Issuing a preliminary report on the value of GLP-1 drugs, drug pricing watchdog the Institute for Clinical and Economic Review (ICER) said on Tuesday that popular weight loss drugs semaglutide from Novo Nordisk (NVO) and tirzepatide from Eli Lilly (NYSE:LLY) are cost-effective.
Its findings sharply contrasted with the nonprofit’s prior view, which indicated that the injectables available as Wegovy and Zepbound, respectively, in the U.S. for more than $1,000 per month were not cost-effective for obesity.
ICER, whose views are used by payers and sometimes lawmakers in decision-making, issued the draft report as part of an ongoing analysis of the effectiveness and value of the two injectables as well as an oral form of semaglutide, which is currently under FDA review.
In addition to weight management, Wegovy is already available in the U.S. to reduce the risk of cardiovascular events such as stroke and for a liver disease called metabolic dysfunction-associated steatohepatitis (MASH).
In December, Eli Lilly (NYSE:LLY) received FDA approval to expand the Zepbound label to include obese adults with obstructive sleep apnea.
“Because treatment with all three drugs results in substantial weight loss and improvement in metabolic risk factors, we have high certainty that all three drugs have substantial net health benefit over lifestyle modifications alone,” ICER said.
However, ICER raised affordability concerns related to the drug, noting that “despite these therapies being highly cost-effective, their potential budget impact is large.” According to the agency, the fact that less than 1% of eligible patients can receive semaglutide and tirzepatide at their existing and projected net prices before exceeding ICER’s annual budget impact threshold of $880K “raises serious concerns about affordability.”
The report, which was released at the midpoint of an eight-month-long review, is not final, the ICER added, noting that it is open to public comments through Oct. 6.
Bank of America argued that its findings will be essential for LLY and NVO to expand employer and payer coverage for semaglutide and tirzepatide, an area that has trailed expectations due to affordability concerns.
However, given that ICER recommendations are not binding, the impact on coverage decisions “may only be gradual,” the analysts led by Time Anderson wrote, maintaining their Buy rating and $900 per share target on LLY.