Business
Column: The Ozempic revolution in weight-loss drugs exposes the weakest links in our healthcare system — drug pricing and insurance
It’s rare — miraculously rare — that a drug can have such a pronounced effect that its immediate benefits translate into healthcare savings for years, even decades. To the wonder drugs Harvoni and Sovaldi, which wipe out hepatitis C, we can now add the weight-loss medicine Ozempic and its cousins Wegovy, Mounjaro and Zepbound.
These drugs have shown remarkable effectiveness in reducing obesity. That points to long-term reductions in users’ vulnerability to the whole spectrum of obesity-related medical conditions, including diabetes, cardiovascular disease, bad knees and sleep apnea.
They appear to work on other unhealthful dependencies such as narcotic and alcohol addiction, and possibly even on Alzheimer’s.
‘Insurers routinely don’t see people for more than a few years at a time …. This limits the length of time that health gains can be internalized as reduced claims.’
— David Anderson, University of South Carolina health policy expert
Yet millions of Americans are unable to access these drugs, thanks to the two big, interrelated flaws in our healthcare system: unrestrained pricing by drug companies and the economics of health insurance.
We’ll explore how these factors work to deny access to drugs that address America’s No. 1 health malady. But first, a look at the seriousness of the obesity epidemic.
Weight is typically measured by the body mass index, or BMI, which correlates weight with height. Roughly speaking (and not accounting for differences between males and females), a “healthy” weight for a 5-foot-10-inch person is reckoned by the Centers for Disease Control and Prevention to be 128 to 173 pounds, which translates to a BMI of between 18.4 and 24.9.
Between 173 and 208 pounds places that person in the “overweight” category and heavier than that is judged to be “obese,” defined as a BMI of 30 or higher. Those with a BMI of 40 or higher, or 278 pounds for a 5-foot-10 adult, are “severely obese.”
America has been getting more obese over time, according to the CDC. In 1960, about 31.5% of U.S. adults were overweight; in 2017, the latest period tracked by the agency, the figure was 30.3%. In 1960, however, 13.4% of adults were obese and 0.9% severely obese; by 2017, about 42.8% of adults were obese and 9.6% severely obese.
The rate of obesity among children — about 20% — is especially worrisome. Obese children are more likely than those with healthy weights to have high blood pressure and diabetes, and more likely to be obese in adulthood.
The toll this epidemic takes on the economy is horrific. Obesity and its consequences cost the U.S. healthcare system nearly $173 billion a year, the CDC estimates.
Experience with the weight-loss medicines thus far shows that they can cut the rates of obesity-related conditions materially. A five-year study of more than 24,000 nondiabetic but obese subjects published earlier this month by a team of Taiwanese researchers found significant reductions not only in heart disease, hypertension, stroke and kidney failure but in mortality from all causes as well. Those in the control group (not receiving the drug) had a 3.5% annual mortality rate; for those given the drug, it was only 0.75%.
So why would stakeholders in our healthcare system not be beating down the doors to make these drugs more widely available?
The answer, of course, boils down to money.
The estimated cost of Wegovy and similar drugs for insurers, net of bulk discounts provided by manufacturers (Denmark-based Novo Nordisk for Wegovy and Ozempic and Indianapolis-based Eli Lilly for Mounjaro and Zepbound) runs from about $8,600 to $9,100 a year. That’s a big lift for insurers contemplating coverage of drugs for which the public demand can be in the millions.
That might work if insurers could be sure that the long-term savings from their enrollees’ health improvements would save them as much or more. In our fragmented healthcare system, however, they can’t be sure that they’ll still be covering those enrollees in the cost-avoidance period. Customers can move to other insurers or leave the employers who were providing the insurance.
“Insurers routinely don’t see people for more than a few years at a time,” observes David Anderson, an expert in health policy at the University of South Carolina. “This limits the length of time that health gains can be internalized as reduced claims.”
