The race to grab market share of the booming obesity drug market has officially begun, with AstraZeneca (AZN) reentering the contest with a partnership for an oral contender and Eli Lilly (LLY) gaining FDA approval for weight loss use for its GLP-1 drug, Zepbound.
The competition between Lilly's tirzepatide drugs, Mounjaro and Zepbound, and Novo Nordisk's semaglutide drugs, Ozempic (Type 2 diabetes) and Wegovy, marks the beginning of what will soon be a much larger field of players in the GLP-1 space.
These GLP-1 drugs, named after a hormone in the body they mimic, which slows digestion and activates insulin production, are not the first in their class. But they are the latest formulas and have shown superior weight loss potential compared to their predecessors like Novo's Saxenda.
Lilly is responding to the challenge of entering the space dominated by Novo with a 20% reduction on its list price for Zepbound compared to Wegovy, at $1,056 per month, in order to ensure greater payer coverage.
Some investors viewed that as a misstep as it hurts its status with pharmacy benefit managers, who enjoy higher rebates on products, according to Leerink Partners analysts.
"The company’s Zepbound list price logic is driven by access … to facilitate employer opt-in to obesity [coverage] in insurance plans," the Leerink Partners analysts said in a note.
Employers primarily focus on the list price of a drug, since they don't see the rebates that PBMs get, and that drives their interest in coverage, the analysts said.
Meanwhile, Novo Nordisk is the only competitor with an oral GLP-1 option, Rybelsus, but that is only approved for diabetes. That's why it's a market investors are eagerly watching.
There are new oral candidates in early-stage trials. That includes AstraZeneca's new partner, Eccogene. The China-based company, with offices in Cambridge, Mass., gave AstraZeneca exclusive global rights for its oral GLP-1 — except in China where they will co-manufacture and distribute — which has shown positive results in a Phase 1 trial.
The up to $2 billion deal includes $185 million up front for Eccogene, and adds to the pharma giant's pipeline of GLP-1 contenders. It's top drug, Farxiga, is doing well in the Type 2 diabetes space, but has additional benefits — similar to GLP-1s — for heart patients. While not all drugs are tested for their benefit to heart patients, new clinical studies by the manufacturers are adding to bodies of evidence linking these benefits — in hopes it will result in broader insurance and Medicare coverage.
The partnership also boosts what was a waning portfolio in the space for AstraZeneca, as it recently terminated two unsuccessful GLP-1 candidates.
"We believe this oral GLP-1RA molecule could offer alternatives to current injectable therapies both as a potential monotherapy as well as in combination for cardio-metabolic diseases," said Sharon Barr, executive vice president of biopharmaceuticals R&D at AstraZeneca.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms @AnjKhem.