Semaglutidonomics

Semaglutide started off as a diabetes medication. Pharma company Novo Nordisk developed it in the early 2010s, and the FDA approved it under the brand names Ozempic® (for the injectable) and Rybelsus® (for the pill).

I think “Ozempic” sounds like one of those unsinkable ocean liners, and “Rybelsus” sounds like a benevolent mythological blacksmith.

Patients reported significant weight loss as a side effect. Semaglutide was a GLP-1 agonist, a type of drug that has good theoretical reasons to affect weight, so Novo Nordisk studied this and found that yes, it definitely caused people to lose a lot of weight. More weight than any safe drug had ever caused people to lose before. In 2021, the FDA approved semaglutide for weight loss under the brand name Wegovy®.

“Wegovy” sounds like either a cooperative governance platform, or some kind of obscure medieval sin.

Weight loss pills have a bad reputation. But Wegovy is a big step up. It doesn’t work for everybody. But it works for 66-84% of people, depending on your threshold.

(Source)

Of six major weight loss drugs, only two - Wegovy and Qsymia - have a better than 50-50 chance of helping you lose 10% of your weight. Qsymia works partly by making food taste terrible; it can also cause cognitive issues. Wegovy feels more natural; patients just feel full and satisfied after they’ve eaten a healthy amount of food. You can read the gushing anecdotes here (plus some extra anecdotes in the comments). Wegovy patients also lose more weight on average than Qsymia patients - 15% compared to 10%. It’s just a really impressive drug.

Until now, doctors didn’t really use medication to treat obesity; the drugs either didn’t work or had too many side effects. They recommended either diet and exercise (for easier cases) or bariatric surgery (for harder ones). Semaglutide marks the start of a new generation of weight loss drugs that are more clearly worthwhile.

Modeling Semaglutide Accessibility

40% of Americans are obese - that’s 140 million people. Most of them would prefer to be less obese. Suppose that a quarter of them want semaglutide. That’s 35 million prescriptions. Semaglutide costs about $15,000 per year, multiply it out, that’s about $500 billion.

Americans currently spend $300 billion per year total on prescription drugs. So if a quarter of the obese population got semaglutide, that would cost almost twice as much as all other drug spending combined. It would probably bankrupt half the health care industry.

So . . . most people who want semaglutide won’t get it? Unclear. America’s current policy for controlling medical costs is to buy random things at random prices, then send all the bills to an illiterate reindeer-herder named Yagmuk, who burns them for warmth. Anything could happen!

Right now, only about 50,000 Americans take semaglutide for obesity. I’m basing this off this report claiming “20,000 weekly US prescriptions” of Wegovy; since it’s taken once per week, maybe this means there are 20,000 users? Or maybe each prescription contains enough Wegovy to last a month and there are 80,000 users? I’m not sure, but it’s somewhere in the mid five digits, which I’m rounding to 50,000.

That’s only 0.1% of the potential 35 million. The next few sections of this post are about why so few people are on semaglutide, and whether we should expect that to change. I’ll start by going over my model of what determines semaglutide use, then look at a Morgan Stanley projection of what will happen over the next decade.

Step 1: Awareness

I model semaglutide use as interest * awareness * prescription accessibility * affordability. I already randomly guessed interest at 25%, so the next step is awareness. How many people are aware of semaglutide?

The answer is: a lot more now than when I first started writing this article! Novo Nordisk’s Wegovy Gets Surprise Endorsement From Elon Musk, says the headline. And here’s Google Trends: