US approves Lilly weight-loss drug, will compete with Novo’s Wegovy

By Patrick Wingrove and Bhanvi Satija

(Reuters) -The U.S. Food and Drug Administration on Wednesday approved Eli Lilly (NYSE:)’s weight loss treatment, giving the U.S. drugmaker official entry into a lucrative market that has captured Wall Street’s enthusiasm this year.

The FDA approved tirzepatide for weight loss under the brand name Zepbound. It has been available as Mounjaro for type 2 diabetes since 2022 and had increasingly been used “off-label” for weight loss while the obesity approval was pending.

“Obesity and overweight are serious conditions that can be associated with some of the leading causes of death such as heart disease, stroke and diabetes,” John Sharretts, a director in the FDA’s Center for Drug Evaluation and Research, said in a statement.

Zepbound will be available in the U.S. by the end of the year at a list price of $1,059.87 a month, according to Lilly. That compares with a list of $1,349 per-package for Novo Nordisk (NYSE:)’s wildly popular weight-loss drug Wegovy.

Morningstar analyst Damien Conover said despite the lower list price than Wegovy, what really matters is the after-discount net prices negotiated by pharmacy benefit managers.

Wegovy’s net price is between $700 to $900 per month, according to the healthcare benefits consultant Aon (NYSE:)’s employer guide on how to manage the cost of weight-loss drugs.

The Lilly drug was approved for use by adults with a body mass index (BMI) – a measure of weight based on height – of at least 30, or a BMI of 27 or more if a patient also has another weight-related health issue, such as heart disease.

Conover said the Zepbound label was in line with expectations. “I think it sets the drug up to be one of the best selling drugs of all time,” he said.

The Indianapolis-based drugmaker said it is launching a commercial savings card program to make Zepbound cost as little as $25 for patients whose insurance agrees to cover the drug, and $550 for those whose insurance does not.

Dr. Robert Kushner, professor at Northwestern (NASDAQ:) University Feinberg School of Medicine, said the price will worsen the health inequity regarding access and affordability of anti-obesity medications.

“The price of $550 a month is unaffordable for most of the patients that I see, even with a 50% reduction,” he said.

MOST VALUABLE IN HEALTHCARE

Eli Lilly shares have soared 67% in 2023 based on anticipation of approval of its drug for weight loss, making it the most valuable healthcare company on the . Even though the approval was widely expected, Lilly shares were up 2% in afternoon trade.

Mounjaro had sales of $1.41 billion in the third quarter with Lilly acknowledging supply constraints. After Wednesday’s FDA approval, Lilly can now promote the drug for weight loss.

The enormous demand for new weight-loss treatments could support as many as 10 competing products with total annual sales reaching up to $100 billion within a decade, mostly in the United States, industry executives and analysts said earlier this year.

The approval was based partly on data from a late-stage trial of 2,539 adults with obesity, or excess weight and weight-related medical problems not including diabetes, as an adjunct to diet and exercise. Some patients lost as much as 25% of their weight.

Zepbound’s most common side effects include nausea, diarrhea, hair loss and gastroesophageal reflux disease, according to Lilly.