The global market for GLP-1 weight-loss medications can grow substantially to benefit more than 1 billion people worldwide by 2030.

With respect to wider weight loss treatment and obesity treatment, the global market for GLP-1 medications now grows substantially to benefit more than 1 billion people worldwide by 2030.

The new third-generation GLP-1 medications for obesity treatment and weight loss treatment, Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, now begin to become more prevalent and more pervasive worldwide. These medications show far higher weight loss efficacy than prior first-generation and second-generation medications. The latest GLP-1 medications further show long prevalent safety track records for the treatments of diabetes, heart diseases, and several kinds of cancers. However, the current U.S. prices for these new GLP-1 medications are extremely high (about $15,000 per patient per year). In the meantime, not all people with obesity can take these new GLP-1 medications because they are now prohibitively costly and U.S. insurance coverage remains partial and incomplete. Despite these current hurdles, obstacles, and impediments for broader GLP-1 drug adoption, we now expect the global market for GLP-1 obesity and weight loss medications to grow substantially to benefit more than 1 billion people with obesity worldwide by 2030.

 

GLP-1 medications are the first in a long history of weight loss medications to target the critical brain pathways that regulate both food intake and energy storage. As a result, GLP-1 patients feel less hungry and so crave food much less. As the third-generation medications for obesity treatment, these new GLP-1 medications often lead to 23%-25% average weight losses among GLP-1 patients (versus the single-digit average weight losses of prior medications).

 

While GLP-1 medications show tremendous promise in weight loss treatment, the global market for these new medications remains only a fraction of all of the people with obesity worldwide. Some patients are not medically able to take these GLP-1 medications, especially since each of these medications requires an injection by a needle. Also, these latest GLP-1 medications are shown to be effective only when patients continue to take these medications almost on a daily basis. A current lack of comprehensive insurance coverage by Medicare, Medicaid, and private insurers remains a major obstacle to wider GLP-1 drug adoption and usage in America and other countries. The current healthcare insurance programs only cover GLP-1s for the wider treatments of obesity-driven diseases such as diabetes, heart diseases, and some types of cancers, but there is now no insurance coverage solely for the treatment of obesity alone.

 

In addition to supply chain shortages and bottlenecks for GLP-1 mass production, the current hurdles, obstacles, and impediments impose hard high-cost limits and constraints on the size of the global market for GLP-1 medications in the near-to-medium term. Some recent estimates show that the U.S. GLP-1 patient population is likely to grow substantially from 2 million people with obesity today to at least 15 million people with obesity in 2030 (about 15% of the U.S. adults with obesity). On the basis of these recent estimates, we can now expect the global market for GLP-1 medications to increase substantially from $10 billion today to almost $100 billion by 2030.

 

Over the next few years, we expect U.S. employer insurance coverage for GLP-1 medications to increase substantially from approximately 50% of U.S. employers today due to greater U.S. employee healthcare needs and the significantly positive health benefits of GLP-1 medications. As several pharmaceutical titans direct their R&D efforts into some further developments of GLP-1 medications, it is reasonable for investors to expect more intense competition to result in lower prices for GLP-1 medications. Further, the new GLP-1 treatments of other obesity-driven diseases, specifically heart diseases, diabetes, and some types of cancers etc, can go a long way in empowering Medicare, Medicaid, and numerous private insurers to broaden their health insurance coverage of GLP-1 medications. In the meantime, however, U.S. Congress prohibits Medicare and Medicaid from covering GLP-1 medications today because of their budget-busting sky-high prices.

 

We can expect U.S. health insurance coverage to broaden substantially if the new GLP-1 medications show promise in treating serious health conditions well beyond obesity. Additional health conditions can include heart diseases, diabetes, as well as some kinds of cancers. The FDA’s recent approval of Novo Nordisk’s Wegovy, semaglutide, for the treatment of heart diseases has led to Medicare coverage of Wegovy for this new indication. Current studies for the treatments of sleep apnea, liver impairment, and other diseases can result in similarly favorable outcomes of broader Medicare coverage of GLP-1 medications. Some recent positive estimates show that the wider GLP-1 treatments of diseases can probably benefit 70 million obese U.S. patients by 2030. These positive ripple effects and chain reactions can cause greater economic benefits beyond the biotech and pharmaceutical sectors. As a result of GLP-1 medications with higher weight-loss efficacy, U.S. adults with prior obesity would have substantially greater and broader needs and demands for day-to-day food items, beverages, many other consumer staples, beauty products, and even air travel round-trips.

