New GLP-1 drugs to treat diabetes and obesity can be expensive, and most payers do not cover drugs only for weight loss for their members.
Manufacturers of the headline-generating drugs are pushing for Medicare to cover the drug, and Medicaid agencies in a few states cover new weight loss drugs for beneficiaries.
GLP-1 drugs, including Ozempic, Trulicity, Victoza and Mounjaro, are used to treat Type 2 diabetes. Wegovy and Saxenda are approved for weight loss.
The FDA and CMS are discussing how to handle obesity drugs in Medicare, FDA Commissioner Robert Califf said at a conference on June 7. Legislation to provide Medicare coverage for the drugs has stalled.
Here's what to know about Medicare's and Medicaid's policies for covering weight loss drugs, and how experts consider their costs and benefits.
1. Medicaid policies are a patchwork
Medicaid's approaches to covering weight loss drugs vary widely from state to state. A report from Bloomberg found 10 states offer broad coverage of weight loss drugs, and six states offer limited coverage of weight loss treatments.
Kate McEvoy, executive director of the National Association of Medicaid Directors, told Becker's a number of Medicaid programs cover a range of treatments for obesity, including pharmaceutical options.
"I think the central question for Medicaid is: Is this something of need for Medicaid members? That is definitely the case for interventions to help people address obesity, because of the high incidence of obesity and its relationship to chronic conditions," Ms. McEvoy said.
Blue Cross Complete of Michigan, a Medicaid managed care plan, told Becker's it covers diabetes and anti-obesity weight loss medications listed on Michigan Department of Health & Human Services' Medicaid formulary.
"When coupling these medications with proper diet and exercise, our members have an excellent opportunity to lower their weight and realize improvements to chronic conditions they may be managing such as diabetes, hypertension and/or COPD," the company said.
2. Medicare can't cover the drugs under current law
Medicare is barred from covering weight loss drugs, including older generation drugs like phentermine and topiramate.
Drug manufacturers are lobbying Congress to provide coverage for the drugs under the program, according to The Wall Street Journal. So far, legislation to implement coverage for the costly drugs has stalled.
3. GLP-1 drugs are more effective than previous generations — but more costly
GLP-1 drugs come with a high price tag, costing patients upwards of $10,000 a year without insurance coverage.
A study published in the New England Journal of Medicine in March found if 10 percent of people with obesity covered by Medicare were prescribed a brand-name semaglutide, the drug would cost Medicare $26.8 billion annually.
Ashley Leech, PhD, assistant professor in the department of health policy at Nashville, Tenn.-based Vanderbilt University School of Medicine, is one of the authors of the study. Dr. Leech told Becker's evidence shows the drugs are more effective than older alternatives, but not enough to justify the price.
"When we look at outcomes relative to costs, in the short and long term, the price of semaglutide simply does not align at the moment with the added benefit over previous generation anti-obesity medications," Dr. Leech said. "So unless the price significantly reduces, we're not looking at a drug that's cost effective, and it can cost Medicare quite a lot of money."
4. Semaglutide and other drugs can be a lifelong treatment
Individuals who begin taking semaglutide may need to use the drug indefinitely to prevent weight regain, according to the New England Journal of Medicine analysis.
Dr. Leech said some countries which choose to reimburse the drug will only do so for two years for each patient.
"That obviously reduces the cost, but it also reduces the benefit as well. These cost-effectiveness studies look at the long-term benefits such as cardiovascular disease outcomes, diabetes and things like that," Dr. Leech said.
Ms. McEvoy said weight loss drugs tend to not show health benefits in the short-term, which can be a challenge for Medicaid programs.
"States tend to have very short budget cycles. So trying to argue for broadening the coverage, with the hope and the promise of long-term cost savings, is a central challenge for states," she said.
5. Why all eyes are on Medicare
Private payers often look to Medicare to decide what to reimburse.
"I think it's reasonable to assume that [Medicare] Part D premiums would need to increase to accommodate the spending, and to the extent that payers follow Medicare, it could be felt across the system," Dr. Leech said.
Ms. McEvoy said state Medicaid programs often look to Medicare to set policies but do not necessarily have to follow the program's lead.
"It would be influential for states if Medicare did go ahead with all those process steps and covered the drugs," Ms. McEvoy said. "States are always looking to see what Medicare does, but it's not necessarily controlling, so states won't necessarily take up coverage of the drugs if Medicare does that."