Medicare spending on weight loss drugs may be lower than previously thought: Report

Medicare spending on GLP-1 medications may not be as high as some estimates predict if coverage was expanded to cover weight loss, according to an analysis from data firm Intensity. 

Federal law currently bars Medicare from paying for any drugs used for weight-loss only. Estimates of the cost of Medicare coverage for the drug vary. A study published in March 2023 estimated if 10% of people with obesity covered by Medicare were prescribed a brand-name semaglutide, this would raise Medicare expenses by $26.8 billion annually. 

Another group of researchers estimated extending coverage of the drugs to all adults with obesity would raise healthcare costs by $1 billion each year. 

Intensity analysts estimated the costs of Medicare coverage for weight-loss drugs would range from $1.9 and $2.7 billion a year, less than 2% of annual drug spending. This figure does not include the estimated cost offsets of treating obesity. Analysts estimated Medicare would save about $500 million in obesity-related costs annually. 

GLP-1 drugs, which include Ozempic, Trulicity, Victoza and Mounjaro, are approved to treat Type 2 diabetes, though these drugs are prescribed off-label for weight loss. Wegovy and Saxenda are approved for weight loss. GLP-1 drugs can cost patients upwards of $15,000 per year without insurance coverage. 

Not including GLP-1 drugs prescribed for diabetes treatment, 3.2% of Medicare beneficiaries will be prescribed weight-loss drugs in a given year, the researchers estimated. Of those, less than half will be prescribed GLP-1 drugs, while others will be prescribed cheaper, older weight-loss drugs, based on current market share, according to the report. 

Analysts estimated fewer than half of beneficiaries will adhere to weight-loss drugs over the course of a year, and that increasing competition in the space will drive down list costs over time. 

Reduced obesity-related health complications and comorbidities will save Medicare between $41 and $54 million a year, according to the report. 

Though Medicare cannot cover drugs for weight-loss, the program spent $5.7 billion for GLP-1 drugs for other indications in 2022. Wegovy, a GLP-1 drug for weight loss, was recently approved as a treatment to reduce the risk of heart attack, stroke and cardiovascular death, which could allow for broader coverage of the drug in Medicare. 

The analysis, published May 14, was supported by Currax Pharmaceuticals, which manufactures Contrave, a non-GLP-1 weight loss drug. The findings are those of the author's only and do not represent the views of Currax, according to the report.

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