 

With the concomitant positive health improvements, the next widespread adoption of GLP-1 medications can cause better economic growth, employment, and labor productivity in America. U.S. GDP can probably rise by 0.5 to 2 percentage points in the long run if at least 30 million U.S. adults with obesity take these medications. Specifically, U.S. GDP can increase more substantially by 1.35 to 2.55 percentage points if all 70 million U.S. adults with obesity take such medications. However, the American government would face fiscal strain if both Medicare and Medicaid start to provide complete health insurance coverage to 40% of U.S. adults with obesity. This fiscal strain would likely amount to $1 trillion per year if all 40% of U.S. adults with obesity take GLP-1 medications at the current high prices ($15,000 per patient per year). This dollar amount is about the current size of Medicare and about 20% of how much Americans spend on healthcare each year. Although there are clear health benefits for U.S. adults with obesity to take GLP-1 medications, broad health insurance coverage would be enormously expensive for the U.S. government. We believe the next wave of GLP-1 technological advancements can help alleviate this fiscal concern for smarter and better healthcare solutions to weight loss treatments in due course.

 

With their current hefty prices, GPL-1 medications show tremendous promise for many, but not all, of people with obesity, and these new medications alone cannot solve the current obesity crisis in America.

Obesity is a complex, chronic, and multi-factorial disease for many U.S. adults that the American Medical Association (AMA) has recognized since 2013. Obesity now affects more than 1 billion people worldwide in accordance with a recent update of figures from The Lancet (a top-tier academic journal for medical science). Also, the latest U.S. National Health and Nutrition Examination Survey suggests that obesity affects about 40% to 43% of U.S. adults. Obesity is a disease because it has patho-physiology in relation to some sort of disorder in physiological processes. Obesity regulation usually begins in the brain, and the brain effectively communicates with the adipose organ, fat tissue, and the gut to regulate weight status. In the brain, 2 primary pathways regulate food intake and energy storage: the anorexigenic pro-opiomelanocortin and the orexigenic agouti-driven peptide. The former tells us to eat less, and the latter tells us to eat more. These 2 brain pathways communicate with the adipose organ. If the adipose organ experiences some sort of dysfunction or dysregulation, this vital deficiency often leads to obesity.

 

Many people tend to mistakenly believe obesity emerges as the result of poor diet and insufficient exercise. However, obesity is more complex than this simple and common belief. Many factors can cause the dysregulation that leads to the disease. These factors include genetic disorder, development, environment, and behavior. More than 100 different ways help explain why a person may develop obesity. For instance, a person may have experienced trauma and immense stress as a child, and the trauma and stress can often result in the excess storage of adipose tissue. As a consequence, this person may become obese at a later stage.

 

GLP-1 stands for Glucagon-Like Peptide-1. GLP-1 medications represent a major inflection point in obesity treatment because they are the first medicine that works by targeting the 2 critical brain pathways that regulate both food intake and energy storage. Unlike the vast majority of the previous anti-obesity medications, GLP-1 medications directly target and affect the 2 food-relevant brain pathways, stimulate the proopiomelanocortin, and then dampen agouti-driven peptide so that a person need not eat as much. It is essential for most of us to recognize that everyone has GLP-1s in her body. The gut can release GLP-1 hormones into the bloodstream in response to food intake, and these hormones reduce appetite and stimulate insulin release. People with more GLP-1s tend to crave food less often, whereas, people with less GLP-1s tend to crave and think about food more often. In essence, GLP-1 medications mimic these natural hormones and can therefore help curb thoughts about food (with substantially lower food intake and energy storage).

 

In contrast to the prior first-generation and second-generation GLP-1 medications, the new third-generation GLP-1 medications have higher weight-loss efficacy. The comparable weight losses for these new third-generation GLP-1 medications tend to hover around 23% to 25%. Tirzepatide serves as a dual agonist for GLP-1 and Glucose-dependent Insulinotropic Polypeptide (GIP). The smart combination leads to high-efficacy weight-loss medications with new FDA approval in November 2023. The world should take notice because these new GLP-1 medications help induce substantial weight losses for people who would otherwise be obese to return to the new normal steady state. These substantial weight losses further reduce the risks of heart diseases, diabetes, and some kinds of cancers.

 

Even though the average body weight loss on GLP-1 medications is significant, a broad range of weight outcomes can arise from these new medications. Most GLP-1 patients show substantial 23%-25% weight losses, whereas, some patients may be non-responders or minimal responders. For instance, a new GLP-1 patient who takes 2.4 mg per week, the highest dosage of semaglutide, experiences a dramatic improvement in blood sugar levels but loses no more than 3 kg in total. In this rare case, the patient is a minimal responder for GLP-1 weight-loss treatment. In some recent clinical studies, almost 10%-15% of GLP-1 patients are non-responders or minimal responders. In some rare special cases like this one, the 2 brain pathways that GLP-1 medications target may not ultimately be the root causes of dysfunction in weight control. Perhaps these rare obese patients need some other medications such as norepinephrine inhibition, gamma-aminobutyric acid (GABA) stimulation, or dopamine changes to their reward pathways as part of the mesolimbic system. In this new light, there are still limits and constraints on the weight-loss efficacy of GLP-1 medications in some rare special cases.

