of these numbers are dropping, and more competition is coming.
His base-case estimate for penetration is 50% of those with obesity (at least, that’s the first figure in the press release). But no one on Earth thinks that half of those with obesity will get on these drugs and stay on them. There was polling last week that found that 12% of Americans had already tried obesity meds, but only 6% were still on them. Talking about 50% penetration is just silly.
The report suggests that spending on prescription drugs is an ever-growing percentage of the health care economy, noting that meds were 9.1% of health spending in 2022 but only 5.5% in 1992. But that 5.5% is cherry-picked. That figure has bounced around throughout the last 70 years. The number was 9.9% in 1960, 10.5% in 2005, and it’s been around 9.2%, on average, for the last decade. This is willful manipulation of a throw-away stat.
There are huge holes in the argument about the impact on Medicare, notably:
There is zero mention of the Inflation Reduction Act. By 2027, Ozempic/Wegovy is likely to have a government-set price in Medicare. That doesn’t enter the Sanders calculations at all. That suggests either really sloppy work or intentional misdirection.
There is a mention that Medicare doesn’t cover obesity meds (but does cover for co-occurring conditions, which Sanders said was excluded from the analysis anyway). But that lack of coverage doesn’t enter the calculus at all. The report seems to assume that there will be broad coverage in Medicare, but it never spells out how or when that will happen.
The discussion of cost offsets, too, is one-sided. In report’s conclusion, Sanders says that savings have been “overstated,” by citing a CBO number that has never been explained or fully documented. The CBO’s record here is not particularly good, and there plenty of evidence on the other side, including this new report that suggests that these medicines would save Medicare money.
It’s worth re-upping a great PhRMA blog post from last week that looks at past panics about new, powerful therapies, which provides even more context around this broadside from Bernie. Because, historically, these kinds of projections end up being really, really wrong.
And the bad outcome in those cases isn’t that the system is bankrupted. It’s that access gets curtailed unnecessarily in ways that are contrary to the public health. I fear that’s the movie we’re watching now.
(If you want a good-news take on all of this, it’s that coverage has not been as broad as I would have expected. But it’s still early. Sigh.)
** Speaking of value: the Sanders report takes a real dismissive tone around the concept: “More broadly, whether weight-loss drugs achieve transformative savings should only be one consideration in their pricing. Pricing drugs based on their value cannot serve as a blank check, or the sole determinant for how we understand what to pay for essential goods.”
I’m still super-curious about the economics of generic Narcan. I was a little cynical, a couple of weeks ago, about California’s deal to making millions of doses available for $24 (I assumed that figure was “pretty close to market rate”). Well, now Walgreens is out with its generic product, likely sourced from the same manufacturer, and it will run $35. So it sounds like California either secured a good deal, or Walgreens has a $10 margin per unit. Either way, I was probably too hard on California. (Unlike Bernie, I’ll own up to my overstatements.)
Big news for wonks: CMS will not move forward with a plan to determine “best price” (used in various government programs) by stacking different rebates on top of each other rather than taking the single best price offered to any single payer. Industry was not a big fan of stacking because it would have massively amped up mandatory discounts in a way that didn’t remotely reflect reality. (Credit where it’s due: PCMA’s Tim Dube flagged to me yesterday, which was appreciated.)
