GLP-1s: The Billion Dollar Dilemma in US Healthcare | Episode 20 with Deborah Williams

In this episode of Only Healthcare, hosts Michael Navin and Dr. Randy Vogenberg welcome guest Deborah Williams, a leading healthcare strategy and policy expert, to explore the explosive growth and complex economics of GLP-1 medications like Ozempic and Wegovy. 

With her extensive background working on Medicare Part D legislation and with major pharmaceutical companies, Deborah breaks down how these breakthrough diabetes and weight loss drugs exemplify everything wrong with America's healthcare incentive structure.

Key Topics Discussed:

• Explosive Market Growth & Cost Impact - GLP-1 scripts increased 442% between 2021-2023, creating a market three times larger than cancer spending, with list prices reaching $1,400 monthly while costing only $60 in Germany
• Coverage vs. Affordability Crisis - Only 33% of employers cover obesity indications, with 17 state employee plans dropping coverage due to budget constraints, while patients face full list prices until hitting deductibles
• PBM-Driven Pricing Distortion - Real-world example of a CEO needing to charge $930 monthly to net $200 profit due to PBM rebate demands, while a $63 diabetes alternative (Steglatro) gets excluded because it offers no rebate opportunity
• Direct-Pay Solutions & Reform - Analysis of Lilly Direct and Novo Cares programs that bypass traditional middlemen, offering vial-and-syringe options at net pricing similar to post-rebate costs but as cash-pay transactions

The fundamental problem isn't just drug pricing, it's a system where every stakeholder is incentivized to maximize revenue rather than patient health outcomes, with PBMs controlling access based on rebate potential rather than clinical effectiveness.

🎧 Listen now: onlyhealthcarepodcast.com

Chapters:

(00:00) Introduction
(02:00) GLP-1 category overview and 442% script growth explosion
(06:00) Patient engagement challenges: lifestyle vs. medication approach
(10:00) Coverage gaps: employer plans dropping obesity coverage
(16:00) PBM rebate demands forcing artificial price inflation
(23:00) Compounding alternatives and FDA policy changes
(27:00) Direct-pay programs: Lilly Direct and Novo Cares analysis
(31:00) Future outlook and policy reform recommendations

Hosted by:
Michael Navin & Dr. Randy Vogenberg

Michael's LinkedIn

Randy's LinkedIn

Sponsored by:
Peek: A game-changing prescription shopping solution that allows its members to view all their prescription cost options across cash discount programs and their insurance in one easy-to-use platform. Peek is currently being offered to organizations to help both employees and plan sponsors save money on their prescription spend. https://peekmeds.com/.

Institute for Integrated Health (IIH): Health care benefits, insurance coverage regulations, and doing business in the healthcare industry can be complicated. At IIH, Dr. Randy Vogenberg and his team understand these unique challenges and provides strategic guidance customized to every client. To help overcome your unique challenges, IIH delivers education, planning and advisory on market trends, and U.S. health care market intelligence. The firm’s decades of proven success are due to strategic collaboration with associates from the business, clinical, and scientific communities. https://iih-online.com/.

Music by:
Hanu Dixit, https://www.youtube.com/hanudixit

Transcript

Welcome back to the Only Healthcare Podcast. Today we’re diving into one of the most pressing topics in healthcare right now: GLP-1s. From Ozempic to Mounjaro, these drugs are making headlines for their impact on weight loss, diabetes, and healthcare spending. We’re exploring the cost pressures, policy challenges, and real-world impacts of these medications.

Thank you very much for having me today. I’m delighted to talk about this topic, which highlights what’s completely wrong about pharmaceutical use and the incentives in healthcare. I’ve had a long history in healthcare. I worked for the Ways and Means Committee on three major bills during the Medicare Modernization Act, which included Part D. I later worked for three of the largest pharmaceutical companies in the world on public policy. Now, I spend my time analyzing issues and providing strategy and information to companies.

Let’s talk about what’s really driving this huge increase in spending. First, there’s major interest in GLP-1 drugs because they create a feeling of fullness and satiety, helping people lose weight. They also help with insulin control and are among the four drug classes used after Metformin for type 2 diabetes. But it raises a question: why are we leaning on these high-cost options when lower-cost drugs are available?

Between 2021 and 2023, prescriptions for GLP-1s increased by 442% across all indications. These include diabetes, obesity, cardiovascular use, and even a recent approval for sleep apnea. For example, Ozempic comes in different strengths and formulations—what pharmaceutical companies call “lifestyle planning.” From a manufacturer’s or employer’s view, this means higher costs. You release a drug, change it, add new indications, and charge more.

There are four main diabetes drug classes: DPP-4s, sulfonylureas, basal insulin, and GLP-1s. Trials are currently underway comparing effectiveness across classes. One big issue in our system is how long it takes for real-world data to arrive. It took at least five years to get Grade trial data for Ozempic, showing similar effectiveness across products. Advertising also plays a powerful role in shaping perception and consumer behavior, even when choices aren’t based on complete information.

For over 20 years in the diabetes space, one of the biggest challenges was therapy adherence. Type 2 diabetes doesn’t cause immediate symptoms like pain does. Patients didn’t feel sick, so they’d rely on medications like Metformin or Avandia but skip lifestyle changes like diet and exercise. They thought the meds alone were enough. Now, with GLP-1s, the appeal is weight loss. Patients with diabetes are improving because they’re losing weight, but this blurs the lines between lifestyle drug and therapeutic treatment. It drives up employer and patient costs, even while outcomes improve.