 

GLP-1s are remarkable weight-loss medications for many obese patients, and the global addressable market for these new medications is large with any reasonable estimates worldwide. However, GLP-1 medications cannot cure all of the 1 billion obese people worldwide for several reasons. First, perhaps some other weight loss treatments are more appropriate for many obese patients. For some obese people, lifestyle changes can be efficacious on their own. For patients with severe obesity and diabetes, surgical intervention remains by far the most effective treatment. In some cases, surgery on its own can place more than 80% of patients with diabetes in remission from the disease within one week after surgery. Few medications can produce these significant positive treatment effects (not even the next-generation triple agonists that combine GLP-1 with GIP and glucagon).

 

Second, some obese patients may have GLP-1 contraindications. For these obese patients, the doctor should not prescribe GLP-1s because these medications may harm these patients. Such patients include patients with some history of medullary thyroid cancer, pancreatitis, and multiple endocrine neoplasia, as well as pregnant patients and breast-feeders, among other complications and contraindications.

 

Third, GLP-1s can cause side effects that some obese patients may not tolerate in due course. These side effects include mild ones such as fatigue and nausea, as well as more serious ones like gastroparesis, intestinal obstruction, and gallbladder diseases. In these rare special cases, the doctor should not prescribe new GLP-1 medications for these obese patients.

 

Finally, not all obese patients wish to use GLP-1 medications. Specifically, each of numerous obese baby-boomers usually refrains from rushing the floodgates to use an injectable GLP-1 medication because she may not want to prick herself with a needle every week. Obese baby-boomers may be more amenable to a pill version of semaglutide, and the FDA continues to evaluate similar alternative medications with high weight-loss efficacy. After all, the daily doses of GLP-1 medications may put off some obese patients. Further, GLP-1 patients most likely need to take these medications continually for sustainable long-term weight control. Only some obese patients wish to take these GLP-1 medications for the rest of their lives.

 

Today, partial and incomplete GLP-1 health insurance coverage continues to be a significant hurdle for many obese patients in America. It takes time and frustration for many obese patients to overcome this hurdle. Medicare now only covers GLP-1 medications and dietician visits for obese patients with diabetes. In March 2024, the FDA approved Wegovy to prevent heart diseases. Within only a week, the U.S. Centers for Medicare and Medicaid Services (CMMS) issued new guidance on the Medicare health insurance coverage of semaglutide for obese patients with heart diseases. In effect, these GLP-1 medications and other similar medical advances seem to have convinced the FDA and the CMMS to recognize obesity as a chronic disease that warrants some sorts of GLP-1 medications by passing the Treat and Reduce Obesity Act (TROA) of 2023. Hence, Medicare and Medicare now cannot cover GLP-1 medications for U.S. adults with obesity alone. In recent years, some patients, whose weight and metabolic profiles have improved significantly as these patients take GLP-1 medications, would lose their private insurance coverage once these patients hit Medicare age. Today, only approximately 50% of U.S. employers provide some sort of health insurance coverage for weight-loss treatment. Hence, health insurance status governs the treatment strategy for obese adults in America. In the next couple of decades, the U.S. government needs to substantially broaden health insurance coverage for high-efficacy GLP-1 medications in order to receive the broader benefits of both leaner and healthier American labor force participation, longer longevity, better productivity, employment, and economic growth.

 

The global addressable market for new GLP-1 medications can grow substantially to almost $100 billion by 2030 as both cost and supply constraints abate and health insurance coverage expands in due course.

In accordance with the World Health Organization’s (WTO) body mass index (BMI) classifications, approximately 105 million U.S. adults meet the criteria for obesity. Today, only about 2 million obese patients take GLP-1 medications for weight-loss treatment, due to the high cost and supply constraints and current partial insurance coverage barriers. As these constraints and barriers abate in light of greater private health insurance coverage and more cost-effective global supply capacity over the next couple of decades, we can expect 15 million obese patients to take new GLP-1 medications by 2030. This higher threshold represents about 15% of obese U.S. adults. In reality, these 15 million obese patients are likely to continue to take GLP-1 medications to sustain their weight losses and better health conditions. Although we expect the gross prices for GLP-1 medications to increase progressively as the demand-supply balance remains tight in the next few years, the discounts between the gross prices and the net prices for obese U.S. patients should widen as private health insurance coverage broadens to include GLP-1 medications in the next few years. In the next couple of decades, we expect many pharmaceutical titans to tap into this $100 billion global addressable market for GLP-1 medications worldwide.

