The dismal science returns: How do you make GLP-1 RAs worth taxpayers’ money?
There are many wondrous things about GLP-1 receptor agonists, not least their capacity to cripple health budgets.
Given the scale of obesity and its economic cost, governments around the globe have been wrestling with whether to fund the treatments through a variety of cost-benefit formulations.
It has been said that they mark a pivotal moment in addressing one of the world’s most pressing health crises.
And that is the problem. Put simply, with so many patients likely to benefit, how do you ensure equity based on patient need without costs sinking the ship?
Or do you have to throw equity based on patient need out the window and go for a harder edged argument from the dismal science [*], say one rooted in the patient’s future economic utility?
What the PBAC thinks
As we know, the PBAC has already baulked at the price tag of semaglutide.
Two years ago, it rejected an application by Novo Nordisk to list Wegovy on the PBS for adults with an initial BMI of 40kg/m2 or above and at least two diagnosed weight-related conditions.
The drug maker said at least one of these related conditions needed to be obstructive sleep apnoea, osteoarthritis of the knee or pre-diabetes.
The PBAC threw it out, saying there was “no strong clinical rationale for the obesity comorbidities selected for inclusion in the PBS listing” and that Novo Nordisk failed to identify patients “most likely to experience relatively large reductions in weight or long-term benefits from weight loss”.
The decision was in sharp contrast to the one made in the UK.
Since 2023, its government has been funding semaglutide for people with at least one weight-related comorbidity and a BMI of 30kg/m2 or above.
Late last year, it followed up, announcing that tirzepatide (Mounjaro) would be free for adults with at least one weight-related condition and a BMI of 35kg/m2 or above.
As you would expect, it came as big news.
UK Health Secretary Wes Streeting said it would reduce sick days as a result of obesity, as well as help the overweight get back to work.
He later had to backtrack slightly on these economic benefits, declaring he was “not interested in some dystopian future where I involuntarily jab unemployed people who are overweight”.
But why the contrast between here and the UK? Is the PBAC being tight-fisted? Are British pockets deeper?
There is no hard-and-fast threshold, but the PBAC is likely to consider a drug worth funding if it costs less than $50,000 for every quality-adjusted life year (QALY) it delivers: the equivalent of one additional year of life in perfect health.
In the case of GLP-1 RAs for obesity, the UK’s PBAC equivalent — the National Institute of Clinical Excellence (NICE) — had calculated a gain of 0.7 QALYs per patient receiving semaglutide in those with a BMI of 30kg/m² or more.
However, the PBAC reported a gain of just 0.3 QALYs, and this was in a population with a BMI of 40kg/m² and above, in which you would expect the benefits to be greater.
Both the NICE and PBAC analyses focused on the results of the SELECT trials, which enrolled 17,500 patients aged 45 or older with pre-existing cardiovascular disease and a BMI of 27kg/m2 or greater but no history of diabetes.
Published in the New England Journal of Medicine, the trials concluded that weekly semaglutide at a dose of 2.4mg reduced the incidence of death from cardiovascular causes, non-fatal MI or non-fatal stroke with a mean follow-up of 39.8 months.
The PBAC said it noted the “top-line positive results” from the SELECT trial, which were announced by Novo Nordisk via press release, particularly the bit that indicated semaglutide treatment was associated with a 20% relative risk reduction in major cardiovascular events compared with placebo in overweight/obese patients with established cardiovascular disease.
However, given the trial was not published in a peer-reviewed journal or provided for evaluation to the PBAC, the PBAC said it could not comment further on the significance of the outcomes.
Trusting the models
“The main difference, in terms of looking at the costs and benefits, was that the NICE assessment accepted the claim there would be an impact on conditions related to obesity, such as heart disease, stroke and joint replacements,” Professor Jonathan Karnon, a health economist at Flinders University in Adelaide, told AusDoc.
“In Australia, the PBAC did not accept those claims, and so the only benefit considered was the direct benefit on people’s quality of life of losing weight.”
He said, for the PBAC, the clinical trials were not long enough to show the benefit, and unlike NICE, it did not accept modelling in the absence of those trials to predict the long-term benefits.
Was he surprised?
“I guess a little.”
“The approach of extrapolating benefits over a longer time period is common in cost–benefit analysis of medications and other health interventions.
“But the PBAC was also concerned about the maintenance of the weight loss. That would be the key uncertainty on the actual long-term benefits of the drugs.
“However, it is going to take a much longer follow-up of the trials to generate the data that may reassure the PBAC.
“Tracking the actual impact on cardiovascular disease and joint replacements could take up to 10 years; 10 years to get a significant outcome like that.”
But he stressed that the core problem facing funders of GLPs for obesity does not evaporate even if the evidence showing long-term impact is persuasive.
