The FDA just lately accepted a brand new use for Wegovy (semaglutide), the blockbuster anti-obesity drug, to cut back the chance of coronary heart assaults and stroke in individuals with heart problems who’re obese or overweight. Wegovy belongs to a category of medicines known as GLP-1 (glucagon-like peptide-1) agonists that had been initially accepted to deal with kind 2 diabetes however are additionally extremely efficient anti-obesity medication. The brand new FDA-approved indication for Wegovy paves the best way for Medicare protection of this drug and broader protection by different insurers. Medicare is at the moment prohibited by regulation from protecting Wegovy and different medicines when used particularly for weight problems. Nonetheless, semaglutide is roofed by Medicare as a therapy for diabetes, branded as Ozempic.
What does the FDA’s choice imply for Medicare protection of Wegovy?
The FDA’s choice opens the door to Medicare protection of Wegovy, which was first accepted by the FDA as an anti-obesity remedy. Quickly after the FDA’s approval of the brand new use for Wegovy, the Facilities for Medicare & Medicaid Providers (CMS) issued a memo indicating that Medicare Half D plans can add Wegovy to their formularies now that it has a medically-accepted indication that isn’t particularly excluded from Medicare protection. As a result of Wegovy is a self-administered injectable drug, protection might be supplied beneath Half D, Medicare’s outpatient drug profit supplied by non-public stand-alone drug plans and Medicare Benefit plans, not Half B, which covers physician-administered medication.
What number of Medicare beneficiaries might be eligible for protection of Wegovy for its new use?
The brand new use of Wegovy is focused to individuals with established heart problems – which means a previous coronary heart assault, prior stroke, or peripheral arterial illness – and both weight problems or obese. Based mostly on KFF anazlysis of Medicare knowledge from 2020, an estimated 7% of Medicare beneficiaries, or 3.6 million general, had established heart problems and weight problems or obese in 2020, and so might be eligible for Medicare protection of Wegovy for its new indication (Determine 1) (see Strategies for particulars). This quantity might be greater based mostly on extra present knowledge than had been obtainable for this evaluation. These 3.6 million beneficiaries symbolize simply over 1 / 4 (26%) of the 13.7 million Medicare beneficiaries identified as being obese or overweight in 2020. Because of this the FDA’s approval of the brand new use for Wegovy doubtlessly opens up entry to this drug for 1 in 4 individuals on Medicare with weight problems or obese.
Of those 3.6 million beneficiaries, 1.9 million additionally had diabetes (aside from Sort 1) and should have already got been eligible for Medicare protection of GLP-1s as diabetes therapies previous to the FDA’s approval of the brand new use of Wegovy.
Not all people who find themselves eligible based mostly on the brand new indication are prone to take Wegovy, nonetheless. Some may be dissuaded by the potential negative effects and opposed reactions. Out-of-pocket prices is also a barrier. Based mostly on the listing worth of $1,300 per 30 days (not together with rebates or different reductions negotiated by pharmacy profit managers), Wegovy might be lined as a specialty tier drug, the place Half D plans are allowed to cost coinsurance of 25% to 33%. As a result of coinsurance quantities are pegged to the listing worth, Medicare beneficiaries required to pay coinsurance might face month-to-month prices of $325 to $430 earlier than they attain the brand new cap on annual out-of-pocket drug spending established by the Inflation Discount Act – round $3,300 in 2024, based mostly on model medication solely, and $2,000 in 2025. However even paying $2,000 out of pocket would nonetheless be past the attain of many individuals with Medicare who dwell on modest incomes. Finally, how a lot beneficiaries pay out of pocket will rely upon Half D plan protection and formulary tier placement of Wegovy.
Additional, some individuals might have problem accessing Wegovy if Half D plans apply prior authorization and step remedy instruments to handle prices and guarantee applicable use. These components might have a dampening impact on use by Medicare beneficiaries, even among the many goal inhabitants.
When will Medicare Half D plans start protecting Wegovy?
Some Half D plans have already introduced that they’ll start protecting Wegovy this yr, though it isn’t but clear how widespread protection might be in 2024. Whereas Medicare drug plans can add new medication to their formularies throughout the yr to replicate new approvals and expanded indications, plans usually are not required to cowl each new drug that involves market. Half D plans are required to cowl not less than two medication in every class or class and all or considerably all medication in six protected lessons. Nonetheless, dealing with a comparatively excessive worth and doubtlessly massive affected person inhabitants for Wegovy, many Half D plans may be reluctant to develop protection now, since they’ll’t alter their premiums mid-year to account for greater prices related to use of this drug. So, broader protection in 2025 might be extra doubtless.
How would possibly expanded protection of Wegovy have an effect on Medicare spending?
The impression on Medicare spending related to expanded protection of Wegovy will rely partially on what number of Half D plans add protection for it and the extent to which plans apply restrictions on use like prior authorization; how many individuals who qualify to take the drug use it; and negotiated costs paid by plans. For instance, if plans obtain a 50% rebate on the listing worth of $1,300 per 30 days (or $15,600 per yr), that would imply annual internet prices per individual round $7,800. If 10% of the goal inhabitants (an estimated 360,000 individuals) makes use of Wegovy for a full yr, that may quantity to further internet Medicare Half D spending of $2.8 billion for one yr for this one drug alone.
