- The rise of buzzy drugs like Ozempic has upended the weight-loss industry.
- Omada Health, a leader in managing diabetes, is grappling with how it can play a role.
- CEO Sean Duffy said Omada won’t prescribe the drugs. Instead, it’s pitching itself as a gatekeeper.
Health companies are at a crossroads in deciding how to respond to the frenzy for prescription weight-loss drugs such as Ozempic and Wegovy.
Some, like the virtual-care giant Teladoc and the diet program Weight Watchers, are rushing to capitalize on prescribing these drugs, known collectively as GLP-1 agonists. Startups have popped up left and right to offer them, too.
Omada Health surged to just north of a $1 billion valuation by offering coaching and connected devices to help more than 800,000 patients manage their diabetes and other chronic conditions. Now, as the rise of these powerful drugs upends the weight-loss industry, Omada is grappling with how it can play a role.
Instead of prescribing the drugs, Omada is pitching itself as a gatekeeper, akin to the role health insurers usually play. Companies would cover the drugs only for people who enroll in Omada’s weight-management program.
“Omada’s gonna do pretty much the exact opposite of what we’re seeing in the digital-health landscape in our competitive set and actually not write GLP scripts,” CEO Sean Duffy told Insider in an interview.
Duffy said employers are turning to Omada to make sure workers lose weight on the drugs and keep it off. Omada plans to work with people who get prescriptions for the GLP-1 drugs from doctors to help them make changes to their diet and exercise habits.
But here’s where Omada is making a big gamble: It wants to help people stop taking the drugs after a period of time. The goal is that by changing their habits, Omada can help patients keep a lot of the weight off, even though clinical-trial data shows people are likely to regain weight once they stop taking the GLP-1 drugs.
The program will launch with a large employer in July, Duffy said.
It was created at the behest of employers facing momentous costs, he said. While the drugs are considered breakthrough treatments, they’re wildly expensive at $1,000 or more a month and must be taken long term. Many people could qualify for the drugs since more than 70% of Americans have obesity or overweight.
Employers can’t afford to shoulder that cost indefinitely, he said.
“They don’t want to pay in the absence of behavior change with the worry that if they don’t do that, and then the person regains on the other side of two years, they may have paid $12,000 for 5% weight loss,” Duffy said.
Demand for weight-loss drugs is soaring, providing new opportunities for digital-health companies
Demand for powerful weight-loss drugs has surged in the past year following the Food and Drug Administration’s approval of Wegovy, developed by the pharmaceutical giant Novo Nordisk. The hugely popular Ozempic is the same drug but approved to treat diabetes, though doctors can prescribe it off-label.
Clinical data has shown that Wegovy can help users shed 15% of their weight on average, and even more powerful drugs are on the horizon.
For many people, these medications are unaffordable without insurance, and plenty of health insurers and employers refuse to pay for them. One survey from 2022 found that only about a fifth of companies cover weight-loss drugs for their workers. About 160 million people depend on employers for health coverage.
Omada’s program will allow companies to set conditions for weight-loss-drug coverage
Employers want to make sure that if they choose to pay for the drugs, they do it in a way in which they get the most value, Duffy said.
Some employers may require workers to try losing weight through Omada without medication before covering the drug. They could also require employees to lose a certain amount of weight to continue paying for the drug, though Duffy said he expects few companies to set such requirements.
People in Omada’s program would work with care teams trained in weight-loss management to change their lifestyles. Omada already provides behavioral support to about 800,000 members, many of whom use GLP-1 drugs to treat diabetes, Duffy said. Weight-loss clients would also receive community support and information about dealing with side effects.
Most employers have asked Omada to help get workers off weight-loss drugs after one year, Duffy said, though one company plans to pay for the drugs for two years.
Clinical-trial data showed that one year after users stopped taking Wegovy, they regained two-thirds of the weight they lost. But Duffy said he’s confident Omada will help people keep more weight off than patients in the study, even if they do regain some.
“We can’t afford — and I can’t find a clinical voice that thinks this is the right move — to have everyone who’s overweight in the country on a GLP for the rest of their lives,” he said.