There are regulatory issues layered into all of this, especially as GLP-1s are used for more than just diabetes. The GLP-1 market is now three times larger than the cancer drug market, not just because of diabetes but due to the expanding list of indications. At the same time, the drug delivery is evolving—from injectable to oral—which will further increase accessibility and cost. We’re now talking about a massive portion of the U.S. population, and the financial burden is enormous.

These drugs weren’t designed to be taken for life. For most patients, it’s a short-term treatment—3 to 6 months, maybe up to a year—followed by maintenance. But many regain the weight after stopping the drug, often at double the pace. There are also concerns about long-term health effects, including muscle mass loss, which could worsen overall health. Leaders like RFK and Dr. Marty Makary have raised alarms about this. If patients stop taking the drug because of cost, are they better off? There’s not enough long-term data to know.

It’s important to note that coverage isn’t the same as affordability. Only a third of employers cover obesity drugs. Among large employers, coverage is around 67%, and 17 state employer plans have recently dropped coverage altogether because the costs are unsustainable. In North Carolina, regulators wanted to tie coverage to lifestyle changes, but either PBMs or manufacturers opposed the move, threatening to withhold rebates.

There are programs that require lifestyle engagement as a condition to access these medications. Patients enroll in coaching and behavioral programs alongside taking the drug, with the goal of eventually weaning off. These models are new, and their effectiveness is uncertain. But it raises a bigger question: couldn’t we accomplish the same thing using a $60 generic? Investing in patients using affordable generics could reduce the need for $1,400 drugs.

Asheville’s city government ran a program 20–30 years ago that required lifestyle accountability among employees—diet, exercise, peer support. They didn’t have these modern drugs then, but participants lost weight, reduced A1C levels, and lowered cardiovascular risks. It worked. The problem is sustaining that kind of intervention. Even today, with GLP-1s, we see mixed results in terms of long-term outcomes. Employers and patients lose interest. Engagement fades.

When coverage decisions come down to performance metrics, it’s easy to say no until there’s enough data. But for certain populations, especially those with chronic illness or complex health risks, it may be hard to say no. Within the system, rebates drive behavior. These are among the most highly rebated drugs. Half of their cost is returned via rebates. HR departments benefit, PBMs benefit, and both look good on paper—even though premiums still go up.

You can't launch a drug today unless it’s profitable for PBMs. They force manufacturers to inflate prices to create room for rebates. A CEO once shared that to earn $200 profit per month, he had to price his drug at $930. That’s the only way it would be covered and available to patients.

PBMs are the root of the cost problem. They bring no real value, yet they add enormous cost. Eliminating PBMs could reduce drug prices by 60–70%. Even so, manufacturers are still making huge profits. In Germany, the list price for GLP-1s like Mounjaro is around $60. In Canada, it’s about $153. The U.S. system is wildly inflated.

The difference? These countries don’t have PBMs or insurance intermediaries. They have national healthcare and higher income taxes, which support lower list prices. In contrast, we have a complex system where drug makers import at high prices to pay taxes overseas and avoid domestic costs. This is why many of them base operations in places like Ireland, where corporate taxes are low.

We also have to look at compounding. Initially, it was a workaround during shortages—especially for drugs like Avastin versus Lucentis. But as shortages end, the FDA has restricted compounding. Now, only GMP-certified repackagers can compound when a drug is officially on shortage. The FDA recently stated they will not reopen that door, and the matter is in court. Whether the courts agree is unclear. Compounding could still be a path forward, but it’s limited.

Compounded products are often cheaper, and telehealth weight-loss companies have used them. But employers won’t cover compounded drugs—they don’t want the liability. Compounding involves repackaging patented products, which creates legal and ethical concerns. Some of these drugs are $63 with no rebates—like Benzavi for type 2 diabetes—but plans won’t cover them because there’s no profit in it.

Looking at employer responses, ISER's latest report recommends BMI-based restrictions, lifestyle management, duration limits, and step therapy. UnitedHealthcare’s policy, for instance, is uninspiring. It fails to prioritize generics even when data shows similar outcomes across drug classes.

Employers benefit from rebates too. They’re addicted to them because it makes their trends look better, helps manage headcount, and supports easy marketing. With compounding being phased out, major companies like Lilly and Novo are stepping in with direct sales programs—Novo Cares and Lilly Direct. These offer vial-syringe and pen options. Vials are cheaper, and direct-pay eliminates PBMs and other rebate mechanisms. It brings prices closer to the net cost a plan would pay—but these are all cash claims and not covered by insurance.

So here we are again: everyone gets a discount, everyone has an incentive to push expensive drugs, and that’s why our system remains broken. PBMs even own biosimilar companies now, forcing people to use their preferred version. Patients are losing autonomy in care.

To wrap up, where are we heading?

It was surprising to see the Biden administration propose covering Wegovy for obesity using a legal interpretation that lacks precedent. When internal CMS leaders were asked if any programs were working, they said no. Still, with federal funding, there’s hope they can launch trials and find scalable, effective solutions.

In the meantime, employers must scrutinize spending on diabetes populations. More advanced protocols and personalization could help—like using pharmacogenomics to understand how patients metabolize drugs before prescribing. Personalized care could lead to better outcomes and lower costs.

We also need to maintain support for programs like PCORI and its Best Meds trial—the only initiative studying whether $60 generics could work just as well. Manufacturers won’t fund such trials. The government must step up.

Thank you for joining us for this episode of the Only Healthcare Podcast. We hope you found today’s conversation insightful. Follow us on all platforms, visit onlyhealthcarepodcast.com, and let us know what you’d like to hear next. Together, let’s continue navigating the journey to better healthcare.