As a result, insurers have been placing obstacles in the way of customers seeking coverage. Some require advance authorization before they’ll pay or limit coverage only to patients with a high BMI. Some insurance plans will cover them only for employees already diagnosed with diabetes, the condition for which these medicines were first developed, but not for weight loss alone.
Insurers administering plans for self-insured employers — large companies and institutions — are probably responding to their clients’ directives.
Some big employers that originally covered the weight-loss drugs have pulled back. The Mayo Clinic has imposed a $20,000 lifetime limit on the coverage for its employees. Purdue University will cover the drugs for employees with BMIs over 30, but requires employees to have lost at least 5% of their body weight after three months to continue coverage.
Others have simply dropped the option altogether. That leaves employees or the uninsured on the hook for the cost of $1,000 or more a month.
The insurer best positioned to pay for the weight-loss drugs and to reap the long-term benefits is Medicare, in which enrollees typically remain for life. Moreover, insurers are generally required to cover drugs considered the standard of care for known conditions.
Unfortunately, Medicare is prohibited by law to cover drugs prescribed specifically for weight loss. It can pay for them only if they’re prescribed for a related condition, such as heart disease or diabetes. For example, Wegovy was added to the standard formulary for Medicare’s Part D prescription benefit after it received approval from the Food and Drug Administration in March for the treatment of heart attack risk.
The popularity and efficacy of the drugs prompted legislators in June to update a measure unsuccessfully introduced in 2014 legalizing Medicare coverage for weight loss alone. The new version would cover mostly those who had been taking a drug for at least a year before joining Medicare, however.
Some experts estimate that expanding coverage of the weight-loss drugs would cost Medicare up to $6.1 billion a year, assuming that 10% of patients eligible for the coverage actually receive prescriptions. That would increase the $120-billion annual cost of Medicare prescriptions (net of enrollee premiums and contributions from state programs) by a little over 5%.
Whether that cost would be fully offset by subsequent healthcare savings for Medicare is unclear. Not every patient prescribed the weight-loss drugs tolerates them well enough to stay on them for even a year, and not all will escape a major health crisis that could have been averted by weight loss alone.
But it seems now that our healthcare system will have to deal with the new class of weight-loss drugs in one way or another. Wegovy and Ozempic are expected to be selected for the next round of Medicare price negotiations, due to take place next year with price reductions effective starting in 2027. Drug industry analysts don’t expect the drugs’ popularity to wane. The market for them reached $6 billion last year, according to Goldman Sachs, which projected that it would grow to $100 billion by 2030.
The weight-loss drugs are by no means the most expensive on the market — that trophy belongs to certain cancer drugs and gene therapies, some of which clock in at several million dollars per treatment. But none of those serve a market anywhere near the potential size of weight-loss treatments.
Unless the U.S. moves toward a single-payer healthcare system and starts to place limits on drug prices, it’s the manufacturers of the weight-loss drugs that will reap most of the benefits. Sales of Wegovy and Ozempic made Novo Nordisk the most valuable European company last year and helped drive an increase in profit at Lilly for the second quarter that ended June 30 by nearly 69% over the year-earlier period.
To put it another way, America’s 20th century healthcare system is coming face to face with a spate of 21st century drugs. Something will have to give.
Business
Kanye West ordered to pay former contractor $140,000 over Malibu mansion lawsuit
A jury found Ye, the controversial music impresario formerly known as Kanye West, liable in the legal dispute brought by his former contractor and ordered him to pay $140,000.
Tony Saxon, who also worked as Ye’s security guard and caretaker at the Malibu property, sued the rapper in Los Angeles Superior Court in September 2023, claiming a slate of labor violations, nonpayment of services and disability discrimination.
The $140,000 judgment announced Wednesday is far less than the $1.7 million in damages that Saxon’s lawyers had originally requested. Ye will also have to pay for Saxon’s legal fees, which is expected to put the total sum that West will have to pay at more than $1 million.