 

Some recent clinical studies show remarkable 23% to 25% weight losses for obese U.S. patients who take Novo Nordisk’s Wegovy, semaglutide, with an average 20% reduction in major cardiovascular events. Also, several other recent clinical studies show significant benefits for obese U.S. patients with diabetes and kidney diseases to take Eli Lilly’s Zepbound. Sleep apnea and other sleep disorder are 2 additional indications for Eli Lilly’s Zepbound. In sum, these new GLP-1 medications provide clear health benefits for obese patients with other serious health conditions: heart diseases, diabetes, some types of cancers, liver and kidney diseases, and sleep-driven diseases. If Medicare, Medicare, and private health insurance schemes etc begin to broaden their coverage over these GLP-1 medications, we believe obese U.S. patients who take these new medications can increase beyond 15 million U.S. adults by 2030. As some pharmaceutical titans tap into the global market for GLP-1 medications, we believe these titans continue to focus on the new developments of oral therapies with both high weight-loss efficacy and high patient tolerance. In due course, these new pharmaceutical rivals and competitors combine to promote more competitive and more cost-effective pill versions of GLP-1 medications.

 

Now about 50% of obese U.S. patients have access to GLP-1 medications through their employers who opt in to reimburse anti-obesity medications. If U.S. employers consistently expand and broaden their health insurance reimbursement for GLP-1 medications to 85%-90% by 2030, the global addressable market for fresh GLP-1 medications can grow substantially to almost $100 billion in due course. We think these broad estimates are quite reasonable in the next GLP-1 patent development cycle.

 

About 20% of obese U.S. adults can acquire access to GLP-1 medications through either Medicare or Medicaid. In the meantime, however, Medicare lawfully prohibits health insurance coverage for GLP-1 medications as part of weight-loss treatments alone, and Medicaid only covers GLP-1 medications on a state-by-state basis. We believe it is quite plausible for Medicare and Medicaid to cover GLP-1 medications not only for weight-loss treatments but also for many other health conditions. Some additional indications for GLP-1 medications include heart diseases, diabetes, liver and kidney diseases, sleep diseases, and some kinds of cancers etc. To the extent that both Medicare and Medicare expand their health insurance coverage to these additional indications, we believe we can see new light at the end of the tunnel for GLP-1 medications.

 

In recent years, the Congressional Budget Office (CBO) reiterates that these pricey GLP-1 medications would cost the federal government more than what these GLP-1 medications would save from reducing other healthcare expenditures on the sole basis of 10-year forward cost-benefit analysis. Thereby, the current hard and hefty prices of GLP-1 medications continue to be prohibitively costly hurdles, obstacles, and impediments for many obese U.S. patients. Today, we can expect better cost-effective resolutions to arise from the market mechanism, government intervention, or some combination of both, over the next couple of decades.

 

In the meantime, virtually no or few pharmaceutical titans show any sign that they seek to reduce prices unilaterally for GLP-1 medications to capture significant parts of the global addressable market for these new medications. The global market for GLP-1 medications remains in a rare unique situation where Novo Nordisk and Eli Lilly now combine to serve as a special duopoly for these new medications. These 2 pharmaceutical titans benefit from significant first-mover competitive advantages with long prevalent safety track records for new GLP-1 medications. Even with the long prevalent safety track records in the top state-of-the-art scientific treatments of both obesity and diabetes, Novo Nordisk and Eli Lilly are not asleep at the wheel. These pharmaceutical titans continue to lead GLP-1 research efforts with long-run clinical developments of more efficacious and more tolerable treatments for obesity and diabetes. These recent developments can help promote GLP-1 oral therapies, less pricey GLP-1 medications, and next-generation obesity treatments. In the next few years, there are few or minimal real incentives for these pharmaceutical titans and other biotech firms to unilaterally reduce prices for GLP-1 medications.

 

As the global supply chains ramp up, even Novo Nordisk and Eli Lilly need to revisit their GLP-1 pricing strategies in the longer run. Today, many private insurers can continue to restrict access to GLP-1 medications due to their hard and hefty prices. As more pharmaceutical rivals and competitors tap into the global market for GLP-1 medications, the resultant more intense competition can probably prompt Eli Lilly, Novo Nordisk, and other GLP-1 manufacturers to consider affordable pricing plans in some specific segments, patient types, and geographic regions worldwide.

 

While global supply capacity, health insurance coverage, and patient tolerance can remain near-term limits and constraints on wider GLP-1 drug adoption and usage, the next-generation clinical developments are critical in reshaping the professional opinions of GLP-1 doctors and policymakers. As these stakeholders increasingly view new GLP-1 medications as high-efficacy weight-loss treatments for diabetes, heart diseases, chronic liver and kidney diseases, sleep apnea and other diseases, peripheral arterial diseases, non-alcoholic steato-hepatitis, knee osteoarthritis, and so forth, the current U.S. health insurance coverage can expand more rapidly than what we infer from the mainstream expectations in recent years.

