Obesity’s $250 billion problem

Few public health issues have more devastating health consequences – or higher economic stakes – than today’s obesity epidemic.

Obesity rates in the U.S. are skyrocketing, with nearly three-quarters of U.S. adults – and one in three children – living with obesity or overweight conditions. Beyond creating a diminished quality of life, obesity increases the risk of high blood pressure, diabetes and heart disease, as well as a shorter life expectancy. Without aggressive intervention, the number of people living with obesity or overweight is expected to rise to 260 million by 2050.

It’s a full-blown public health emergency, with wide-reaching implications for the nation’s health and medical costs as it faces a growing burden of weight-related diseases.

Amid this crisis, GLP-1s have emerged – seemingly – as the hero drug to help us combat this critical moment. The numbers are staggering, with some estimates projecting the obesity drug market to exceed $250 billion in annual sales within the next decade.

The question is – are we solving a medical crisis or creating a financial catastrophe?

Soaring costs, unclear future

After outpacing specialty drugs for the first time in 2023, spending on GLP-1 drugs continues to rise. While pharmaceutical spending overall has grown significantly in recent years, it has accelerated since semaglutide earned approval for chronic weight management in 2021. Since then, the rate of annual growth rose from 2.1% in 2021 to 12.8% in 2024, according to a study by Evernorth.

Medicare spending on 10 diabetes drugs, including GLP-1s, more than quadrupled over a five-year period and could reach $102 billion next year, according to the Office of Inspector General. Medicare Part D spending on these drugs reached $35.8 billion in 2023, a 364% increase from $7.7 billion in 2019. These findings come as the Trump Administration rejected a Biden administration proposal that would require Medicare and Medicaid to cover GLP-1s for weight loss, which was projected to cost nearly $40 billion over 10 years.

The problem with chronic therapy

GLP-1 drugs work—but only if patients stay on them. Unfortunately, the reality is that adherence rates are low. Without ongoing treatment, patients are back to square one: all therapeutic benefit and financial investment evaporate. For example, a standard GLP-1 therapy costs about $550 per month, but after two years, only one in four patients remains on the drug. This means for every 100 patients starting therapy, the total cost over two years reaches $845,625. When divided by the 25 patients who are actually adherent and continue treatment, the true cost per long-term user soars to $33,825.

This inefficiency creates a massive economic dilemma. Novo Nordisk’s SELECT trial showed Wegovy can reduce cardiovascular events, but given the real-world adherence rates, the total cost to prevent just ONE cardiovascular event based on the results of the trial exceeds $2.2 million. It is no surprise, then, that payers are asking themselves if these drugs are truly worth it.

The hidden clinical risks

Beyond cost, there’s another major concern: what happens when patients stop taking GLP-1s? Weight loss from these drugs includes both fat and muscle, but when patients discontinue therapy, they often regain fat more quickly than they regain muscle. This leads to worsening body composition and a progressive loss of muscle mass over time—setting patients up for a pattern of metabolic instability. If patients repeatedly start and stop therapy over their lifetimes, they risk making their underlying health problems worse, not better.

A better way forward

The real opportunity in obesity treatment won’t come from locking patients into a lifetime of expensive medication. It lies in pioneering therapies that address the root causes of obesity and drive durable, long-term metabolic change. We need solutions that work with the body’s natural systems, to create lasting metabolic health rather than short-term weight loss. By redefining the obesity treatment landscape and offering sustainable solutions, we can transform patient outcomes and create the next generation of healthcare value.

The stakes for investors

The obesity drug boom is real, but so are the challenges. The current generation of GLP-1 drugs has proven that pharmacological weight loss is possible—but at a cost that is likely unsustainable. Investors who focus on durable, long-term solutions to obesity rather than short-term market hype will be the ones who create lasting value.

The World Obesity Federation predicts that the global economic impact of overweight and obesity will reach $4.32 trillion annually by 2035 – just 10 years away.

Obesity treatment isn’t just a financial opportunity—it’s a question of healthcare sustainability. We stand at a crossroads: lean into temporary solutions and spiraling costs, or embrace a more sustainable solution.

The companies that break the pattern of chronic therapy and deliver real solutions will define the future of this space. The $250 billion question is: Who will step up to solve it?

Harith Rajagopalan, M.D., Ph.D., is the Co-Founder and CEO of Fractyl Health