After seeing another Ozempic comerical, I found myself wondering how the US would change if this drug or another drug could cut the rate of obesity in the US by 10%. Now why 10%, no reason, just had to start somewhere. If you ever look at old photos, like the one below taken right after World War 2, Americans used to be much smaller.
The increase in BMI values continued throughout the 20th century, especially after World War II. Nationwide surveys conducted by the National Institutes of Health since the early 1960s show that US obesity rates have tripled over the last 60 years, from 13% in 1960-1962 to 43% in 2017-2018. Severe obesity, also known as morbid obesity, has risen tenfold, from less than 1% to nearly 10%. Childhood obesity rates have also tripled, from 5% in the early 1970s to more than 19% by March 2020.
So, if you look at old photos, and look for any easy to find studies, one will quickly figure out that Americans are much larger now than they had been in the past. A 10% reduction in obesity due to miracle drugs isn’t far fetched, so is it something that should be captured in our expectations of growth when we model a Discounted Cash Flow analysis of a health care practice?
In case you haven’t heard, many people take Ozempic, for the side effect of losing weight that was discovered, it was actually designed to treat type 2 diabetes and reduce the risk of cardiovascular events. It belongs to a class of drugs called glucagon-like peptide-1 (GLP-1) receptor agonists, which stimulate the production of insulin and lower blood sugar levels. Ozempic also has an effect on weight loss, as it reduces appetite and slows down gastric emptying.
A recent study published in the New England Journal of Medicine showed that Ozempic, when given at a higher dose than usual, led to an average weight loss of 14.9% over 68 weeks in people with obesity and without diabetes. This is a significant result, as it is comparable to the weight loss achieved by some bariatric surgeries.
But what would happen to the health care revenue expectations if Ozempic lowered obesity in the US by 10%? Obesity is a major risk factor for many chronic diseases, such as diabetes, heart disease, stroke, cancer, and arthritis. It is estimated that obesity costs the US health care system about $147 billion per year, or 10% of total medical spending. If Ozempic could reduce obesity by 10%, it could potentially save $14.7 billion per year in health care costs.
However, this is a simplistic calculation that does not take into account other factors, such as the cost of Ozempic itself, the side effects and complications of the drug, the adherence and compliance of the patients, the availability and accessibility of the drug, and the impact on other health outcomes and quality of life. Moreover, obesity is a complex and multifactorial condition that requires a comprehensive and holistic approach, involving not only pharmacological interventions but also lifestyle changes, behavioral modifications, psychological support, and environmental and policy interventions.
Therefore, while Ozempic may be a promising option for some people with obesity who need additional help to lose weight, it is not a magic bullet that can solve the obesity epidemic in the US. The health care revenue expectations from Ozempic may depend on how well it is integrated into a broader and more sustainable strategy to prevent and treat obesity and its related complications.
Is it time to lower our expectations on the growth of health care revenue going forward, or is it too early to declare a magic pill for obesity is here?