 

Significantly broader health insurance coverage for GLP-1 medications would cost the American government much fiscal strain, so U.S. policymakers should regulate the current hard hefty prices of these GLP-1 medications.

The U.S. healthcare system still cannot grapple with the increasingly popular GLP-1 medications for anti-obesity and weight-loss treatments. More than 40% of U.S. adults meet the criteria for obesity today, and U.S. healthcare fiscal expenditures for obesity amount to more than $210 billion per year. Also, these figures are likely to grow substantially over the next couple of decades. In the meantime, the current U.S. healthcare system needs significantly more cost-effective GLP-1 medications, even though these new medications show tremendous promise in anti-obesity and weight-loss treatments on a standalone basis.

 

Many GLP-1 patients need to continually take these pricey medications indefinitely to maintain their weight losses. Today, Medicaid spends only $3 billion on GLP-1 medications because U.S. federal government health insurance plans only cover these new medications for the particular treatment of Type 2 diabetes. Broadening health insurance coverage for GLP-1 medications would almost surely generate a host of health benefits, such as the pervasive reductions of obesity itself as well as other fatal and serious health conditions like heart failure and stroke etc.

 

The total fiscal strain of broader Medicare and Medicaid health insurance coverage for GLP-1s would be exorbitant for the American government. If all of 40% of obese U.S. adults took these GLP-1s at their current hefty prices ($15,000 per person per annum), the total cost would be more than $1 trillion per year. This staggering sum is approximately equal to the annual cost of comprehensive Medicare expenditures (with state health insurance costs, health insurance exchange subsidies, and some U.S. taxes), as well as almost 20% of the overall cost of U.S. healthcare each year. In the next few years, not all obese Americans have health insurance coverage for these new GLP-1 medications. For the foreseeable future, we expect several other pharmaceutical titans to tap into the global market for GLP-1 medications with new oral therapies, wider weight-loss treatment options, and significantly cheaper GLP-1 solutions with equally high weight-loss efficacy.

 

In the current biotech patent system, pharmaceutical titans usually launch lawsuits and other remedies to extend the lifespan of each patent. In the global market for GLP-1 medications, Novo Nordisk and Eli Lilly dominate the vast majority of other rivals and competitors across the competitive landscape. For this reason, it is quite slow for the U.S. regulators to promote fierce competition as a market mechanism for less pricey GLP-1 medications across the board. In the meantime, obese U.S. adults who would benefit substantially from GLP-1 medications still face restrictive access to these miracle medications, because many private health insurers are so afraid of the hefty costs that these insurers restrict GLP-1 access with partial health insurance coverage in America.

 

In terms of the broader social value of GLP-1 medications, the non-profit Institute for Comparative Effectiveness Research (ICER) finds that the social value of GLP-1 medications is only $7,000 per person per year. This broader social value takes into account the marginal increase in lifespan, or longer longevity, for each patient, as well as the marginal improvement in the quality of life for this patient, who would otherwise remain obese without GLP-1 medications. Health economists gauge the broader social value of each year of life by measuring how much each patient pays to protect herself from death. Prices should not remain so high that few obese U.S. adults have access to GLP-1 medications. At the same time, prices should not be set so low that these prices choke off global supply chains for GLP-1 medications. Competent pharmaceutical titans should be able to produce GLP-1 medications in accordance with the long sustainable demand-supply balance. In this positive light, the marginal cost of all GLP-1 medications should be between $7,000 and $15,000 per person per annum. The resultant intermediate prices provide strong incentives for further public and private GLP-1 medical innovations. Public research benefits everyone, whereas, private research benefits only the major pharmaceutical titans. In the wider context of GLP-1 medications, Novo Nordisk, Eli Lilly, and many other pharmaceutical titans should receive some state subsidies to further develop GLP-1 oral therapies with substantially more indications in a more cost-effective manner. The new indications should span heart diseases, diabetes, sleep apnea and other sleep-driven diseases, peripheral arterial diseases, non-alcoholic steato-hepatitis, and knee osteoarthritis etc. As a result, these extra indications can help justify ever more comprehensive GLP-1 health insurance coverage from Medicare, Medicaid, and private insurers in America.

