Walter G. Wasser

Innovation at Risk in Obesity Drug Price Debate

President Biden and Senator Bernie Sanders recently co-authored an op-ed advocating for the reduction of GLP-1 drug prices, such as Ozempic, Wegovy, and Mounjaro, which are essential in managing type-2 diabetes and obesity. While their intent to make medications more affordable for Americans is commendable, the approach raises significant concerns about its potential negative impact on pharmaceutical innovation and patient care.

Unprecedented Advances in Diabetes and Obesity Treatment

GLP-1 drugs represent a major breakthrough in the treatment of chronic conditions like type-2 diabetes and obesity. These medications are the first truly effective drugs in the medical battle against obesity. They not only help regulate blood sugar levels but also contribute significantly to weight loss, a critical component in managing diabetes. Additionally, GLP-1 drugs have been shown to offer other health benefits, notably in reducing the risks of heart and kidney diseases. This makes them invaluable tools in the fight against multiple chronic health issues.

The Enormous Costs of Innovation

The development of GLP-1 drugs involves extensive research and substantial financial investment. Pharmaceutical companies spend years—and often billions of dollars—developing, testing, and bringing these innovative treatments to market. These efforts are not just about profit; they are driven by the potential to drastically improve patient outcomes and quality of life. The cost of bringing a new drug to market has been estimated to exceed $2.6 billion, factoring in the expenses of research, development, and the numerous trials required to ensure safety and efficacy.

Short Periods for Return on Capital

The pharmaceutical industry operates under the constraint of limited patent periods, typically around 20 years from the date of filing. Given that the development phase alone can take up to 10-15 years, companies often have a very short window to recoup their investments and generate profits before generics enter the market. This short period for return on capital makes the financial risk associated with drug development exceptionally high. Imposing strict price regulations on such groundbreaking drugs could discourage investment in future innovations.

Declining Drug Development

Already, we are witnessing a decline in the number of new drugs being developed. This trend is alarming and could be exacerbated by hyperaggressive campaigns such as those waged by Senator Sanders, which could potentially lead to decreases in investments in drug development. Forward-thinking leaders in the pharmaceutical industry have driven the development of GLP-1 drugs, and their work exemplifies the progress that can be achieved when the industry is adequately rewarded for its efforts. Policies that fail to recognize and support this can stifle further advancements and limit the availability of new, life-saving treatments.

Remarkably Low Side Effects

Another compelling reason to support GLP-1 drugs is their remarkably low side effect profile compared to many other medications. These drugs are not only effective but also safe, with minimal adverse effects reported in clinical studies. This combination of efficacy and safety makes them an ideal choice for long-term management of diabetes and obesity, providing patients with a reliable treatment option without the burden of significant side effects.

Economic Considerations and Rationing

Rationing the drugs is another way to keep spending in check, health economists say. High sticker prices have limited access to the drugs, often making income a determining factor in deciding who can take them and who must go without. However, there are other ways to prioritize patients. A person with a “healthy weight” — defined as a body mass index (BMI) between 18.5 and 24.9 — incurs about $2,780 a year in healthcare costs, on average. That figure rises by $2,781 for a person with a BMI of 30 or above, according to the 2024 edition of “The Handbook of Obesity.”

Most of those added costs are concentrated among people at the higher end of the BMI curve. Someone with a BMI between 35 and 39.9 requires $3,336 in additional health spending per year, on average, while a person with a BMI of 40 or above needs an extra $6,493 in medical care. “If your goal is to target interventions in order to reduce healthcare spending, you’d want to target it to people with more extreme or morbid obesity,” said John Cawley, who co-wrote the handbook’s chapter on obesity’s economic toll.

Natural Price Reduction Over Time

Even if all else fails, prices are bound to fall over a period of years as new drugs win FDA approval and make the market more competitive, economists said. And once generic versions become available, prices will plummet. That’s what happened with pricey medications for hepatitis C and HIV. “Eventually things become generic,” said economist Doug Wenstrup. “They still do the same thing but it costs less.”

