Discovery weighs up expanding access to Ozempic-style drugs

Insurer Discovery is looking at how to expand access to the blockbuster weight-loss GLP-1 drugs, beyond just diabetes patients. 

Originally, these drugs – the most well-known brands of which are Ozempic and Wegovy – were created specifically to treat diabetes, but doctors soon discovered the not-so-fringe benefit of weight loss. Being “on the pen” is now a cultural phenomenon, as (dramatically slimmer) celebrities like Oprah Winfrey and Elon Musk tout the benefits.

This is a trend evident in South Africa, too. The most remarkable finding from a new survey by Discovery Bank and Visa, released yesterday, is that 14% of the country’s wealthiest people are paying out of their own pockets for “prescribed weight-loss medications, including GLP-1 therapies”.

The finding, from a survey conducted among 1,000 people who spend more than R100,000 on their credit cards every year, was a “surprise” to Hylton Kallner, the CEO of Discovery Bank and an executive at the wider insurance group.

“We’ve seen a huge increase in people using these drugs. And it’s actually a brilliant outcome, because they tend to support this through healthier behaviour more broadly,” he tells Currency. “People who use this medication – provided they are supervised properly – tend to increase their physical activity, eat healthier and they drink less alcohol.”

More health, less booze, less spend

This lifestyle shift is evident in the spending survey too. Of the people in that survey using these weight-loss drugs, 59% say they spend more on healthier food, 48% spend less on takeaways and restaurants, 45% spend less on alcohol, and 38% spend less on groceries overall.

Intuitively, you might imagine that wouldn’t exactly be positive news for Discovery Bank, which would benefit from greater spending on its cards.

But Kallner says the wider Discovery Group is premised on a behavioural economics model in which it tries to encourage healthier behaviour to drive down claims made through its medical-aid administrator, ultimately positively impacting its life insurer too.

In other words, if South Africans are healthier, less money would have to be paid out of the medical scheme – a powerful incentive to cover GLP-1s for those South Africans with significant obesity, and not just diabetes patients, as it routinely does now. (The medical aid does pay for these GLP-1s for weight loss, but out of someone’s medical savings accounts.)

Kallner says this is precisely what the wider group is working on. “We are working on getting to a situation where everyone who needs these drugs, beyond just diabetes, can access them,” he says. “Part of our role as a group is to look to solve this issue, and the health economics argument is a powerful one.”

The complication for the medical scheme is the cost.

Money well spent

These GLP-1 drugs typically cost from R2,100 to about R4,000 a month – a price that South Africans, who can afford it, have been happy to pay until now. As one anonymous Wegovy user tells Currency: “It is money well spent and anyway, the price has dropped hugely in the past two years.”

Kallner says the emergence of generic GLP-1 drugs in recent months, combined with the wider benefits from the lifestyle changes which tend to happen after patients begin to use the medication, make the economics “look a lot more sustainable”.

Professor Claudia Gray, a clinical consultant at the Sports Science Institute of South Africa and a lifestyle medical enthusiast, says there is a rationale for a medical scheme to cover GLP-1s in selected cases involving obesity.

“Most doctors are now far more comfortable prescribing these drugs, and the demand is huge,” she tells Currency. “For a medical aid like Discovery, the real benefit won’t be in covering the cost of the image-aware, relatively fit person who wants to shed 5kg, but rather in providing the medication for someone who is morbidly obese.”

Someone in that category “is at higher risk of metabolic and cardiovascular complications, which could ultimately prove to be extortionately expensive for a medical scheme”.

Fast-food threat

There is a clear cost factor that any medical scheme will need to take into account.

For instance, once you’re on the drugs, you may need them for life – but as Gray says, the monthly cost of R3,000 or so pales in comparison to the nightly cost of a stay in a hospital ICU after a heart attack. And it is also likely that the cost will drop sharply once generic versions, and an oral pill rather than a jab, are offered.

“The oral version will likely be a game changer, because then it won’t just be this injection for the elite. It will likely become more commonly available, in a similar vein to blood pressure or cholesterol medication,” says Gray.

Which isn’t to say there aren’t downsides: side-effects such as nausea, vomiting and diarrhoea are common in about 75% of patients; less common is vision loss. Loss of muscle mass and bone density can happen if diet and exercise are not well managed, too.

But, the consensus is that, with millions of global users, these drugs are generally safe.

Less obvious is the way in which the new “vanity economy” has changed the game for the hawkers of fast-food. While it is good for people’s health, it is far less positive for companies like Yum, which owns KFC, Steers, owned by Famous Brands, or Spur’s RocoMamas.

In its survey, Discovery said the trend away from unhealthy food is one that “food retailers, restaurants and alcohol brands should be watching”.

Last year, brokerage Redburn Atlantic downgraded a raft of Wall Street-listed fast-food chains, including McDonald’s and pizza chain Domino’s due to concerns over longer-term demand.

For the makers of these drugs – including Novo Nordisk, which makes Wegovy and Ozempic, and Eli Lilly, which makes Mounjaro – it has had the opposite effect. It has also provided support for JSE-listed Aspen Pharmacare, which markets Mounjaro in South Africa for chronic weight management.

Nor is this trajectory likely to slow. In the US, where the weight-loss industry is most pronounced, one in eight adults, or 12% of that population, are on one or other weight-loss drug, according to a poll from health policy unit KFF.

“Among adults who have ever taken GLP-1 drugs, cost is one of the most commonly cited reasons for stopping,” said KFF.

If Discovery, convinced by the economic argument, begins covering these drugs for a wider group of patients, it’ll likely boost demand locally too.

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