This put up was up to date on March 27, 2024 to incorporate a clarification of the medication included within the evaluation and extra details about rebates.
GLP-1 medication equivalent to Ozempic, Wegovy, and Mounjaro had been initially developed to deal with kind 2 diabetes, however their effectiveness as anti-obesity drugs has generated super pleasure and excessive demand amongst individuals who have struggled to drop extra pounds by different means. These medication are additionally being examined to deal with different situations, and the FDA has just approved a new use for Wegovy to scale back the danger of adversarial cardiovascular occasions. However the annual price of those medication within the US – upwards of $11,000 at current checklist costs, although web costs could also be decrease with rebates negotiated by pharmacy profit managers – has raised issues concerning the fiscal affect of broad protection of GLP-1 medication on Medicare, different well being insurers, and sufferers.
Medicare is prohibited under current law from overlaying medication used for weight reduction, however Medicare Half D plans can cowl GLP-1s for his or her different medically-accepted indications, together with to deal with diabetes, and now to chop cardiovascular threat primarily based on a recent memo from the Facilities for Medicare & Medicaid Companies (CMS). Whereas the potential price of authorizing Medicare protection of anti-obesity medication has introduced a barrier to enacting legislation to lift the prohibition, overlaying these medication underneath Medicare for approved makes use of has already catapulted these medication to rank among the many top-selling medication coated by Part D, Medicare’s outpatient drug profit program.
KFF’s evaluation of newly launched Medicare Part D spending data from CMS exhibits that complete gross Medicare spending on the three latest variations of those diabetes drugs which have additionally been lately accepted for weight reduction – Ozempic, Rybelsus, and Mounjaro – has skyrocketed in recent times, rising from $57 million in 2018 to $5.7 billion in 2022 (Determine 1). (Gross spending doesn’t account for rebates that lead to decrease web spending.) Ozempic (semaglutide injection) was accepted in December 2017; Rybelsus (semaglutide tablets) was accepted in September 2019; and Mounjaro (tirzepatide) was accepted in Could 2022. As weight reduction medication, semaglutide was accepted as Wegovy in 2021 and tirzepatide was accepted as Zepbound in 2023. (This evaluation doesn’t embody all GLP-1s coated by Medicare, solely these merchandise with more moderen FDA approvals which can be additionally accepted as weight reduction drugs.)
Spending on Ozempic alone elevated considerably between 2021 and 2022. Ozempic rose from a tenth place rating among the many 10 top-selling Part D drugs in 2021, with gross spending of $2.6 billion, to sixth place in 2022, with spending of $4.6 billion (Determine 2). In complete, gross spending underneath Medicare Half D was $240 billion in 2022; Ozempic accounted for two% of this quantity. That is earlier than bearing in mind rebates, which Medicare’s actuaries estimated to be 31.5% overall in 2022 however might be as excessive as 69% for Ozempic, in accordance with one estimate.
Given the comparatively excessive stage of gross Medicare Half D spending as of 2022 for the 2 semaglutide merchandise mixed, Ozempic and Rybelsus, it’s potential that Medicare might choose this product for drug price negotiation as early as 2025, which might be simply over seven years previous its earliest FDA approval in late 2017. (For small-molecule medication like semaglutide, no 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 willpower.) If that occurs, a negotiated Medicare value can be accessible starting in 2027. This might decrease complete Medicare spending on semaglutide merchandise, together with Ozempic, Rybelsus, and Wegovy.
The truth that overlaying GLP-1s underneath Medicare Half D for approved makes use of is already making a mark on complete Half D program spending might be an indication of even larger spending to return as Half D plans are actually in a position to cowl Wegovy for its coronary heart well being advantages, as different makes use of for GLP-1s are accepted, and as policymakers contemplate laws that may authorize Medicare to cowl weight problems medication. Competitors amongst GLP-1 medication might have a moderating impact on launch costs and result in larger rebates negotiated between producers and pharmacy profit managers. These medication provide substantial potential well being advantages, however the mixture of intense demand, new makes use of, and excessive costs for these therapies is more likely to place super strain on Medicare spending, Half D plan prices, and premiums for Half D protection.
