Semaglutide Coverage For Weight Loss Could Cost Medicare Billions: Study

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Dive Brief:

• An expensive drug for weight loss could become one of Medicare’s costliest medications, even if the majority of patients are ineligible for coverage, according to a study published on Monday in the Annals of Internal Medicine.
• The analysis found 3.6 million people are highly likely to be eligible for semaglutide like Wegovy, a GLP-1 that’s effective at treating obesity. More liberal definitions of eligibility could increase that number to 15.2 million patients.
• If all newly eligible patients received semaglutide, spending in Medicare’s Part D prescription drug benefit could increase by $34 billion to $145 billion each year, according to the study. Even if the government narrowly defined eligibility, federal spending on the medicine could still exceed $10 billion annually.

Dive Insight: 

GLP-1s, or glucagon-like peptide-1 medications, have shown promise at treating obesity, a condition that affects a large swath of Americans and contributes to worse health outcomes. But the drugs are expensive too, and patients need to continuously take the medications for them to stay effective — racking up significant costs.

Employers, who provide health insurance coverage for the majority of non-elderly Americans, have already been sounding the alarm over the drug’s contribution to rising healthcare expenses. 

A report published last week by the Business Group on Health estimates large employers are preparing for a 7.8% spike in healthcare costs next year, largely due to increased spending on pharmaceuticals like GLP-1s.

Meanwhile, Medicare spending on GLP-1 drugs has already accelerated. Gross spending on the medications rose from $57 million in 2018 to $5.7 billion in 2022, even though the program only covered three GLP-1 medications for diabetes at that time, according to an analysis by health policy research firm KFF. 

But now more Medicare patients may be able to access semaglutide for weight loss. This spring, the CMS said it would cover the costs of Novo Nordisk’s Wegovy for some people with a history of heart disease. 

The new research aims to estimate how much covering the drug could cost Medicare, depending on how the program defines patients with established cardiovascular disease. 

While more than 14% of Medicare-eligible adults would be highly likely to be covered for semaglutide, more liberal definitions of established cardiovascular disease could pump that proportion up to nearly 61%, according to the study. 

Still, access to the drug could be impacted by other factors, like out-of-pocket costs, drug shortages, utilization management strategies and formulary placement, the researchers wrote. For example, if the medication is put on a specialty tier, Medicare Part D drug plans could charge 25% to 33% of the medication’s retail cost. 

But even with low usage rates, the medication could potentially become one of the largest drivers of Medicare spending without near-term budget controls, according to the study.

Only one in seven Medicare beneficiaries with elevated BMIs are likely eligible for semaglutide if established cardiovascular disease is narrowly defined, researchers found. Still, costs to Medicare could still exceed $10 billion each year.

“In this conservative coverage scenario, that means most beneficiaries with elevated BMI and cardiovascular risk would remain ineligible for semaglutide, yet the medication could still potentially become one of the costliest drugs to Medicare,” lead author Alexander Chaitoff said in a statement.