 

U.S. employers can ultimately pass the hefty costs of GLP-1 medications onto their employees. As the entire cost of health insurance rises, employers usually choose to pay their employees lower wages. The U.S. government should still bear some of the fiscal strain, because the U.S. government receives some taxes from wages but not from employer health insurance programs. Under the Biden administration, the Inflation Reduction Act (IRA) of 2022 grants Medicare the authority to negotiate medicine prices. The IRA is an important baby step in the right direction. Under the second Trump administration, both Medicare and Medicaid should have the further authority to negotiate medicine prices for the top 100 medications in America. This broader scope better balances both patient needs and demands against profitable patent ventures for the pharmaceutical titans in America. Nobel Laureate Michael Kremer proposes the creation of prizes for new medical innovations, such as GLP-1 medications, that can lead to substantial health benefits across the board. A good recent example is the pneumococcal vaccine: the Gates Foundation offered a $90 million prize in 2021 for the next-generation pneumococcal vaccine development. At a subsequent stage, the Gates Foundation helped provide this new vaccine at marginal cost to the wider global population worldwide. The current pneumococcal conjugate vaccine is now available at US$2 per dose. Billions of people worldwide benefit substantially from the triple combo of this pneumococcal conjugate vaccine, the influenza vaccine, and the corona virus vaccine (Covid-19). Today, we receive better protection against many common severe acute respiratory diseases through these preventive immunizations.

 

GLP-1 medications not only serve as high-efficacy weight-loss treatments, but also help boost substantially U.S. consumer needs, wants, and demands for food items, beverages, many other consumer staples, and beauty products etc.

The current hard hefty prices of GLP-1 medications pose challenges to wider GLP-1 adoption, usage, and health insurance coverage. In recent years, GLP-1 access gradually expands with more than 50% of U.S. employers that can afford to provide some health insurance coverage for GLP-1 medications. We expect greater obese employee needs, demands, and likely productivity gains to result in broader health insurance coverage in America. Ubiquitous health insurance coverage for GLP-1 medications should require a major tidal moment for both the U.S. government and regulatory agencies to regard anti-obesity weight loss maintenance as an essential health benefit under the Affordable Care Act (ACA), Inflation Reduction Act (IRA), and more widespread GLP-1 adoption, usage, and Medicare and Medicaid health insurance coverage in America.

 

The total U.S. expenditures on GLP-1 medications can grow substantially to more than $85 billion in U.S. sales by 2030. These expenditures would likely depend on the resultant reductions in total costs in support of widespread GLP-1 adoption for both corporate and government payors. Now more than 20 clinical trials delve into the positive ripple effects of GLP-1 medications on cardiovascular heart diseases, diabetes, sleep apnea and other sleep-driven disorders, liver and kidney diseases, and non-alcoholic steato-hepatitis etc. In the next few years, these clinical studies help shine new light on the significant extra health benefits of GLP-1 medications. Additional indications for GLP-1 medications can probably help justify the current hard and hefty prices of these anti-obesity medications for high weight-loss efficacy. In the meantime, the current U.S. healthcare expenditures across these additional diseases amount to more than $850 billion per annum. The total reductions in U.S. healthcare expenditures from GLP-1 medications amount to only $300 billion per annum. We need both the market mechanism and some government intervention to bridge the complete U.S. fiscal shortfall of $550 billion per annum for widespread GLP-1 adoption for affordable anti-obesity weight-loss treatments.

 

Today, many U.S. employers remain hesitant to provide health insurance coverage for GLP-1 medications in light of significant medium-term costs, the relatively short tenure of the average U.S. employee (5 years to 7 years), huge uncertainty around patient compliance, and the relative magnitude of future cost avoidance. For long-term chronic diseases such as diabetes and heart diseases etc, the health benefits may not be attainable by the average patient’s current employer in America. Hence, U.S. employers focus on controlling both GLP-1 patient compliance and utilization through mandatory participation in some other weight-loss program, stringent past authorization, specific weight-loss progression, and some employee attestation of lifestyle changes in both diet and exercise.

 

In America, Medicare and Medicaid now still lawfully prohibit comprehensive health insurance coverage for GLP-1 anti-obesity weight loss treatments alone. The Treat and Reduce Obesity Act (TROA) of 2023 helps overturn this prohibition by opening the door to Medicare health insurance coverage for GLP-1 medications insofar as these new medications help treat some additional diseases such as heart diseases, diabetes, sleep apnea and other similar disorders, liver and kidney diseases, and some types of cancers. We can expect to see greater political support for broader Medicare Part D and Medicaid health insurance coverage for GLP-1 medications beyond anti-obesity weight-loss treatments alone. The U.S. Congressional Budget Office (CBO) reiterates that these pricey GLP-1 medications would cost the federal government more than what these GLP-1 medications would save from reducing other healthcare expenditures on the basis of 10-year forward cost-benefit analysis. Therefore, the hard hefty prices of GLP-1 medications continue to be prohibitively costly hurdles, obstacles, and impediments for obese U.S. patients. Today, we can expect cost-effective resolutions to arise from the market mechanism, government intervention, or some combination of both, over the next couple of decades.