It’s doable that Medicare might choose semaglutide for drug worth negotiation as early as 2025, based mostly on the earliest FDA approval of Ozempic in late 2017. For small-molecule medication like semaglutide, not less than seven years should have handed from its FDA approval date to be eligible for choice, and for medication with a number of FDA approvals, CMS will use the earliest approval date to make this dedication. If semaglutide is chosen for negotiation subsequent yr, a negotiated worth could be obtainable starting in 2027. This might assist to decrease Medicare and out-of-pocket spending on semaglutide merchandise, together with Wegovy in addition to Ozempic and Rybelsus, the oral formulation accepted for kind 2 diabetes. As of 2022, gross Medicare spending on Ozempic alone positioned it sixth among the many 10 top-selling medication in Medicare Half D, with annual gross spending of $4.6 billion, based mostly on KFF evaluation. This estimate doesn’t embody rebates, which Medicare’s actuaries estimated to be 31.5% general in 2022 however might be as excessive as 69% for Ozempic, in line with one estimate.
What does this imply for Medicare protection of anti-obesity medication?
For now, use of GLP-1s particularly for weight problems continues to be excluded from Medicare protection by regulation. However the FDA’s choice alerts a turning level for broader Medicare protection of GLP-1s since Wegovy can now be used to cut back the chance of coronary heart assault and stroke by individuals with heart problems and weight problems or obese, and never solely as an anti-obesity drug. And extra pathways to Medicare protection might open up if these medication achieve FDA approval for different makes use of. For instance, Eli Lilly has simply reported scientific trial outcomes displaying the advantages of its GLP-1, Zepbound (tirzepatide), in decreasing the incidence of sleep apnea occasions amongst individuals with weight problems or obese. Lilly reportedly plans to hunt FDA approval for this use and if accepted, the drug could be the primary pharmaceutical therapy available on the market for sleep apnea.
If extra Medicare beneficiaries with weight problems or obese achieve entry to GLP-1s based mostly on different accepted makes use of for these medicines, that would scale back the price of proposed laws to carry the statutory prohibition on Medicare protection of anti-obesity medication. It’s because the Congressional Funds Workplace (CBO), Congress’s official scorekeeper for proposed laws, would incorporate the price of protection for these different makes use of into its baseline estimates for Medicare spending, which implies that the incremental value of fixing the regulation to permit Medicare protection for anti-obesity medication could be decrease than it could be with out FDA’s approval of those medication for different makes use of. Finally how broadly Medicare Half D protection of GLP-1s expands might have far-reaching results on individuals with weight problems and on Medicare spending.
Juliette Cubanski, Tricia Neuman, and Nolan Sroczynski are with KFF. Anthony Damico is an impartial marketing consultant.
This work was supported partially by Arnold Ventures. KFF maintains full editorial management over all of its coverage evaluation, polling, and journalism actions.
Strategies |
The estimate of Medicare beneficiaries who might be eligible for Medicare protection of Wegovy for heart problems is predicated on individual-level claims and encounter knowledge for beneficiaries in conventional Medicare and Medicare Benefit from the Power Circumstances Knowledge Warehouse (CCW).
For beneficiaries in conventional Medicare, coding of individual-level fee-for-service (FFS) claims knowledge matched the next persistent situation flags within the 2020 Medicare Beneficiary Abstract File 30 CCW Power Circumstances and Different Power or Probably Disabling Circumstances segments: AMI_EVER, STROKE_TIA_EVER, and OBESITY. Along with weight problems, beneficiaries had been coded with obese if the next ICD-10 codes had been recognized within the claims with the identical necessities because the CCW OBESITY flag: E66.3, Z68.25, Z68.26, Z68.27, Z68.28. Z68.29. To determine beneficiaries with peripheral arterial illness (PAD), we used ICD-9 prognosis codes for PAD recognized by both Hirsh et al (August 2008) or Jaff et al (July 2010) of their analyses of peripheral arterial illness amongst Medicare beneficiaries; these research are two of three references cited by CCW within the Different Power Circumstances Algorithms Reference Listing for peripheral vascular illness. We used the ICD10Data web site to transform the ICD-9 codes used within the Hirsch and Jaff research to corresponding ICD-10 codes for our evaluation based mostly on the 2020 knowledge (ICD-9 codes had been changed by ICD-10 codes in 2015). Beneficiaries who had been coded with weight problems or obese and both a previous coronary heart assault (AMI_EVER), prior stroke (STROKE_TIA_EVER), or peripheral arterial illness had been coded as being eligible for the brand new use of Wegovy. Amongst this group, beneficiaries who had been flagged as having diabetes (not together with Sort 1 Diabetes Mellitus) based mostly on ICD-10 codes and utilizing the identical necessities because the CCW DIABETES flag, had been recognized as being eligible for GLP-1s accepted to be used as diabetes therapies. For Medicare Benefit enrollees, the ICD-10 codes for the CCW-developed algorithms for AMI, stroke, weight problems, and diabetes (not together with Sort 1), plus ICD-10 codes specified above for obese and peripheral arterial illness, had been used to determine whether or not enrollees had been eligible for the brand new use of Wegovy, based mostly on 2020 encounter knowledge and using a within-year lookback interval for all circumstances (reasonably than ever, or in some circumstances a 2-year lookback that’s used for conventional Medicare enrollees). Earlier years of knowledge to allow an extended lookback interval weren’t obtainable for this evaluation. Among the many components contributing to imprecision within the general estimate:
It’s not doable to measure the diploma of uncertainty related to these various factors. |