In today’s Finshots, we explore how weight loss drugs are being touted as a way to cut healthcare costs in the US and whether they really deliver on those lofty promises.

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The Story

What if you could lose a few kilos just with some simple injections under your skin?

It sure sounds like wishful thinking, but it’s actually happening!

Denmark’s Novo Nordisk, the pharmaceutical company behind the magical weight loss drugs, Ozempic and Wegovy, and US-based Eli Lilly’s Mounjaro have made this a reality.

Add to that, the US Food and Drug Administration (FDA) giving them the go-ahead signal, these drugs are being prescribed left, right and centre, across the US. To put that into perspective, about 7 million Americans are taking these weight-loss drugs, and that number might reach 24 million by 2035.

Here’s the thing, though. These drugs were initially made to treat type 2 diabetes. They help regulate blood sugar by reducing appetite and triggering insulin release. But patients taking them started to notice something unexpected. They were shedding kilos in a big way. And that’s how these drugs emerged as a solution for weight loss.

If you’re wondering how that happened, let’s break that down a bit. GLP-1 (glucagon-like peptide-1) is a hormone your gut releases after you eat. It tells your brain, “Hey, you’re full now”. It also helps release insulin, but only when your blood sugar is high, helping to stabilise glucose levels.

The drugs in question — Ozempic, Wegovy and Mounjaro, are GLP-1 agonists or simply medications that mimic the hormone. In simple terms, these drugs amplify the natural signals that tell your body to stop eating. And the results are impressive. Clinical trials show that people can lose up to 15-20% of their body weight with consistent use of these drugs.

But here’s where it gets even more interesting. These drugs are promising for tackling a range of other chronic conditions. Some early studies suggest that GLP-1 agonists could help reduce addiction to alcohol or nicotine, opening up new possibilities for addiction treatment. There’s also evidence that these drugs could help with sleep apnoea, chronic kidney disease, and even cardiovascular problems. Researchers are even exploring their potential in treating Alzheimer’s and Parkinson’s diseases.

That basically means one drug could tackle multiple issues, potentially cutting down healthcare costs for people. And guess what? That’s exactly what Novo Nordisk and Eli Lilly are claiming too.

So just imagine how much it could help bring down long-term healthcare costs! After all, over 1 billion people are classified as obese globally. Obesity rates have doubled for adults and quadrupled for children since 1990. With the growth of these drugs, analysts predict that the market for these drugs could be worth $130 billion by 2030. That’s a lot of potential.

In fact, just last week, Elon Musk took to social media to argue that these drugs should be made more affordable because these drugs don’t come cheap. A month’s supply can cost over $1,000, which is beyond reach for many people. To put that in perspective, for the average American, that’s about 17% of their annual household income.

And that’s exactly why he’s pushing for this through his Department of Government Efficiency (DOGE), suggesting that reducing obesity-related healthcare costs could save billions in the long run. Musk’s point is simple. Obesity is already a massive public health issue. About 70% of American adults are obese or overweight. So if we spend smartly on prevention today, we could reduce healthcare costs down the road.

But does it really work that way?

Well, not quite. Because here’s where things get tricky. Even though these GLP-1 drugs are helping people lose weight, they don’t seem to lower medical costs overall. A recent study found that while people on the drugs may shed pounds, their medical expenses actually go up. For example, the average annual medical costs for obese patients were about $12,695 before starting the medication. Two years later, that number had shot up to $18,507 — a 46% increase.

In comparison, those not on the drugs saw their costs rise by only 14%. What’s most concerning perhaps is that there wasn’t any noticeable drop in obesity-related health issues like heart attacks, strokes or type 2 diabetes. People still needed medications for high blood pressure and cholesterol, just like before.

So, while these drugs are helping people get rid of their excess weight, they’re not necessarily making the overall healthcare situation any better.

The problem lies in what happens after you stop taking them. Their appetite-regulating magic fades, and for most folks, the hard-lost weight slowly creeps back. Experts believe that this happens because the drugs don’t fix the underlying issues with appetite control; they just mask them for a while. So technically, you’re not really losing weight and that can’t help you control other obesity related health issues.

To be clear, weight loss happens when you create a calorie deficit. Then, your body taps into the energy stored in fat cells. But here’s the thing. When you lose weight, your body burns muscle tissue as well and not just burns fat. So, whether you’re losing weight through exercise or with the help of GLP-1 drugs, you’re losing muscle mass and fat.

The twist here is that studies show that 20-40% of the weight lost because of these medications is actually muscle. And if you lose too much muscle, it can slow down your metabolism and leave you feeling drained.

So yeah, these drugs may be a breakthrough, but much more research is required before we can say for sure if they’re a sustainable solution to the obesity crisis.

Until then…

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