Profitability and Innovation in the U.S. Pharmaceutical Industry

It is accurate to state that new drug development is a significant profit center in the United States. The U.S. pharmaceutical industry is characterized by substantial investments in research and development (R&D), innovation, and marketing, which have historically led to high financial returns for shareholders. The U.S. accounts for a large proportion of global prescription drug spending and gross domestic product (GDP) among innovator countries, and it is responsible for a significant share of new molecular entities (NMEs) developed worldwide.

The current U.S. drug innovation financing framework, which includes marketing exclusivity and the expectation of reimbursement for clinically valuable therapies, ensures a sufficient return on investment to incentivize private sector R&D activities. This system has been effective in promoting drug innovation, particularly in biotechnology companies and universities, which have contributed significantly to the development of scientifically innovative drugs.

However, the high costs associated with drug development, particularly in oncology, and the substantial revenues generated post-approval underscore the profitability of the sector. For instance, the median cost to develop a cancer drug is estimated at $648 million, while the median revenue from sales post-approval is significantly higher, highlighting the financial returns of successful drug development.

Rewarding Innovation and Personal Risk

The pharmaceutical leaders whose decisions drove the development of GLP-1 drugs took personal and financial risks to achieve breakthrough results. These risks deserve to be rewarded, especially in an industry where too often companies concentrate on “me too” drugs that are not truly innovative. Recognizing and rewarding these bold decisions will encourage continued investment in pioneering treatments that can transform patient care.

Global Benefits, Including Israel

We in Israel are significant beneficiaries of the enormous worldwide efforts in research and development, especially given our resource constraints as a country. The advancements made in pharmaceutical research globally have direct positive impacts on our healthcare system and patient outcomes.

Government Investment in Drug Development

If the U.S. government truly wants to reduce drug costs, it should consider offering programs to participate in drug development investment upfront rather than undermining drug companies. By supporting the development phase, the government can help reduce the financial burden on pharmaceutical companies and encourage the creation of innovative treatments. This proactive approach would ensure a steady pipeline of new drugs while keeping prices in check for consumers.

In summary, the U.S. pharmaceutical industry remains a major profit center due to its robust R&D investments, regulatory framework, and substantial market returns.

Misguided Focus on Effective Drugs

Regulating the prices of highly effective and beneficial drugs like GLP-1 medications seems counterproductive. Instead, efforts should be directed towards ensuring that only those medications with proven efficacy and substantial patient benefits are rewarded appropriately. This would create a balanced environment where innovation is encouraged, and ineffective treatments do not burden patients financially.

A Balanced Approach

There is no doubt that the cost of medications needs to be managed to ensure affordability and accessibility. However, it is crucial to strike a balance that does not undermine the incentives for pharmaceutical companies to innovate. Policies should focus on regulating prices of drugs that do not provide significant benefits rather than those that represent significant advancements in medical science.


The Biden administration’s efforts to control drug prices should be applauded for their intent to make healthcare more affordable. However, it is essential to consider the broader implications of such regulations on innovation and patient care. GLP-1 drugs are a testament to what can be achieved when the pharmaceutical industry is adequately rewarded for its investments in research and development. Misguided attempts to reign in these costs at the expense of innovation could ultimately harm patients who stand to benefit the most from these advances.

In the quest for affordability, let us not lose sight of the need to foster and sustain the innovative spirit that drives medical progress. By focusing regulatory efforts on ineffective drugs and ensuring that effective, life-changing medications remain incentivized, we can achieve a healthcare system that balances cost, accessibility, and continuous advancement.


Biden, J., & Sanders, B. (2024, July 2). Novo Nordisk, Eli Lilly must stop ripping off Americans with high drug prices. USA Today. Retrieved from USA Today

About the Author
The author is a specialist in nephrology and internal medicine and lives with his wife and family in Jerusalem.
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