This New Zepbound Study Could Be Great News for Eli Lilly Investors

Eli Lilly (NYSE:LLY) has performed well in recent years thanks to its strong position in the GLP-1 market. However, it has encountered some obstacles, one of which is spotty (at best) insurance coverage for Zepbound, its GLP-1 weight-loss medication. The drug's out-of-pocket monthly price is high, and the fact that a significant portion of patients can't rely on insurance to cover the cost has arguably limited its potential.

But what if Eli Lilly could make progress in expanding insurance coverage for Zepbound? The company recently released results from a real-world study that could help it make its case before third-party payers. Here's what investors need to know.

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Does Zepbound help reduce healthcare costs?

Health insurance companies are more likely to cover treatments when there is evidence that they save healthcare costs. The logic is straightforward. If a drug costs $1,000 per patient annually, but the data show that those who take it incur $4,000 less in medical costs, insurers may actually save money by picking up the tab for the medicine.

That brings us to a recent study conducted among patients who were taking Zepbound for weight management. It enrolled patients over 55 years of age who met the criteria for Zepbound (i.e., a BMI above 30 or above 27 with at least one weight-related comorbidity).

The study found that, compared to similar patients in the same age group who were not on the weight-loss therapy, those on Zepbound incurred up to 15% lower healthcare costs six months into the study. After a year, the difference was up to 38% lower for patients on Zepbound, who had lower rates of hospital admissions and emergency visits than their peers not taking the drug.

Based on the results of this study, insurers may want to reconsider covering Zepbound. Now, there are several caveats to keep in mind. Here's one of the most important. In estimating healthcare cost savings for patients on Zepbound, the study did not include the drug's costs. Still, it's an additional data point that could move the needle in Eli Lilly's favor as it continues to try to expand insurance coverage for Zepbound. If it can achieve that goal, it could make a massive difference for the company.