Prevention is better than cure

Eli Lilly jumped 3% on Tuesday on news that Tirzepatide reduces the risk of developing Type 2 diabetes by 94% in obese or overweight adults. Insulet Corp, a maker of insulin delivery devices, dropped 6.9% on the same news. Tirzepatide is the active ingredient in Lilly's popular weight loss injection Zepbound and diabetes drug Mounjaro.

We were a little puzzled at the favourable share price move on this news. These drugs are used to treat diabetes, so it isn't a surprise to hear that it helps prediabetic people keep their blood sugar below diabetic levels. Being prediabetic means having blood sugar levels that are higher than normal but not high enough to be classified as Type 2 diabetes.

I suppose prevention is better than cure. If people can get their blood sugar levels down early, they can avoid progressing to full-blown diabetes, with all of its serious health complications. As the list of noteworthy health benefits of GLP-1 drugs grows, so too does pressure on health insurers to cover their cost.