Ozempic Won't Save Us Money
GLP-1 Agonists are miracle drugs but they won't protect us from the fiscal reckoning of an ageing society
GLP-1 agonists seem like miracle drugs. They lead to weight loss, slash the risk of heart and kidney disease, and lower blood pressure. The emerging evidence suggests they can go much further; reducing relapse rates in alcoholics and drug addicts, and possibly cutting the risk of dementia and depression too.
But politicians in a climate of fiscal pressure are touting another benefit; freeing up funds currently spent dealing with the consequences of obesity and delivering an economic uplift associated with a fitter, healthier population. I strongly believe we will look back on the emergence of these drugs as of comparable importance to the discovery of penicillin – we just keep finding wonderful new applications. But cash strapped governments looking for a silver bullet will be disappointed. GLP-1s are likely to worsen the acute demographic pressures facing the West.
Wishful Thinking
The Health Secretary Wes Streeting has touted weight loss jabs as a medicine for Britain’s financial ills. Obesity costs the NHS around £11 billion (about $15 billion) a year, if we could eliminate this problem surely we could then eliminate the associated costs and divert funding elsewhere?
In more horizontally challenged countries the costs are even higher. The US spends some $173 billion a year on the health care costs of obesity. Governments are desperate for a solution but their motivation is largely economic.
There are several problems with approaching the roll-out of weight loss jabs as an exercise in cost saving. Firstly, the expense of the drugs themselves. The British government’s initial roll-out is limited to just 220,000 severely obese people – more than 20 million brits are overweight or obese to some extent – at a cost of £900 million per annum by year three, and this is just targeting a small subset of the population.
Which leads to the second issue. While GLP-1s are mighty impressive at prompting weight loss, the majority will need to stay on them indefinitely in order to maintain it. Those who stop taking the drugs regain, on average, around two thirds of the lost weight within a year and are back to their original weight before the end of year two. This isn’t a reason not to roll the drugs out, but it does mean that they should be approached as a long-term treatment for a chronic condition rather than a cure.
While GLP-1s are mighty impressive at prompting weight loss, the majority will need to stay on them indefinitely in order to maintain it.
Costs will come down over time as more drugs emerge and existing jabs fall off-patent. The much bigger cost though is more people living for longer. There is an economic irony that healthier people cost more in the long-run. Somebody who dies of a heart attack at 65 doesn’t need anymore help with their health, won’t be around to claim a state pension for 30 years, and isn’t a threat to the hard pressed social care budget.
If GLP-1s work as advertised, and we have no reason to think they don’t, we are looking at millions more people living longer, healthier lives. This is fantastic! But the trend towards longer lives began decades ago and we are already dealing with the fiscal consequences of this before introducing a wonder drug into the mix.
In the next twenty years the proportion of brits of pensionable age will rise by a third while the cohort of people over 85 will almost double. Poorly targeted policies like the Triple Lock and the lack of an equitable mechanism for funding social care mean an ever greater proportion of state spending will sprinkle on the shoulders of the old, funded by the dwindling ranks of over-taxed youngsters.
On the other side of the Atlantic the increase in the median age is rising too, albeit at a slower rate, offset by the greater amount of inward migration – though this too could change if Trump continues to make the US less attractive to external talent.
We’ve Been Here Before With Tobacco
We can look at smoking as a powerful case where health interventions have already increased long-term costs. The Western world has been phenomenally successful at driving down tobacco use over the last half century+ and the proportion of people who smoke has fallen by more than 70% since its 1960s peak. Then too, a big part of the justification was that it would save money by reducing healthcare spending.
Whilst the health conditions associated with smoking have fallen (yay!) the cost to the state has increased as a result. Treating someone for emphysema may be expensive but less so than pensions, bus passes, hip replacements, and free TV licenses.
One study in the New England Journal of Medicine found that while smokers have a higher cost to the state at any given age, a hypothetical population in which nobody smoked would have higher lifetime health costs. Researchers in Finland similarly found that smoking was associated with lower lifetime health costs and a marked reduction in pension outlays. Their study concluded that the net public finance was some €133,000 more favourable to a smoker than to a non-smoker.
Treating someone for emphysema may be expensive but less so than pensions, bus passes, hip replacements, and free TV licenses.
The counter-argument is that we are always told that obesity – like smoking before it – has costs in lost productivity that are harder to measure. If people are less sick they may be able to work more hours, provide more value to the economy, and pay more tax.
Here I would point to East Asia. Japan, South Korea, and Taiwan are all years ahead of us in the demographic crisis, they started ageing before we did. Helpfully, they also rank among the healthiest countries in the world and have obesity rates far below the western average (Japan has an obesity rate of around 6%, compared to 30% in the UK and 40% in America).
These countries still face unsustainable increases in spending on healthcare and pensions despite being much healthier overall. The South Korean pension system faced bankruptcy by the mid point of this century and has only been saved by nearly doubling income contributions. The Taiwanese system meanwhile will be insolvent within the next 10 years without reform. Even healthier populations still cost more as they age.
None of this is to say we should want to condemn huge swathes of the population to an early grave. The cost in interactions unspent and dreams unrealised is great. GLP-1 agonists will deliver a dramatic increase in the number of healthy – and happy – years of life and this is something worth spending money on.
But we shouldn’t pretend that they are going to help ease the fiscal pressures facing western governments or allow their prospect to become an excuse for badly run healthcare systems. They are a wonderful end in and of themselves but they are a medical miracle not a fiscal one.
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