More Americans Taking Ozempic Could Boost US Economy Growth Outlook

The more people that take GLP-1 weight-loss drugs, the faster the US economy will grow, according to estimates from Goldman Sachs.

The bank said in a note on Thursday that US GDP would grow by an extra 1% if 60 million Americans took GLP-1 drugs by 2028.

The thinking behind Goldman's forecast is that poor health burdens economic growth because it can weigh heavily on the total labor supply and hours worked through elevated frequencies of "missed days" at work, early death, and informal caregiving that takes people out of the workforce.

"Combining current losses in hours worked and labor force participation from sickness and disability, early deaths, and informal caregiving, we estimate that GDP would potentially be over 10% higher if poor health outcomes did not limit labor supply in the US," Jan Hatzius, the chief economist at Goldman Sachs, said.

So a drug that has shown great promise in improving a wide range of patient health outcomes could ultimately have a sizable impact on the broader economy.

"The main reason we see meaningful upside from healthcare innovation is that poor health imposes significant economic costs. There are several channels through which poor health weighs on economic activity that could diminish if health outcomes improve," Hatzius said.

GLP-1 drugs from Novo Nordisk and Eli Lilly and Company are sold under the brand names Ozempic and Mounjaro to treat type 2 diabetes, and under the names Wegovy and Zepbound to treat obesity.

The drugs have seen sales explode as some users have counted drastic weight loss of up to 20% of body weight, improved sleep-apnea symptoms, and a reduced number of cardiac events such as strokes and heart attacks among the benefits.

And with the US obesity rate hovering at around 40%, many Americans could take these drugs over the next few years.

Goldman Sachs estimates that anywhere from 10 million to 70 million Americans will take a GLP-1 drug by 2028, with uncertainties related to adequate supply, insurance coverage, and clinical-trial outcomes driving the wide range.

"If GLP-1 usage ultimately increases by this amount and results in lower obesity rates, we see scope for significant spillovers to the broader economy," Hatzius said.

One spillover effect would be an increase in productivity. Hatzius cited academic studies that show obese individuals are both less likely to work and less productive when they do work.

"These estimates therefore suggest that obesity-related health complications subtract over 3% from per-capita output, implying an over 1% hit to total output when combined with the over 40% incidence of obesity in the US population," Hatzius said. 

And if there are more productivity gains via improved health outcomes, the impact on GDP growth in excess of its current trend could be between 0.6% and 3.2%.

"Historically, health advancements have lowered the number of life years lost to disease and disability by 10% per decade in DM economies, and we estimate that a 10-year step forward in health progress in excess of current trends could raise the level of US GDP by 1%," Hatzius said.