Insurance companies will pay for weight-loss drugs for members

CNBC’s Jim Cramer on Monday emphasized his belief that GLP-1 drugs primarily used to treat diabetes and obesity and the companies that make them, like Eli Lilly and Novo Nordisk, will be very valuable.

“At the end of the day, the use cases are tested. And for millions of people, it’ll be cheaper for the insurance companies to shell out for the new weight-loss drugs than to let their morbidly obese members just get heart disease,” he said.

Cramer called these drugs “revolutionary,” citing new data from Novo Nordisk suggesting its drug Wegovy cut the risk of serious cardiovascular complications in patients with obesity and heart disease by 20%.

Some analysts expressed concerns that these findings wouldn’t convince insurance companies to pay for the drugs, but Cramer argued there are many patient groups who could benefit from these medicines that insurers might be eager to cover in order to prevent future illness.

For example, type two diabetes can put patients at risk for other health issues, so insurance companies would want to pay for the drugs in order to prevent further complications, he said. Similarly, those with obesity and treatment-resistant high blood pressure are at higher risk for heart disease, making them primary candidates for the drugs. Cramer also noted there are more uses for these drugs that are just starting to be explored, like helping to treat alcoholism, which can lead to many different health problems.

“So today’s a day when the junk food purveyors, the anti-diabetes devices and the alcohol stocks were able to run, because the analysts said not to fear this new class of drugs,” he said. “I say let them run, they’re way too knocked down. But once these miracle drugs are mass-produced, and especially once they come in pill form, I think Eli Lilly and Novo Nordisk will be much higher than they are today.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Eli Lilly.