Medicare’s decades-old exclusion of weight-loss drug coverage is coming under scrutiny amid mounting evidence that Wegovy and similar medications have health benefits that extend well beyond shedding pounds.?
With billions of dollars in federal spending and pharmaceutical-company revenues at stake, drugmakers and lawmakers are amplifying calls for Medicare to broaden access to obesity drugs. Last week, the American Medical Association, the country’s largest physician group, adopted a policy supporting broad health-insurance coverage parity for obesity treatments, saying it would urge insurers to provide coverage of approved weight-loss drugs, including GLP-1 medications like Wegovy.??
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Under a 20-year-old law, passed at a time when late 1990s diet-drug debacles were a recent memory, drugs prescribed for weight loss are not covered under Medicare’s Part D prescription-drug benefit. That means that Medicare covers Novo Nordisk’s Ozempic, which is approved for the treatment of diabetes, but not the Danish drugmaker’s Wegovy, which has the same active ingredient but is approved for the treatment of obesity.?
This fall’s rapid-fire obesity-drug developments, including new data on Wegovy’s potential to reduce the risk of heart attacks and strokes and the U.S. Food and Drug Administration’s approval of Eli Lilly’s obesity drug Zepbound, are ramping up the political pressure to expand Medicare coverage of the drugs, analysts say.?
Any change in Medicare’s coverage of medications could have big implications for the 50 million people enrolled in Part D drug plans as well as for Wall Street’s forecasts for obesity-drug market growth. Expanded Medicare coverage would also likely spur more coverage in commercial health plans, analysts say.?
A bill that would allow Medicare to cover weight-loss drugs, the Treat and Reduce Obesity Act, has won some bipartisan support but still faces roadblocks as Congress deals with other must-pass legislation this year–and it’s not likely to be at the top of the to-do list in the election year ahead, policy analysts say.?
Kim Monk, partner at policy research firm Capital Alpha Partners, sees the bill as the most likely path to expand Medicare coverage of the drugs. But right now, she said, “the Hill is preoccupied with its challenge of keeping the lights on.” And down the road, “Medicare’s got a looming solvency issue,” Monk said. “Congress needs to deal with that, and it’s going to be tough to do anything that significantly expands Medicare spending without thinking or talking about what they’re doing on the solvency front.”?
The Congressional Budget Office hasn’t yet produced an estimate of the bill’s budget impact. But in an October blog post, the agency said that Medicare coverage of the weight-loss drugs at their current prices, after factoring in rebates and discounts, would increase overall federal spending. The CBO called for more research on factors affecting the drugs’ use and their long-term impact on patients’ use of other medical services.?
Based on the U.S. Centers for Disease Control and Prevention’s estimate that 41.5% of U.S. adults age 60 and older have obesity, and assuming just 10% of the eligible Medicare beneficiaries were treated, Medicare could spend about $26.8 billion a year on Wegovy, according to a study published earlier this year in the New England Journal of Medicine.??
However, some researchers say that expanding Medicare coverage wouldn’t necessarily be a financial catastrophe for the program, as the treatment could help offset other health spending. Reducing obesity rates would also reduce heart disease and diabetes, and Medicare coverage of weight-loss drugs could save the program up to $245 billion in the first 10 years, according to an analysis earlier this year by the University of Southern California’s Schaeffer Center for Health Policy and Economics. Most of the savings would come from lower hospital inpatient care and skilled nursing care, the researchers found.?
Now, some industry players are promoting the idea that federal regulators can expand Medicare coverage of the new obesity drugs even without Congressional action. Pfizer Inc.
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Part of the issue, the report said, is that the regulator characterizes obesity almost exclusively in terms of weight and considers the new anti-obesity medications as simply weight-loss drugs–disregarding obesity’s many metabolic complications, like high blood pressure and heart disease.?
In a statement to MarketWatch, a CMS spokesperson did not address questions about its characterization of obesity and whether it might revise its interpretation of the law. Plan sponsors can provide weight-loss drug coverage as an extra benefit in enhanced alternative Part D plans, the CMS spokesperson said. In practice, that benefit is not widely offered, experts say. Medicare also offers dietary assessments and behavioral therapy to promote weight loss through diet and exercise under Part B, which covers doctor visits and other outpatient care, the spokesperson said.?
CMS may have the regulatory flexibility to modify the Part D weight-loss drug coverage exclusion, but given how that change could impact Medicare’s financial status, “that would be a very tough road for them,” Monk said.?
But if CMS were to provide more coverage flexibility through regulatory action, that could also pave the way for legislative change down the road, said Michael Kolber, partner at Manatt Health and co-author of the report, because it would make further coverage expansion by Congress less costly.?
At least one other key federal agency is already rethinking its approach to weight-loss drugs: the FDA. By the end of this year, the agency plans to issue revised guidance on developing drugs for chronic weight management–guidance that was last updated in 2007. “Obesity is a very important public health concern, and there has been a great deal of new information about this disease, its complications, and its treatment since the last guidance was published,” the FDA said in a statement to MarketWatch. The FDA is revising the guidance, the agency said, “to ensure that it reflects current thinking on drug development in this important area.”?
Updated FDA guidance, the Manatt report said, could help demonstrate to CMS that the latest generation of anti-obesity medications is far more than “weight loss” drugs.?
“The clinical community recognizes obesity as a disease, and CMS and FDA are somewhat outliers in how they treat this therapeutic area,” Kolber said. “When you conceptualize obesity as a disease with a lot of causes and consequences, it makes sense to say these drugs are treating that disease and are not agents solely for weight loss,” he said.?
Some drugmakers are also pushing ahead with research that could ultimately expand weight-loss drugs’ labels for treatment of other conditions–potentially opening a route around Medicare coverage restrictions. Lilly is investigating tirzepatide, the active ingredient in Zepbound and Mounjaro, in cardiovascular disease, obstructive sleep apnea, and other conditions. But “it is too soon to comment on any additional reimbursement prospects,” Lilly said in a statement to MarketWatch.?
Novo Nordisk said in a statement to MarketWatch that the company is “continuing to evaluate Part D coverage options in the cardiovascular therapeutic area,” pointing to its recently released Wegovy cardiovascular outcomes data as an important development for patients with serious chronic disease.?
