Part D GLP-1 Spend Soars as CMS Makes Key Coverage Decision

Medicare is spending billions on GLP-1s, the groundbreaking diabetes drugs that are now seeing skyrocketing demand for their ability to help patients lose weight. While Medicare Part D plans are prohibited from covering weight loss therapies, a new FDA decision for Novo Nordisk’s Wegovy (semaglutide) could reshape the coverage landscape for some GLP-1s — and drive Part D spending even higher.

A March 22 analysis from KFF found that Part D spending on Novo’s Ozempic (semaglutide) alone reached $4.6 billion in 2022, a 77% increase from the prior year and a 207% increase from 2020. (Novo brands its injectable semaglutide as Ozempic for the treatment of Type 2 diabetes and as Wegovy for weight loss.) KFF found that Part D spending on GLP-1s has grown exponentially every year since 2018. Eli Lilly’s Trulicity (dulaglutide), an older GLP-1 that hit the market in 2014, saw the second-highest gross Part D spending among all therapies in 2022 at $6.2 billion. Ozempic, meanwhile, sat at No. 6. KFF speculated that both Ozempic and Novo’s oral semaglutide Rybelsus could be selected for Medicare drug price negotiation as early as 2025.

Data from MMIT Analytics shows that many GLP-1s are readily available to seniors for the treatment of diabetes — but not weight loss. (MMIT is the parent company of AIS Health.) The Medicare Modernization Act of 2003, which established the Medicare Part D program, prohibits Part D plans from covering weight loss therapies, designating them as cosmetic treatments. But some Medicare beneficiaries will have a new pathway to GLP-1 coverage due to a key FDA decision. The agency on March 8 expanded Wegovy’s label for use in obese or overweight patients with cardiovascular disease who are at risk of cardiovascular death, heart attack and stroke.

CMS responded by issuing new guidance on March 21 that gave Part D plans the go-ahead to cover GLP-1s for cardiovascular indications. It’s unclear how many actually will, however, as the guidance was not a mandate. Before CMS released its guidance, some equities analysts speculated that any Part D coverage would be limited and heavily restricted. “Even if CMS decides to cover Wegovy for CVD [cardiovascular disease], Part D plans will subject it to utilization management processes that may limit access,” Max Reale, an analyst at Compass Point Research & Trading, LLC, wrote to investors on March 13. Still, the new indication provides a major opportunity. “With only 25% of the Medicare population presenting with Type 2 diabetes, but over 40% of the Medicare population presenting with at least one heart condition,” Reale wrote. “The secondary indication opportunity for Wegovy could generate millions in additional annual script volumes.”

So far, CVS Health Corp., Elevance Health, Inc. and Kaiser Permanente have announced their Part D plans will cover Wegovy for its newly approved use, AIS’s Health Plan Weekly reported March 29.

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