The Economics of Overweight and Obesity - The High Cost Of Losing Weight

The AOA estimates that at any given moment approximately 40 percent of women and 25 percent of men are trying to lose weight, and more than forty-five million Americans are dieting. In 2003 Americans spent about $40 billion to lose weight, and a report conducted by a market research firm that has tracked the weight-loss products and services market since 1989 forecasts that a 5.6 percent annual growth in the U.S. weight-loss industry will produce a staggering $48.8 billion industry in 2006 (U.S. Weight Loss & Diet Control Market, 7th edition, [Tampa, FL: Marketdata Enterprises, 2002]).

Marketdata reported that diet soft drinks dominated in terms of sales, generating $14.86 billion in 2003, and health clubs ranked second, with $13.52 billion in 2002 sales, up $1 billion from 2001. The most rapid growth occurred in do-it-yourself, over-the-counter diet aids, which are less costly alternatives to medically supervised weight-loss and commercial programs. Commercial weight-loss centers, medically supervised weight-loss programs, diet books, cassette tapes, and exercise videos compete for consumer dollars with Web-based diet and nutrition services, low-calorie and low-carbohydrate food products, and meal replacements, as well as over-the-counter appetite suppressants, and prescription diet drugs.

Another study, Weight Loss Market: Products, Services, Foods and Beverages (Norwalk, CT: Business Communications Company, Inc., 2003), described the total U.S. market for weight-loss products and services as $84.73 billion in 2002, and forecast growth to $157.64 billion in 2007. Like the Marketdata report, this study confirmed the preeminence of the low-calorie food and beverage market, and predicted increasing use and greater acceptance of artificial sweeteners in non-carbonated beverages, including refreshment, sports, and energy products. Supplements such as coenzyme Q10 (an antioxidant), the fat-burning amino acid carnitine, and the mineral chromium (believed to aid glucose tolerance) were named the third largest product/service segment, after low-calorie foods and low-calorie beverages.

There is no question that the array of low-calorie, lowfat, and low-carbohydrate food products and dietary supplements to promote weight loss is expanding. Further, many of the most popular diet regimens promote their own high-priced brands and formulations. In "The Atkins Low Evidence Revolution" (Nutrition Action Newsletter, vol. 31, no. 1, January–February 2004), David Schardt reported that Atkins dieters pay a hefty price for Atkins-brand foods—a 12-ounce box of pasta cost $5.99, four cups of instant soup cost $12, and fifteen brownies cost $32. Atkins Nutritionals also sells frozen dinners, snack bars, muffin mixes, ice cream, and dietary supplements. Schardt observed that even Dr. Phil McGraw, the therapist turned talk-show host and relatively recent entrant to the weight-loss market, is promoting his own line of nutrition shakes, bars, and weight management supplements. Dr. Phil offers two different supplement formulations, designed for either apple-or pear-shaped body types, that involve taking a basic regimen of twelve pills containing twenty-three vitamins and minerals, carnitine, and a variety of herbs. The basic regimen costs $60 dollars for a one-month supply, and Dr. Phil recommends taking an additional regimen of ten pills to intensify weight loss, which cost an additional $60 for a one-month supply. Schardt observed that scientific evidence supporting the claims that these supplements enhance weight loss is scanty and that consumers wishing to supplement their diets with vitamins and minerals could easily do so by consuming far fewer pills, at a fraction of the price of these brand name products.

The Business Communications Company study also anticipated continued growth of weight-loss centers where the AOA estimates as much as $2 billion is spent each year, and predicted growth of the Internet-based weight-loss programs. Still, Weight Watchers, one of the acknowledged market leaders in the weight-loss program market sector (with U.S. membership of about nine million people in 2004), suffered a slight drop (2.4 percent) in attendance in 2003 at its North American meetings. Meeting fees accounted for 65 percent of revenues, and sales of books and products generated 35 percent of revenues that totaled $809.6 million in 2002. The stock of the company, which went public in 2001, responded by dropping nearly 20 percent from a December 2002 high of $48.37 per share. Industry observers attributed the declining attendance to the recent resurgence of enthusiasm for such low-carbohydrate diets as the Atkins and South Beach regimens. Many believe, however, that the popularity of low-carbohydrate diets may have peaked and that Weight Watchers' tried-and-true formula of portion control, healthy diet, and exercise will continue to attract persons seeking to lose weight, and the company will prosper financially. Journalist Eric Wahlgren, in "The Skinny on Weight Watchers" (BusinessWeek Online, November 17, 2003), found financial analysts optimistic about Weight Watchers' prospects. In the article, Kathleen Heaney, an analyst with the Maxim Group in New York, asserted that consumers "typically end up at Weight Watchers after several other diet attempts have failed" and asserted that if anything, Weight Watchers' potential market in the United States has been drastically underestimated—its potential is about 100 million clients.

Although the greatest proportion of outlays for weight loss are for food products and commercial weight-loss programs, in "Screening and Interventions for Obesity in Adults: Summary of the Evidence for the U.S. Preventive Services Task Force" (Annals of Internal Medicine, vol. 139, no. 11, December 2003), Kathleen McTigue and her colleagues observed that medical and behavioral treatment options for obesity involve considerable cost. "Intensive counseling programs require a large amount of time and a substantial staffing commitment. Based on average wholesale price, one-year supplies of orlistat (brand name Xenical, 120 mg three times daily) and sibutramine (brand name Meridia, 15 mg daily) cost $1,445.40 and $1,464.78 respectively." It is important to note that consumers generally purchase prescription drugs at retail rather than wholesale prices, so their costs are considerably higher than those reported by McTigue and her colleagues.

According to the National Institute of Diabetes and Digestive and Kidney Diseases of the NIH, gastrointestinal surgery costs about $15,000, and the availability of medical insurance coverage for these surgical procedures varies by state and health insurance provider. Surgical costs reflect both the fees associated with the invasive procedure and the long-term follow-up that patients who have undergone the surgery require. Since the surgical treatment of obesity is a relatively recent phenomenon, research has not yet determined whether its costs are offset by a reduction in future utilization of health-care services and a resultant reduction in health-care costs.