Oh, Ozempic: Retail analysts see little impact from weight-loss drugs

Pharmaceutical advocates have hyped the success of high-priced, weight-loss drugs like Ozempic in a campaign to make appetite-suppressing medications a new standard of obesity care, retail analysts say.

Walmart reported this month that it saw a slight reduction in food purchases among customers using prescription anti-diabetes medications such as Mounjaro, Ozempic and Wegovy. That prompted supermarket chain Kroger and snack food company Conagra Brands to say they could consider selling smaller and healthier portions if the trend persists.

But restaurant, fast food, snack food and weight loss experts interviewed by The Washington Times said they don’t expect U.S. industries to prepare for a wave of skinnier Americans anytime soon. They offered as reasons:

⦁ Internal industry data shows fewer than 2 in 100 Americans used the drugs regularly last year, and the most optimistic estimates show only 7 in 100 getting regular prescriptions by 2035.

⦁ Most health insurance plans only cover drugs for Type 2 diabetes management, not for weight loss, forcing patients to pay for them directly.

⦁ Under its patent monopoly, Danish pharmaceutical company Novo Nordisk charges a monthly premium of $300 to $1,300 for Wegovy — a version of Ozempic approved for weight loss. The drug costs about $35 to manufacture.

⦁ The long-term safety and effectiveness of insulin-producing diabetes medication for weight loss remain unknown, and the drugs include alarming side effects such as stomach paralysis.

“I do not think the drugs will affect the restaurant business any time soon and may not ever affect it,” said Larry Lavine, founder of the Chili’s Grill & Bar restaurant chain. “People tend to forget their diet when they dine out.”

Andy Puzder, an analyst at the conservative Heritage Foundation, said it’s too early to know if Ozempic will be a market game-changer like Viagra or “another craze like Beyond Meat or Atkins that fades over time.”

“As much as you might want to lose weight, a lot of people in this economy just aren’t going to afford $1,000 a month,” said Mr. Puzder, a former CEO of Carl’s Jr. and Hardee’s parent company CKE Restaurants.

Novo Nordisk, which holds exclusive rights to sell Ozempic and Wegovy in the U.S. until 2031, has spent hundreds of millions of dollars on advertising and lobbying to expand its market.

Last Friday, the company raised its third-quarter financial outlook ahead of a Nov. 2 earnings report, citing increases of 33% in sales and 37% in operating profit during the first nine months of the year. Novo Nordisk said U.S. sales of Ozempic and Wegovy — a version of the Type 2 diabetes drug approved for weight loss — drove the growth.

During the last three months of 2022, Novo Nordisk sold 9 million Ozempic and Wegovy prescriptions in the U.S. The company’s market value has risen to $350 billion over the past year.

Meanwhile, Indianapolis-based competitor Eli Lilly & Co. has seen similar growth in prescription sales for Mounjaro, the brand name of a diabetes drug known as tirzepatide that observers expect to be approved for weight loss this year.

“Lilly is currently studying how tirzepatide can be used to treat obesity in adults,” Jessica Thompson, associate director of diabetes corporate affairs at Eli Lilly, said in an email. “However, it is not approved for this indication.”

Calley Means, co-founder of TrueMed, an Austin, Texas-based company that prescribes diet and exercise plans for weight loss, said pharmaceutical interest groups have lobbied hard for a bill pending in Congress that would force health insurers to cover the drugs as anti-obesity treatments. He said that would cost insurance companies about $20,000 per patient annually.

“The more sick patients you have, the higher the profits, and obesity is the biggest market in the history of health care,” said Mr. Means, a former lobbyist for the food and pharmacy industries. “The incentive here is not to cure people, but to find something they can take for life so you can manage and profit off them.”

Reintroduced this year, the Treat and Reduce Obesity Act had 17 co-sponsors in the Senate last year and 125 in the House. It has yet to reach a floor vote in either chamber.

According to Allison Schneider, Novo Nordisk’s director of media relations, the company believes making Medicare and Medicaid cover the drugs as anti-obesity medications will help them reach “approximately 110 million adult Americans living with obesity.”

“Novo Nordisk believes the most effective way for the millions of Americans who need anti-obesity medicines to be able to access and afford them is to ensure these medicines are covered by government and commercial insurance plans,” Ms. Schneider said in an email.

In 2017, the Food and Drug Administration approved Ozempic as an insulin-boosting treatment for Type 2 diabetes. The agency added Wegovy as a weight loss treatment in 2021 without obliging insurance companies to cover it.

Both drugs reduce body weight 10% to 20% by slowing digestion, which makes users feel full with smaller portions of food.

“Only Wegovy is approved for chronic weight management,” the FDA said in an email to The Times.

The Centers for Medicare & Medicaid Services, part of the Department of Health and Human Services, said public health insurance coverage of “prescription weight loss agents” remains optional under the Social Security Act.

”CMS does not comment on proposed legislation or lobbying efforts,” the agency said in a statement to The Times.

Retail leaders say it will take years of gains in prescription sales before restaurants, weight loss companies and gyms break a sweat over these efforts.

Branden Muhl, CEO of Mahaska Bottling Co., said his Mahaska Markets automated convenience stores at industrial manufacturing plants will adjust their menus only if prices drop by 50% to 75% and treatment proves safe and effective for long-term use.

He said even the most “bullish estimates” show the share of Americans using the drugs regularly will grow from 1.5% last year to 7% by 2035, putting any notable impact on food consumption habits in the “distant future.”

“Any near-term impact on consumption in our business has been undetectable in any data that we have,” Mr. Muhl said.

Economist Markus Bjoerkheim, a research fellow at George Mason University’s free-market Mercatus Center, estimates that a fivefold to tenfold growth in prescription sales would be enough to change how Americans eat and shop.

“It’s incredibly rare for one product to have a direct impact on whole industries,” Mr. Bjoerkheim told The Times. “This drug could do that.”

Skeptics of Ozempic and Wegovy point to emerging evidence that the long-term use of the drugs to sustain weight loss can produce side effects such as nausea, diarrhea, vomiting, depression and even stomach paralysis — an incurable condition in which solid blockages force a sluggish digestive system to stop processing food into energy, leading to symptoms such as bloating and chronic abdominal pain.

According to health experts, losing weight on Wegovy and Ozempic without embracing a healthier diet and regular physical exercise undermines their health benefits.

“This is because we know there are cardiovascular health benefits of eating a healthy diet and getting exercise beyond merely weight loss,” said Dr. Natalie Bello, a cardiologist and researcher at Cedars-Sinai Medical Center in Los Angeles.

The drugs also do nothing to reduce the risks of hypertension, high cholesterol, cancer and other heart issues that arise from millions of low-income Americans living sedentary lifestyles and eating unhealthy food, said Adolfo Cuevas, an assistant professor in the Center for Anti-Racism, Social Justice, and Public Health at New York University.

“These medications are not cures to obesity but Band-Aids,” Mr. Cuevas said. “To truly address the obesity issue, we have to adopt a holistic approach, which includes improving access to nutritious foods and fostering environments that encourage regular physical exercise.”

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