A team of researchers, after conducting an extensive data analysis, concludes that potential Medicare Part D coverage of weight-loss drugs outside the current parameters around diabetes, could explode Medicare Part D costs overall.
The possible expansion of approval of Medicare coverage for anti-obesity drugs, including Wegovy, outside of current coverage for patients living with diabetes, could dramatically increase Medicare Part D costs, possibly doubling them under Medicare Part D; that is the conclusion that a team of researchers has reached, based on an extensive statistical analysis, according to an article published online in the “Forefront” section of Health Affairs on August. 15.
Benedic Ipoolito, a senior fellow at the American Enterprise Institute, and Joseph F. Levy, Ph.D., an assistant professor of health economics in the Bloomberg School of Public Health at Johns Hopkins University, write in “Expanding Medicare Coverage Of Anti-Obesity Medicines Could Increase Annual Spending By $3.1 Billion to $6.1 Billion,” that “The introduction of highly effective anti-obesity drugs, such as Wegovy, has prompted debate over Medicare’s prohibition on coverage of such products. In this study, we estimated the costs of allowing Medicare coverage of anti-obesity medications. Our analysis incorporated data on drug costs, real-world adherence rates, and potential changes to other health care spending. Using Medicare claims,” they write, “we also documented beneficiaries’ eligibility for nearly identical products approved for different indications. Assuming that anti-obesity drugs were covered in 2025 and that 5 percent or 10 percent of newly eligible patients were prescribed one, annual Part D costs were estimated to increase by $3.1 billion or $6.1 billion, respectively. The marginal costs of this policy could fall by as much as 62.5 percent from baseline estimates if products were approved for additional indications in coming years because these additional conditions are common among people with obesity. This would increase Medicare spending but would occur regardless of a policy change. Longer-term estimates come with significant uncertainty about utilization and price changes, but these results are consistent with this policy change likely increasing Medicare costs by the low to middle tens of billions of dollars over ten years.”
The policy implications of possible Medicare Part D coverage of Wegovy and other glucagon-like peptide-1 receptor agonists, popularly referred to as GLP-1s, are massive, given the potential costs involved. Ippolito and Levy write that, given the rapidly increasing numbers of Americans who are developing type 2 diabetes—a condition for which health insurance already broadly covers GLP-1s—the costs to the healthcare system of those medications will inevitably rise considerably over time. But Medicare approval could, as noted above, result in “increasing Medicare costs by the low to middle tens of billions of dollars over ten years.”
In the end, the article’s authors conclude, “There is significant debate about whether to allow Medicare to cover anti-obesity medications, including products such as Wegovy and Zepbound. We estimated that doing so would increase Medicare spending meaningfully in the near term. For example, if 5 percent or 10 percent of newly eligible patients were prescribed a new anti-obesity medicine, annual program costs are estimated to increase by $3.1 billion or $6.1 billion, respectively. However, we documented that a very large share of those with obesity or overweight have other diagnoses that currently, or soon could, make them eligible for one of these products, regardless of a policy change,” they note.
