Are GLP-1 drugs worth their current cost?

Medications like semaglutide and tirzepatide (known by commercial names like Ozempic, Wegovy, Zepbound and Mounjaro) that target GLP-1 receptors have revolutionized the treatment of diabetes and obesity, offering dramatic weight loss and surprising benefits for other chronic conditions. But they come at a steep cost, and public health experts and health economists are raising a fundamental question: are these drugs really worth what we’re paying?

Two new studies led by researchers at the University of Chicago found that although GLP-1 drugs deliver impressive long-term health improvements, their current prices far exceed accepted thresholds for cost-effectiveness, posing difficult choices for policymakers, insurers and patients.

A pharmaceutical breakthrough

GLP-1 receptor agonists work by mimicking hormones that regulate hunger and satiety, effectively helping people feel full sooner and eat less. In clinical trials, they’ve produced weight loss of 15% to 20% — figures that far exceed older medications or lifestyle interventions alone. But their appeal doesn’t stop there.

“These drugs don’t just help with weight loss; they also reduce the risk of cardiovascular disease, slow the progression of chronic kidney disease, and improve conditions like sleep apnea,” said senior author David Kim, PhD, a health economist at UChicago. “That’s a big deal, especially when you think about obesity as a risk factor for so many chronic illnesses.”

Drawing on nationally representative U.S. population data, the researchers used advanced simulation models to project the long-term health effects of four anti-obesity medications. The analysis predicted that GLP-1 drugs could prevent thousands of cases of diabetes and cardiovascular disease and add months of high-quality life to patient lifetimes on average.

When the math doesn’t add up

But those benefits come at a price — roughly $700 to $800 per month in the U.S. Even accounting for long-term health gains, the researchers found that GLP-1 drugs fall well short of standard benchmarks for cost-effectiveness.

“We modeled an optimistic scenario using the best possible weight loss outcomes and long-term risk reductions,” said first author Jennifer Hwang, DO, a primary care physician at UChicago Medicine. “Even then, the drugs didn’t meet the cost-effectiveness threshold.”

That threshold is typically defined as less than $100,000 per quality-adjusted life year (QALY) — a standard tool economists use to compare the value of medical treatments. According to the study, tirzepatide would need a 30% price reduction to meet that mark, and semaglutide would need to cost 80% less than it currently does.

Manufacturing costs for these drugs are likely low — some experts estimate under $10 per dose — but drugmakers factor in decades of research and development investments. “It’s not just about what it costs to make a vial,” Kim said. “It’s also about patents, marketing, clinical trials — all of that gets baked into the price.”

Medicare as a predictor

In a companion paper, the team looked specifically at what might happen if Medicare began covering GLP-1s for obesity treatment. Currently, Medicare pays for these drugs only when prescribed for diabetes or, more recently, sleep apnea.

Their projections showed that if Medicare expanded coverage, 3 million beneficiaries would likely start using the drugs over the next decade. Drug costs would total nearly $66 billion, with about $18 billion saved through reduced hospitalizations and chronic disease care. The net cost? $48 billion in new Medicare spending over 10 years.

“Insurers and policymakers aren’t just asking, ‘Is this a good treatment?’” Kim said. “They’re asking, ‘What will this do to our budget?’ And for now, the budget impact is huge.”

Looking for smarter solutions

The researchers say there are still ways to make GLP-1s a viable, affordable option—starting with smarter coverage decisions and targeted use. “These drugs aren’t equally effective for everyone,” said Hwang. “Some patients respond incredibly well, and others don’t. We need to identify who benefits the most and focus our efforts there.”

Hwang is currently working on a follow-up project to refine clinical guidelines for prescribing GLP-1s more selectively. In parallel, other researchers are exploring alternative models of use, such as starting with GLP-1s for a short period to achieve initial weight loss, then switching to lifestyle programs, meal replacements, or older medications for maintenance.

“If we don’t have to keep everyone on these drugs forever, we can reduce costs significantly,” Kim said. “We’re also hopeful that increased competition and Medicare drug price negotiations will help bring prices down.”

Semaglutide is already among the first 15 drugs selected for Medicare price negotiations under the Inflation Reduction Act, with changes expected to take effect in 2027. Historically, such negotiations have resulted in price cuts of around 20% — a start, though still short of what’s needed for true cost-effectiveness in this case.

A changing landscape

The researchers also acknowledged how quickly the GLP-1 field is evolving. “Every month, there’s a new study showing another benefit for something like fatty liver disease, addiction or sleep apnea,” Kim said. “It’s very much like we’re building the plane while flying it.”

In fact, some of those newer benefits weren’t even included in their models because the data came out after their analysis was complete. As evidence accumulates, future studies may show greater long-term returns, potentially tipping the balance toward cost-effectiveness.

Promising drugs, ongoing challenges

For now, the reality is both hopeful and frustrating. “These are inarguably great drugs,” Hwang said. “But they are so expensive.”

Kim agreed. “We want people who need these medications to be able to access them,” he said. “But to do that, we need lower prices, thoughtful coverage policies, and a clearer understanding of who benefits most.”