Although Saxon’s attorneys at the Los Angeles-based firm West Coast Trial Lawyers called the verdict a “mixed” one, they characterized it as as a “vindication for our client.”
“Ye’s lawyers called him a liar, a fraud, and a malingerer in court. His medical records, bank records, and personal family history were dissected, mocked, and vilified,” said attorney Ronald Zambrano in a statement.
“In true David-vs.-Goliath fashion, Mr. Saxon stood firm against one of the biggest celebrities in the world, with the truth on his side,” Zambrano said.
Saxon alleged that while working as a security guard on the property, he was forced to sleep on the floor and was fired in November 2021 for failing to comply with Ye’s “dangerous requests.” He also said that he frequently complained to West about these and other issues, but that the rapper failed to address them.
In a statement, Ye’s spokesperson noted the jury had “rejected almost all of his [Saxon’s ] claims,” and that Saxon only recovered “a small fraction of what his lawyers demanded.”
“The jury also found that Saxon acted in the capacity of a contractor and did not qualify for the employee exception under California’s contractor licensing statutes,” according to the statement. “We believe the damages award is legally barred and we’ll be seeking post-trial relief from the court.”
Ye purchased the beachfront concrete mansion in 2021— designed by Pritzker Prize-winning Japanese architect Tadao Ando — for $57.3 million. He then gutted the property on Malibu Road, reportedly saying, “This is going to be my bomb shelter. This is going to be my Batcave.”
Three years later, the hip-hop star sold the unfinished mansion (he had removed the windows, doors, electricity and plumbing and broke down walls), at a significant loss to developer Steven Belmont’s Belwood Investments for $21 million.
In court filings Ye denied Saxon’s allegations. In a November 2023 response to the complaint, he disputed that Saxon “has sustained any injury, damage, or loss by reason of any act, omission or breach by Defendant.”
In January, Ye sued Saxon and his law firm over a $1.8 million lien placed on the Malibu mansion, alleging they “wrongfully” placed an “invalid” lien on the property “while simultaneously launching an aggressive publicity campaign designed to pressure Ye, chill prospective transactions, and extract payment on disputed claims already being litigated in court.”
The Malibu mansion that Ye purchased and gutted was later purchased and restored to its original design.
(The Oppenheim Group / Roger Davies)
That case is pending.
Ye’s spokesperson said the lien “clouded the home’s title and interfered with its sale, destroying substantial value at the time of sale.”
In recent years, the mercurial superstar has faced a number of public and legal dramas.
In 2022, Ye lost numerous lucrative partnerships with companies like Adidas and the Gap, following a raft of antisemitic statements, including declaring himself a Nazi on X (which he later recanted).
Two years later, Ye abruptly shut down Donda Academy, the troubled private school he founded in 2020.
Ye, the school and some of his affiliated businesses faced multiple lawsuits from former employees and educators, alleging they were victims of wrongful termination, a hostile work environment and other claims.
In court filings, Ye has denied each of the claims made against him by former employees and educators at Donda.
Several of those suits have been settled.
Business
Yamaha is leaving California after nearly 50 years
Yamaha Motor Corp. is relocating part of its operations to Georgia and selling its California assets after 47 years.
The company is the latest among a slew of businesses to relocate operations outside the Golden State to cut costs and improve profitability. Many cite high taxes and strict regulations as obstacles to doing business in the state.
Yamaha Motor Corp. U.S.A., the U.S. subsidiary of Yamaha Motor Co., has been based in Cypress since 1979. It will begin its move to Kennesaw, Ga., at the end of this year and complete the moving process by the end of 2028, the company said in an announcement.
The company’s marine and motorsports business facilities already moved to Kennesaw in 1999 and 2019, respectively. The Cypress facility currently houses corporate functions and the financial services business on roughly 25 acres, the company said.
