A new microsimulation model projects that Medicare coverage of obesity medications could increase federal healthcare expenditures by $47.7 billion over the next decade, raising significant questions about the fiscal implications of expanding drug benefits for weight management.
The study, published in JAMA Health Forum and led by Dr. David D. Kim, assistant professor of medicine and public health sciences at the University of Chicago, analyzed potential costs if Medicare Part D were to begin covering GLP-1 receptor agonists like semaglutide (Wegovy) and tirzepatide (Zepbound).
"Our finding is that obesity drugs [would be] a pretty substantial cost, [about] $47 billion over the next 10 years," Kim told Healio. "These are important numbers, because a lot of people say that GLP-1s will save a lot of money in health care because obesity is a risk factor for many other conditions... Our paper highlighted that in some sense, GLP-1s do save money, but not enough to offset the high prices of the medication."
Modeling Medicare's Potential Obesity Drug Coverage
Researchers created their model using National Health and Nutrition Examination Survey data from 2017 to 2020, focusing on a population of approximately 30 million current or future Medicare Part D beneficiaries with overweight or obesity.
The base-case scenario assumed:
- 10% annual uptake rate over a 10-year period
- 100% of adults who initiated a drug would use it for 1 year
- 40% would adhere to therapy over 2 years
- Net annual cost of semaglutide (Wegovy) estimated at $8,412
- Net annual cost of tirzepatide (Zepbound) estimated at $6,236
- Both drugs offered at a 10% discount from annual list prices
Under these assumptions, the model projected Medicare would spend $65.9 billion on obesity medications over 10 years. While an estimated $18.2 billion would be saved from reduced obesity-related comorbidities, the net increase in Medicare spending would still reach $47.7 billion over the decade.
Sensitivity Analysis Shows Variable Cost Projections
The researchers conducted sensitivity analyses that revealed how significantly the financial projections could change based on several key variables:
- When obesity drugs were offered at an additional 30% discount and adherence dropped to 20%, ten-year medication costs fell to $17.9 billion
- With lower uptake (5%), higher adherence (60%), and standard 10% price discounts, ten-year drug costs were $43.1 billion
"Based on what we know today, [obesity drugs] have a substantial fiscal impact," Kim said. "But there are a lot of moving pieces that we don't know."
Long-Term Projections Show Growing Costs and Savings
The study also modeled longer-term financial implications, showing both increasing costs and savings over time:
| Year | Projected Drug Costs | Obesity-Related Health Savings | Net Medicare Spending |
|------|----------------------|--------------------------------|----------------------|
| 2026 | $11.3 billion | $1.0 billion | $10.2 billion |
| 2035 | $65.9 billion | $18.2 billion | $47.7 billion |
| 2045 | $148.2 billion | $44.6 billion | $103.6 billion |
| 2055 | $266.5 billion | $89.3 billion | $177.3 billion |
Policy Implications and Future Considerations
This research comes at a pivotal time, as CMS recently decided not to move forward with a previously proposed rule that would have allowed Medicare to begin covering obesity medications in 2026. However, the agency indicated it might reconsider the proposal in future rulemaking.
The findings add to growing evidence suggesting that current pricing of GLP-1 receptor agonists presents significant challenges for healthcare systems. A previous study by Kim and colleagues published in JAMA Health Forum in March found that semaglutide and tirzepatide were not cost-effective therapies at their current list prices.
"The prices need to be lower," Kim emphasized. "It will happen, whether it's through [Inflation Reduction Act] Medicare price negotiations or competition, the prices eventually will go down to the level where they provide good value."
Kim noted that semaglutide was among 15 drugs selected by CMS for the second round of Medicare Part D price negotiations, which could potentially address some of the cost concerns.
Beyond pricing considerations, researchers suggest more investigation is needed into alternative interventions or maintenance therapies that could help patients sustain weight loss achieved with GLP-1 medications but at lower ongoing costs.
As obesity rates continue to rise among older Americans and GLP-1 medications demonstrate significant clinical benefits, policymakers face complex decisions balancing access to effective treatments with fiscal responsibility and sustainability of the Medicare program.