 

In response to the recent FDA approval of Novo Nordisk’s Wegovy for obese U.S. patients with heart diseases and other cardiovascular problems, Medicare Part D has effectively expanded to include this new indication for broader GLP-1 adoption. We can expect Eli Lilly’s Zepbound to receive some similar treatment, classification, and categorization in due course. To the extent that the FDA approves new GLP-1 medications for further indications, Medicare and Medicaid would likely broaden U.S. health insurance coverage for GLP-1 anti-obesity weight-loss treatments with significant additional health benefits.

 

Due to the current statutory prohibition, Medicare cannot cover GLP-1 medications for anti-obesity and weight-loss treatments alone. Under the Trump administration, the Republican-majority lawmakers in both Senate and House would likely propose new legislation to alter this current statutory prohibition. In the meantime, the Treat and Reduce Obesity Act (TROA) would permit Medicare Part D to help cover GLP-1 weight-loss medications for obese patients who have heart comorbidities. Under the TROA, approximately 55% of Medicare beneficiaries, or 29 million U.S. adults, would be eligible for GLP-1 anti-obesity weight-loss treatments.

 

For these new anti-obesity weight-loss treatments, however, the current costs still outweigh the additional health benefits. If half of Medicare Part enrollees take GLP-1 medications, the total Medicare health insurance expenditures would triple. The CBO projects total Medicare Part D expenditures to be $120 billion per annum. At the current price of $1,350 per month with a 30% average rebate, the annual cost of Novo Nordisk’s Wegovy, semaglutide, would be more than $11,000 per annum. As a result, the total net cost of Wegovy adoption for 55% of Medicare beneficiaries would be twice as much as the total cost of the Medicare health insurance program each year. The CBO should substantially extend the forward 10-year cost-benefit analysis to better capture both the longer-term health benefits and cost reductions of GLP-1 medications for chronic diseases such as diabetes and heart diseases.

 

Under the Inflation Reduction Act (IRA), Medicare offers each beneficiary a $2,000 annual out-of-pocket limit on medical expenses. In effect, this upper limit can help reduce the cost sensitivity of obese U.S. patients to pricey GLP-1 medications, and so this upper limit shifts the costs elsewhere in the broader U.S. healthcare system. Medicare Part D now receives 74% public finance from U.S. taxpayers, 15% from month-to-month health insurance premiums, and 11% from U.S. states. As a result, U.S. taxpayers and Medicare enrollees would more generally bear the higher costs of new GLP-1 medications. Counterintuitively, although broader Medicare Part D　health insurance coverage for GLP-1s would substantially increase total Medicare expenditures each year, this broader coverage would improve Medicare solvency in U.S. federal budgetary terms. Under the Trump administration, the Republican-majority lawmakers in both Senate and House would likely propose new legislation to alter the current statutory prohibition against wider GLP-1 adoption in America.

 

GLP-1 medications lead to not only better health outcomes for U.S. adults, but also substantially leaner and healthier labor force participation, better labor productivity, employment, and economic growth in the next few decades.

GLP-1 medications help result in significant improvements in health outcomes and thus empower many U.S. adults, who would otherwise be obese, to live better and longer lives. With these positive health outcomes, the next widespread adoption of GLP-1 medications can cause leaner and healthier labor force participation, better employment, higher labor productivity, and economic growth in America. U.S. GDP can probably rise by 0.5 to 2 percentage points in the long run if at least 30 million U.S. adults with obesity take these new GLP-1 medications for anti-obesity weight-loss treatments. Specifically, U.S. GDP can increase more substantially by 1.35 to 2.55 percentage points if 70 million U.S. adults with obesity take these medications. However, the American government would face fiscal strain if both Medicare and Medicaid provide comprehensive health insurance coverage to 40% of U.S. adults with obesity. From AI-led medicine discovery and gene modification to cell therapy and better diagnosis for dementia, these other medical innovations can help boost U.S. GDP by additional 0.5 to 2 percentage points in the next few decades.

 

Poor health generally imposes significant economic costs on the American society, primarily through needless hurdles, limits, and constraints on U.S. labor supply and high-skill human productivity. In effect, both short-term diseases and chronic health conditions reduce the number of hours that U.S. adults are able to work from week to week. In the meantime, the American society loses almost 2% of U.S. workdays due to health reasons. Early mortality further reduces U.S. labor supply and high-skill human productivity. In the longer run, early deaths due to short-term diseases and chronic health conditions substantially reduce annual U.S. labor supply growth by 0.5 to 2 percentage points, while the average annual U.S. labor supply growth hovers around 2% to 3%, equivalently 3.5 million to 4.5 million jobs, in recent years. In the next few years, poor health may continue to weigh heavily on American labor force participation, high-skill human productivity, and broader economic growth.

 

Although we can never fully eradicate chronic diseases and poor health conditions, the next widespread GLP-1 adoption helps reduce their long-run economic impact. Over the next couple of decades, obese U.S. adults with comorbidities can become eligible for both GLP-1 weight-loss treatment and health insurance reimbursement if the new clinical trials, rules, and regulations turn out to be favorable. Some recent estimates show that almost 70 million obese U.S. patients can benefit substantially from GLP-1 medications by 2030.

