GLP-1 Drugs and Generative AI: Wall Street's New Darlings and the future

Both GLP-1 drugs (like Ozempic and Wegovy) and Generative AI are emerging as Wall Street favorites. Take a look at the stock market performances of NVIDIA (driven by AI) and Novo Nordisk (with GLP-1 drugs). While I’m invested in NVIDIA and can predict some market trends, when it comes to GLP-1, I’m trying to understand what could happen from a market perspective.

Now, I’m not commenting on the efficacy of these drugs—that's for the medical experts. Instead, I want to ask a few questions around the financial and market implications of GLP-1 drugs.

Key Questions:

Insurance Coverage for GLP-1 Drugs:

With insurance plans varying widely, some cover GLP-1 drugs for diabetes but not for weight loss. How are individuals managing these coverage gaps, and what factors determine eligibility for coverage?

High Deductible vs. High Premium Plans:

In a landscape of high-deductible health plans versus high-premium options, how are people balancing the significant out-of-pocket costs associated with GLP-1 drugs?

Out-of-Pocket Costs:

GLP-1 medications can cost between $900 and $1,300 per month without insurance. How can the average person afford these drugs long-term, and will there eventually be a price cut to help people stay on this drug for 12 months or longer?

Insulin Pricing Lessons:

What can we learn from insulin’s pricing history, and will GLP-1 drugs follow a similar trajectory?

• 1980s: Insulin cost around $20 to $40 per vial.

• 2010s: Prices soared to over $300 per vial for some products.

• 2023: Medicare capped insulin at $35 per month, though broader affordability remains an issue for many.

• 2024: Ongoing efforts address affordability, with the introduction of biosimilars and state-level price caps.

Profitability and Artificial Scarcity

Originally developed for diabetes, GLP-1 drugs have been around for over 10 years, but now face scarcity due to their profitability in the weight loss market. How does this shift impact diabetic patients who need these medications for their original purpose?

Biden’s Insulin Price Cap vs. GLP-1 Pricing:

With President Biden’s efforts to reduce insulin prices, will similar measures affect GLP-1 drugs? Or is there an implicit understanding between pharma companies and policymakers to maintain higher prices in order to recoup investment dollars in laborious aspect of drug discovery?

Digital Marketing and Cost-Per-Click (CPC):

With online platforms like Ro, Found, Hims, and numerous weight loss clinics competing for customer attention, the cost-per-click for GLP-1 keywords can reach $50. Who is ultimately paying for this—these companies or the consumer? And what about other GLP-1 cocktails being developed, similar to Semaglutide?

Annual Costs and Sustainability for Average Americans:

With an annual spend of $12,000 to $15,000, how can the average American afford these drugs over time? Are there alternative solutions to make these life-changing medications more accessible? If 99% of Americans stop taking the drug due to cost, will they end up back where they started, and what does this mean for their long-term financial and health outcomes?

These are important questions as GLP-1 drugs gain popularity and Generative AI captures attention. What do you think the future holds for these industries, and how will everyday Americans be impacted by the high costs associated with these trends?