“Even if the costs per QALY would come down because the largest benefits are recognised, even if, for instance, the drug company cuts the price, you could still find yourself in a situation where you would not be able to afford to fund it.
Healthcare lotto
AusDoc had a suggestion.
“What about selecting patients from your targeted cohort by lotto?”
Professor Karnon laughs, then adds that the lotto fix for healthcare funding dilemmas is not unknown.
“In Oregon, in the US, they had a lottery for publicly funded health insurance.
“They essentially calculated how many people for whom they could afford to provide insurance, and then it was literally a lucky dip.”
This happened back in 2008, when the state opened an additional 10,000 slots in its medical assistance program, known as the Oregon Health Plan.
More than 85,000 people put their names down.
Between March and October, 35,000 people were randomly selected from the list, allowing them to apply for insurance coverage for all members of their household.
The NHS did not go that route.
With its decision to fund semaglutide two years ago, it limited cost by restricting treatment to two years and demanding that patients were referred to specialist weight-loss clinics, whose limited capacity would severely limit supply.
With Mounjaro, although 3.4 million British patients meet the criteria for free treatment, the government has said it will only fund the treatment for 220,000 over the next three years.
In this case, it is relying on GPs to assess and then prioritise those with the highest clinical needs.
For critics, it is likely to result in another case study proving the inverse care law.
A few weeks ago, the NHS formalised the approach, issuing guidance saying GPs should only prescribe Mounjaro for patients with a BMI of 40kg/m² or more with four or more comorbidities in the first year.
In the second year, those with BMIs between 35kg/m² and 39.9kg/m² will be able to access the drug but, once again, only if they have four or more comorbidities.
And in the third year, patients with a BMI of 40kg/m² or more with three or more comorbidities will be eligible.
The value proposition
There are two other options to improve the economic proposition of funding expensive treatments.
The dark one would be to ditch the QALY currency and shift to something like, say, a QAWY — a quality-adjusted working year — where healthcare interventions are measured by the number of active working years they produce in a population.
It is an ethical minefield likely to be socially regressive, underpinned with a form of age-related triage that is usually considered a moral no-no in healthcare, reinforcing the view held by some that the individual can only justify his or her existence through their apparent economic utility to the nation state.
But it is interesting that the UK Government, given its references to weight-loss drugs helping the jobless, has announced a five-year real-world trial in Greater Manchester not only looking at whether the drug prevents diabetes and obesity-related complications but also how it affects the employment status of a patient, as well as the number of sick days they take.
Mounjaro’s maker, Eli Lilly, is helping to fund the trial as part of a £279 million ($584 million) plan to work with the UK government to address public health challenges like obesity.
The other option to deal with the budgetary issues: the drug makers simply lower the cost of their drugs.
When you look through the PBAC assessment of semaglutide (Wegovy), there are a lot of numbers about clinical outcomes and QALYs, but the ones about dollars are often blacked out as commercial in confidence.
So we do not know the precise cost per QALY-gained figure. The PBAC documents indicate only that it is between $25,000 and $45,000.
Professor Karnon says the PBAC assessments are ultimately part of a business negotiation, not simply a cold and rational analysis of a drug’s value based on the QALY.
“There is a benefit to these drugs, and the companies know that the health minister wants to fund them for obesity.
“I think, in most of these cases, it is brinkmanship or negotiation around whether the government or the company is going to accept a price.
“If it is just about the price, the company will try to negotiate. But then if a price cannot be found, then the company will look for additional evidence, so it might wait until it has got more evidence from the clinical trial to demonstrate the benefit.”
The business negotiations go on.
AusDoc understands that, following the PBAC rejection letter in 2023, Novo Nordisk will be putting together fresh submissions for a PBS listing for Wegovy later this year.
In light of its success in the UK, AusDoc has also been told that Eli Lilly will also make a PBAC submission for Mounjaro.
But the clock is ticking for the drug makers because the generics are already looming.
Generally, the patents last 20 years in the US, but some of the initial patents for certain formulations of the drugs will begin to run out from the beginning of next year.
Novo Nordisk has already been involved in settling patent litigation with numerous prospective generics by Mylan, Dr. Reddy’s, Apotex and Sun Pharmaceuticals.
“There is a horizon to all this,” Professor Karnon says.
“Maybe in 10 years these drugs will become available on a widespread basis.
“Certainly, the price will decline pretty quickly at that point.”
[Footnote *] A few years before his death, AusDoc interviewed Professor John Deeble, one of Australia’s greatest health economists and architect of Medicare, where we mentioned the constant references to the ‘dismal science’.
He pointed out that it was coined by the 19th century intellectual Thomas Carlyle in his attempt to justify slavery in the West Indies in his notoriously racist tract Occasional Discourse on the Negro Question.
“Given the actual source, I’m not that offended,” Professor Deeble said.
Read more:
