ARTICLE SUMMARY:
A new class of drugs is ushering in a sea change in approaches to obesity. How will this impact the market for invasive weight-loss surgical procedures? Excerpted from our recent feature article.
A new class of powerful weight-loss drugs that act on GLP-1 receptors (glucagon-like peptide-1) is gaining remarkable attention in the obesity world and could for the first time be a more viable treatment alternative to invasive surgical procedures. Clinical trials have demonstrated that these drugs, along with diet and exercise, effectively reduce weight in obese, nondiabetic patients by an average of 15% sustained more than five years—–as long as they continue on therapy—the first time such drugs have come close to surgical results.
No longer viewed as a behavioral condition at the mercy of largely ineffectual lifestyle and diet modifications, obesity is now seen as a chronic disease that responds to medicinal interventions acting on hormones that modulate hunger and satiation.
Whether prescribed on-label or off-label, these drugs have already generated billions of dollars in revenues for their manufacturers (Novo-Nordisk’s Wegovy alone had sales of $1.7 billion in the first half of 2023), disrupting every aspect of the enormous weight-loss industry.
The effect on medical device companies that address procedural solutions for obesity and its many comorbidities is not clear-cut at this point. Bariatric and gastric bypass surgeries, mainstays of the field, are potentially the most exposed, but makers of devices for obesity-related comorbidities, such as diabetes, obstructive sleep apnea, osteoarthritis and other musculoskeletal (MSK) conditions, and cardiovascular diseases, also could be vulnerable, according to several analysts and device company executives who addressed the threat on recent earnings calls. Makers of sleep apnea equipment and cardiovascular devices—conditions that afflict a majority of obese people—could be impacted negatively. As one indicator, Intuitive Surgical has seen its US bariatric growth slow this year due to increased interest in weight-loss drugs, company executives said at a Wells Fargo conference in early September. Bariatric procedures account for about 4% to 5% of global Intuitive procedures, translating into annual revenue of about $300 million.
Diabetes monitoring device makers, on the other hand, particularly continuous glucose monitors vendors and aesthetics companies, are expected to thrive. In MSK, degenerative conditions, while exacerbated by obesity, take longer to manifest, so any impact would occur down the road, analysts predict. Anti-obesity drugs could even expand eligibility for some orthopedic procedures by removing certain high-BMI patients from high-risk categories that make surgeons hesitant to operate on them.
Patients’ preferences vary widely, although many obese candidates for surgery are opting instead for medication management, and surgeons are “fearful” of losing business, observes Osama Hamdy, MD, PhD, medical director of the obesity clinic and the inpatient. Still, he notes, some patients who opt for medication change their minds, and the cost benefits of the drugs have yet to proven. At a price of roughly $1,000 a month, the expense becomes burdensome, especially since the drugs must be taken continually to sustain weight loss, and insurers generally dare not cover their use for this indication. In aggregate, the cost of GLP-1s for weight loss over two years is roughly equivalent to surgery, but the drugs are ultimately more expensive because they must be taken continually to maintain the weight loss. While the downstream positive impact on spend for treatment of comorbidities, hospital admissions, and emergency room visits, etc., has the potential to offset that expense, the health economics analyses needed to confirm this expectation has yet to be done—and private insurers tend to diminish long-term beneficial trade-offs because their membership turns over too rapidly.
Yet, the potential for systemic long-term savings is alluring. For example, one of the major complications of obesity is congestive heart failure, which often leads to multiple hospital admissions and visits to emergency rooms. Every hospital admission costs roughly $13,000, so if weight reduction lowers hospital visits, the financial benefits to healthcare systems will accrue—–although the exact savings have yet to be quantified.
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