Study Puts Price Tag on Medicare Coverage of GLP-1s for Obesity

If Medicare Part D covered GLP-1 drugs for obesity, rather than just Type 2 diabetes, it could increase annual spending by $3.1 billion to $6.1 billion, according to a recent Health Affairs study.

The introduction of GLP-1 medications for treatment of diabetes and obesity has reignited the debate over Medicare’s prohibition on covering weight loss medications. In June, the House Ways & Means Committee advanced legislation that would provide a limited pathway for adults 65 and older to get anti-obesity GLP-1s covered by Medicare. The bill has not yet passed the full House.

The weight loss medication market is currently dominated by Wegovy (semaglutide), which was initially approved by the FDA for Type 2 diabetes under the brand name Ozempic. Using Medicare claims data, researchers found that about 10.9 million qualifying Medicare beneficiaries with obesity would become newly eligible if Medicare allowed coverage of anti-obesity drugs immediately. If 5% or 10% of newly eligible patients were prescribed such a medication, annual Part D spending would increase by either $3.1 billion or $6.1 billion, respectively.

The marginal costs of this policy could fall by as much as 62.5% from primary estimates if GLP-1s gain additional indications in coming years, because these additional conditions are common among people with obesity. More than 77% of qualifying beneficiaries with obesity or who are overweight have another diagnosis for which these drugs are already covered or may be covered soon. In 2025, more than 12% of qualifying Medicare enrollees with obesity are projected to have cardiovascular disease. Earlier this year, Wegovy received FDA approval to treat cardiovascular disease. A KFF analysis predicted that the approval of the new indication potentially opens up access to Wegovy for one in four Medicare enrollees with obesity or who are overweight.

Data from MMIT Analytics shows that GLP-1s — Ozempic and Mounjaro (tirzepatide) — are available for almost all of Medicare enrollees for the treatment of diabetes, as of August 2024 (MMIT is the parent company of AIS Health.) Meanwhile, fewer than 3% of Medicare enrollees have plans that put Wegovy and Zepbound — GLP-1s that were approved for anti-obesity — under the preferred/preferred (prior authorization and/or step therapy) tier and covered/covered (PA/ST) tiers. (It is possible, per news reports, that a substantial amount of diabetes-coded utilization of GLP-1s is actually off-label weight loss utilization.)

As of August 2024, more than 90% of Medicare enrollees in all states except Utah have access to Ozempic with utilization management restrictions, according to MMIT Analytics. Compared to a year ago, more enrollees are required to go through prior authorization and/or step therapy. All states have very limited coverage of the weight-loss medication Wegovy. In West Virginia, North Carolina, Kentucky, North Dakota and Washington, D.C., pharmacy-benefit formularies that cover 10% to 20% of Medicare enrollees categorize the GLP-1 as “preferred” or “covered” with utilization management restrictions.

This infographic was reprinted from AIS Health’s biweekly publication Radar on Drug Benefits.

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