The FDA's recent approval of Wegovy (semaglutide) for reducing the risk of heart attacks and stroke in individuals with cardiovascular disease who are overweight or obese marks a significant shift in Medicare coverage policies. This decision allows Medicare Part D plans to include Wegovy in their formularies, potentially benefiting millions of beneficiaries. Wegovy, a GLP-1 agonist initially approved for type 2 diabetes, has demonstrated efficacy as an anti-obesity drug, paving the way for this expanded indication.
Impact on Medicare Beneficiaries
An estimated 3.6 million Medicare beneficiaries, representing 7% of the total Medicare population, have established cardiovascular disease and are either overweight or obese. These individuals could now be eligible for Wegovy coverage under Medicare. This figure accounts for just over a quarter (26%) of the 13.7 million Medicare beneficiaries diagnosed as being overweight or obese in 2020. However, not all eligible individuals may opt for Wegovy due to potential side effects, adverse reactions, or out-of-pocket expenses.
Cost and Coverage Considerations
Wegovy's list price is approximately $1,300 per month, potentially placing it in a specialty tier drug category under Part D plans. This could result in coinsurance costs of 25% to 33% for beneficiaries, translating to monthly expenses of $325 to $430. While the Inflation Reduction Act introduces a cap on annual out-of-pocket drug spending, these initial costs may still pose a barrier for many Medicare recipients with modest incomes. The actual out-of-pocket costs will depend on the specific Part D plan's coverage and formulary placement of Wegovy. Furthermore, Part D plans may implement prior authorization and step therapy protocols to manage costs and ensure appropriate utilization, potentially limiting access for some beneficiaries.
Medicare Spending Implications
The extent of Wegovy coverage by Part D plans, the utilization rate among eligible beneficiaries, and negotiated drug prices will collectively determine the impact on Medicare spending. If a substantial portion of the target population utilizes Wegovy, the financial implications could be significant. For instance, if 10% of the target population (360,000 people) uses Wegovy for a full year, with a net cost of $7,800 per person (assuming a 50% rebate on the list price), the additional Medicare Part D spending could reach $2.8 billion annually for this single drug.
Future Prospects and Policy Implications
Semaglutide may be considered for drug price negotiation as early as 2025, potentially lowering Medicare and out-of-pocket expenses for Wegovy, Ozempic, and Rybelsus. Expanded Medicare coverage of GLP-1s for various approved uses may also influence the cost of proposed legislation aimed at removing the statutory prohibition on Medicare coverage for anti-obesity drugs. As more GLP-1s receive FDA approval for additional indications, such as Eli Lilly's Zepbound (tirzepatide) for sleep apnea, the landscape of Medicare coverage for these medications is likely to evolve further.
