Taxpayers Paid $6.2 Billion to Develop Weight-loss Drugs. Pharma Charges Consumers a Premium

U.S. taxpayers picked up the tab for about $6.2 billion worth of research, development and distribution of GLP-1s, the new class of blockbuster weight-loss drugs, according to an investigation by The Lever.

The “blockbuster drugs” generate annual sales exceeding $1 billion for Big Pharma.

Drugs like Ozempic, Wegovy and Zepbound — which belong to the glucagon-like peptide-1 (GLP-1) class of drugs — are “minting billions of dollars” for Eli Lilly and Novo Nordisk, the companies that make them.

Taxpayers fund the research. Pharma reaps massive profits. And Americans pay up to 11 times more for the drugs than people in other countries. The marked-up prices are inflating insurance premiums and risk bankrupting the country’s healthcare system, according to The Lever.

Researchers at Bentley University shared data with The Lever showing that between 1980 and 2024, the federal government spent $6.2 billion on the discovery and development of GLP-1 molecules, plus research on how to use those molecules to treat diabetes, obesity and other health conditions.

“You have to know a lot to develop a drug and to apply it in people,” Dr. Fred Ledley, professor of Natural and Applied Sciences at Bentley University in Waltham, Massachusetts, told The Lever. “What we call a ‘mature body of knowledge’ is not cheap.” Ledley provided the spending data to The Lever.

That research laid the foundation for the development of Ozempic and triggered a wave of similar drugs that spawned a massive market.

Media tout ‘miracle cures’ but weight-loss drugs linked to serious side effects

The drugs are now being hailed in the media as the miracle cure for everything from alcoholism and opioid addiction to leukemia, strokes, heart attacks and aging.

The media has focused less attention on the serious side effects of these drugs, which range from vomiting, diarrhea, and nausea to pancreatitis, stomach paralysis, kidney disease, thyroid cancer and sudden vision loss.

The drugs are so potentially dangerous for pregnant women that doctors have argued they should carry a black box warning.

They’ve also been linked to suicidal ideation and even death.

As of May 2024, more than 15 million people — 1 in 8 adults — were taking GLP-1 drugs, which generated more than $50 billion for the drugmakers in 2024 alone, reportedly leading to drug shortages.

At the time, Novo Nordisk said that at least 25,000 people in the U.S. were starting its drug Wegovy each week, according to CNN.

The Lever reported:

“While the weight-loss drug market booms and related ads flood the airwaves and internet, the drugs’ price markups are wreaking havoc on government budgets and even contributing to electric and gas rate hikes.

“In 2022 alone, the federal health insurance plan Medicare spent $5.7 billion on this class of drugs, 10 times what it spent in 2018.”

Big price tags spawn market for alternatives

A month’s supply of GLP-1 drugs in the U.S costs over $1,000, leading many people to seek alternative versions of the drugs made by compounding pharmacies, which mix the drugs themselves.

Drug compounding companies, like the direct-to-consumer telehealth companies Hims & Hers, Noom, Ro, 23andMe, and WeightWatchers, are also raking in major profits from selling compounded versions of the drugs.

Last year, the U.S. Food and Drug Administration (FDA) warned against compounded versions, even though it allows compounding companies to make the drugs during shortages of the brand-name versions.

The agency doesn’t monitor the compounded drugs for safety, efficacy or quality, according to CNN.

Eli Lilly and Novo Nordisk are pushing the compounding pharmacies to stop making the drugs, according to NPR.

Last year’s shortage of the GLP-1s ended in February, so compounding is no longer permitted, but The Lever said it is uncertain whether the secondary market will be shut down.

Price of GLP-1s driving up healthcare costs and more

Last year, Sen. Bernie Sanders (I-Vt.) launched an investigation into the “outrageously high prices” GLP-1 drug manufacturers charge.

Health and Human Services Secretary Robert F. Kennedy Jr. has criticized weight-loss drug manufacturers for the high costs, but also for pushing drugs to solve the obesity problem rather than changing the food system.

Dr. Mehmet Oz, nominated by President Donald Trump to lead the Centers for Medicare and Medicaid — which pays for the drugs when used for indications other than weight loss by people in those programs — has spent years promoting weight-loss drugs.

Dr. Marty Makary, nominated to lead the FDA, was the chief medical officer at a telehealth company selling compounded weight-loss medications.

A 2023 study by Ledley and colleagues highlighted the crucial role of U.S. government funding in drug development, showing that the National Institutes of Health contributed $187 billion to research that led to almost all drugs approved in the U.S. between 2010 and 2019.

The research focuses on “basic science,” according to The Lever, such as identifying proteins or genes linked to a disease or studying how GLP-1s might work.

Despite U.S. taxpayers’ funding for the research, Ozempic costs about $1,000 per month in the U.S., compared to $147 in Canada, $103 in Germany, $93 in the U.K. and $83 in France.

Wegovy is listed in the U.S. for more than $1,300 per month, compared to $186 in Denmark, $137 in Germany and $92 in the U.K.

The high cost of the drugs in the U.S. is driving up healthcare costs overall.

The Lever reported:

“This year, private health plan costs are expected to rise by 8 percent — the highest increase in 15 years apart from 2021, during the global COVID-19 pandemic — thanks in part to the rising cost of prescription medications. GLP-1 drugs are ‘a major driver of higher prescription drug costs,’ according to recent reports by the benefits consulting firm Segal.

“A Senate report from last May also found that if half of all Medicare and Medicaid patients with obesity took Wegovy and other GLP-1 weight-loss drugs, it could cost the federal health care system $166 billion per year — nearly as much as what Medicare and Medicaid spent on all retail prescription drugs in 2022.”

Those higher costs affect the broader economy. Con Edison, the largest electricity provider in New York City, announced a likely rate hike, citing a 12% increase in employee benefit costs due to the rising costs and use of GLP-1 drugs.