 

We believe the economic productivity gains from widespread GLP-1 drug adoption are likely to be larger in the U.S. than many other parts of the world for 3 reasons. First, the U.S. has relatively more to gain from broader GLP-1 drug adoption given the dramatically higher level of obesity in America. Almost 40%-43% of U.S. adults, or more than 100 million U.S. adults, are obese by several reasonable benchmarks. Second, the U.S. continues to outpace most other countries in the current race of new medical developments, especially new GLP-1 oral therapies and several other high-efficacy weight-loss treatments. In human history, the pharmaceutical titans launched more than half of all new medications in America, with an average delay of one year before the next launch in non-U.S. major markets. Third, although the wider scope for health improvements outside America seems significant, the near-term non-U.S. health-relevant technological advancements often arise from high-impact biopharmaceutical investments in relatively cost-effective extant therapies, rather than high-end state-of-the-art medical research developments in pricey anti-obesity weight-loss treatments. For these reasons, the American economy should benefit more substantially from widespread GLP-1 adoption and its likely economic productivity gains (than many other parts of the world).

 

With new technological advancements in AI-driven computational biology, genetic modification, cell therapy, and better diagnosis and treatment for dementia etc, we expect several American pharmaceutical titans to accelerate medical innovations and healthcare solutions with substantially greater and broader economic benefits in the next couple of decades. Although it is highly uncertain whether the individual therapies can cross particular thresholds for regulatory approval, mass production, and patient adoption worldwide, these novel medical advances can help accelerate the current pace of human health progress.

 

Today, we view the increasingly widespread GLP-1 drug adoption and the broader medical innovations as a compelling story with human, micro, and macro economic benefits in the next couple of decades. At any rate, we should keep in mind at least 4 major caveats. First, our current fundamental analysis assumes that U.S. adults who experience GLP-1 weight-loss treatments and resultant health improvements increase both labor supply and labor force participation to match their leaner and healthier peers. Alternatively, if these U.S. adults who would remain obese without GLP-1 medications leverage health improvements to increase their leisure, our key estimates would likely overstate the U.S. economic productivity gains.

 

Second, our fundamental analysis assumes that widespread GLP-1 adoption can help reduce U.S. needs for longer-term healthcare services. Alternatively, it might be plausible for U.S. adults who take GLP-1 weight-loss medications to experience longer longevity, thus these U.S. adults might need additional geriatric healthcare services in the next few decades. At the margin, GLP-1 medications might extend longevity more than they improve health status. As a consequence, our estimates would likely overshoot the U.S. economic productivity gains in the longer run.

 

Third, ubiquitous GLP-1 adoption may or may not reduce nominal U.S. healthcare expenditures. To the extent that U.S. health insurance coverage serves as a partial solution to GLP-1 reimbursement for many obese U.S. adults, some of these U.S. adults may choose to spend significantly more money on GLP-1 medications, while some other U.S. adults may choose to spend substantially less money on GLP-1 medications. The net effect on GLP-1 consumption may turn out to be ambiguous. In this special case, our estimates would overstate the U.S. economic productivity gains again.

 

Finally, our fundamental analysis cannot capture the complete effects on U.S. GDP and the wider social value of GLP-1-driven improvements in both health status and longevity. Many obese U.S. adults may hold dramatically different subjective views of the broader social value of GLP-1-driven health improvements. Also, these U.S. adults may further face dramatically different subjective views of the broader social value of GLP-1-driven improvements in the quality of life. In this special case, our estimates would understate the U.S. economic productivity gains as a result of the new improvements in health status, longevity, and the wider quality of life etc due to widespread GLP-1 adoption, usage, and consumption in America.

 

AYA Stock Synopsis: Pharmaceutical post-pandemic patent development cycle

https://ayafintech.network/blog/stock-synopsis-pharmaceutical-post-pandemic-patent-development-cycle/

 

AYA stock page for Novo Nordisk ($NVO):

https://ayafintech.network/stock/NVO/

 

AYA stock page for Eli Lilly ($LLY):

https://ayafintech.network/stock/LLY/

 

AYA stock page for Pfizer ($PFE):

https://ayafintech.network/stock/PFE/

 

AYA stock page for AbbVie ($ABBV):

https://ayafintech.network/stock/ABBV/

 

AYA stock page for Merck ($MRK):

https://ayafintech.network/stock/MRK/

 

AYA stock page for Amgen ($AMGN):

https://ayafintech.network/stock/AMGN/

 

AYA stock page for Johnson & Johnson ($JNJ):

https://ayafintech.network/stock/JNJ/

 

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