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Weighing the Benefits: Are Payers Likely to Cover Weight Loss Drugs in 2023?

By Jacquelyn Cafasso

In 2021, Novo Nordisk’s Wegovy (semaglutide) gained FDA approval for chronic weight management in overweight or obese adults, hitting the market in June 2022 at a list price of $1,349 per 28-day supply. In clinical trials, patients achieved an astounding mean weight loss of nearly 15% after 68 weeks of treatment with Wegovy.

Excess body weight is a real problem in this country, as more than two-thirds of American adults are either overweight or have obesity. Despite efforts to diet and exercise, most people fail to lose weight and keep it off. Numerous medical conditions linked to obesity—including diabetes, heart disease, sleep apnea, high cholesterol, and chronic pain—can be improved with sustainable weight loss, potentially leading to a profound drop in healthcare costs.

Regardless of these facts, many payers refuse to cover weight loss drugs based on a perceived lack of medical necessity. In addition to Wegovy, this category includes agents like Contrave and Saxenda, approved in 2014, and Qsymia, approved in 2012.

Ever since Wegovy won FDA approval, Novo Nordisk, in partnership with the Obesity Care Advocacy Network, has been making waves in Congress in an effort to require Medicare to pay for the drug. While payers are taking notice, the status quo on access still hasn’t budged.

Overwhelming Demand for Weight Loss Treatment

Wegovy was originally developed as a diabetes treatment, for which it’s marketed under the brand name Ozempic. Demand for Ozempic skyrocketed after TikTok influencers shared their experiences of using the drug to lose weight, presumably after being prescribed the drug off-label despite not having diabetes.

As demand for semaglutide has significantly exceeded expectations, its launch has been troubled by manufacturer supply issues, which Novo Nordisk has worked hard to resolve. The prevalence of off-label use has exacerbated the supply shortage, which means some diabetics have been unable to obtain treatment.

In addition to gaining fame across social media platforms, Ozempic has even received attention from the mainstream media and celebrities, including an unofficial endorsement by Twitter CEO Elon Musk, plus a witty call-out in the opening monologue of the 2023 Oscars.

Additional competition is set to enter the market shortly. On the near horizon, Eli Lilly is planning a rolling NDA submission to the FDA for its dual GIP/GLP-1 agent tirzepatide for treating obesity, which was granted a Fast Track designation last fall. In the spring of 2022, tirzepatide was FDA-approved to treat diabetes under the brand name Mounjaro.

Need for Cardiovascular and Mortality Outcomes Data

So, what’s it going to take to move the needle on payer coverage? MMIT’s Payer Message Monitor offers some insight. Several payers explained that a shift in coverage is expected once data is released, likely in late 2023, from Wegovy’s cardiovascular outcomes trial, known as SELECT.

In a payer poll, when asked about the likelihood of covering new weight loss agents if such outcomes data proves positive, roughly 30% of panelists responded they would be “highly likely” to provide coverage. Another 30% reported they would be at least “somewhat likely” to initiate coverage if these agents show strong data from outcomes trials.

As for tirzepatide, Eli Lilly plans to complete its regulatory filing shortly after the data rollout from its SURMOUNT-2 clinical trial, which is slated for this month. The manufacturer is also currently recruiting participants for the SURMOUNT-MMO trial, which will investigate the effect of tirzepatide on the reduction of morbidity and mortality in adults living with obesity.

Additional trials aim to build a body of evidence on measures of heart failure, blood pressure, sleep apnea, and chronic kidney disease. Positive results could increase the probability that Congress passes a bill to pave the way for Medicare coverage, which could represent a sharp turning point for the rest of the payer realm.

Mitigation of Shortages to Boost Payer Confidence

Payers are no fan of supply issues, and their reaction to the role social media has played in the shortage of Ozempic has been largely negative.

One payer tells Message Monitor they are “in the midst of dealing with the Ozempic shortage fallout.” In this payer’s opinion, Novo Nordisk may have behaved “irresponsibly by not curtailing demand generated through social media.” The payer suggests that the Ozempic shortage might “even backfire on Novo” as the payer reveals they feel “more committed to focusing obesity prescribing on Mounjaro in the near future.”

However, Eli Lilly’s Mounjaro has also struggled with high demand, with the FDA first listing a shortage of Mounjaro in mid-December. The company reported they resolved the shortage just two months later.

Potential Impact of Pricing and Preferred Product Status

Just as Novo Nordisk priced Wegovy higher than Ozempic, some payers tell Message Monitor that they anticipate Eli Lilly will price tirzepatide higher than its diabetes equivalent. If Eli Lilly adopts a flat pricing strategy for tirzepatide across diabetes and obesity, however, payers may be more amenable to quicker adoption.

Once coverage for these weight loss drugs is granted, there’s no doubt that payers will implement utilization management strategies, such as prior authorizations, to drive appropriate use. However, payers may also choose a preferred product to take advantage of potential manufacturer rebates. In Message Monitor, some payers have already remarked that a choice of preferred agent could be just around the corner if tirzepatide enters the market.

National interest in obesity drugs exploded this year, partially due to social media. With new products, rich clinical pipelines, and new outcomes data on the horizon, will it finally be time for payers to agree on the benefits of covering weight loss drugs?

For more information on accessing payer and IDN opinions on market events, check out MMIT’s Message Monitor solution.

© 2024 MMIT
Jacquelyn Cafasso

Jacquelyn Cafasso

Jacquelyn Cafasso is a Market Research Manager at MMIT.

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