Yamaha said it will sell all its land, offices, warehouses and other fixed assets in California. It will use a sale-and-leaseback arrangement for a temporary period to ensure a smooth transition and business continuity.
“This initiative is positioned as one of the Company’s key measures aimed at improving asset efficiency and enhancing profitability in the United States,” the company said in its announcement of the move. Yamaha “is undertaking structural reforms … in response to cost increases resulting from U.S. tariffs and changes in the market environment,” it said.
Yamaha Motor was founded in Japan in 1955 and began selling its products in the U.S. in 1960. The company got its start making motorcycles for racing and contests, and released its first boat motor in 1960. It acquired land in Cypress in 1978 and established an office there one year later.
Some companies have been vocal about their dissatisfaction with California’s business environment.
Last year, Bed Bath & Beyond’s executive chairman, Marcus Lemonis, said his bankrupt company won’t be reopening any stores in California, where it used to have more than 80 locations.
“California has created one of the most overregulated, expensive, and risky environments for businesses,” Lemonis said in a statement posted on X in August.
Also in August, In-N-Out owner Lynsi Synder announced she was moving her family from California to Tennessee, where she planned to open a new regional headquarters. In-N-Out’s California headquarters remains operational.
“There’s a lot of great things about California, but raising a family is not easy here,” Snyder said on a podcast at the time. “Doing business is not easy here.”
Tesla moved its headquarters out of Palo Alto in 2021, the same year that financial services firm Charles Schwab relocated from San Francisco to north Texas.
Elon Musk moved the head offices of his other companies — SpaceX and X — to Texas in 2024, as did Chevron, the oil giant that was started in California.
Business
Disneyland Resort President Thomas Mazloum named parks chief
Disneyland Resort President Thomas Mazloum has been named chairman of Walt Disney Co.’s experiences division, the company said Tuesday.
Mazloum succeeds soon-to-be Disney Chief Executive Josh D’Amaro as the head of the Mouse House’s vital parks portfolio, which has become the economic engine for the Burbank media and entertainment giant. His purview includes Disney’s theme parks, famed Imagineering division, merchandise, cruise line, as well as the Aulani resort and spa in Hawaii.
Jill Estorino will become the head of Disneyland Resort in Anaheim. She previously served as president and managing director of Disney Parks International and oversaw the company’s theme parks and resorts in Europe and Asia.
Estorino and Mazloum will assume their new roles on March 18, the same day as D’Amaro and incoming Disney President and Chief Creative Officer Dana Walden.
“Thomas Mazloum is an exceptional leader with a genuine appreciation for our cast members and a proven track record of delivering growth,” D’Amaro said in a statement. “His focus on service excellence, broad international leadership and strong connection to the creativity that brings our stories to life make him the right leader to guide Disney Experiences into its next chapter.”
Mazloum had been about a year into his tenure at Disneyland. Before that, he was head of Disney Signature Experiences, which includes the cruise line. He was trained in hospitality in Europe.
In his time at Disneyland, Mazloum oversaw the park’s 70th anniversary celebration and recently pledged to eliminate time limitations for park-hopping, which are designed to manage foot traffic at Disneyland and California Adventure.
Mazloum will now oversee a 10-year, $60-billion investment plan for Disney’s overall experiences business, which includes new themed lands in Disneyland Resort and Walt Disney World. At Disneyland, that expansion could result in at least $1.9 billion of development.
The size of that investment indicates how important the parks are to Disney’s bottom line. Last year, the experiences business brought in nearly 57% of the company’s operating income. Maintaining that momentum, as well as fending off competitors such as Universal Studios, is key to Disney’s continued growth.
In his new role, Mazloum will have to keep an eye on “international visitation headwinds” at its U.S.-based parks, which the company has said probably will factor into its earnings for its fiscal second quarter. At Disneyland Resort, that dip was mitigated by the park’s high percentage of California-based visitors.
Times staff writer Todd Martens contributed to this report.
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