A push to lift Medicare’s prohibition on coverage of weight loss drugs is picking up steam in Congress. The history of the Treat and Reduce Obesity Act, which would allow coverage of obesity medications, goes back a decade. It’s been re-introduced in every subsequent Congress. But this time around there’s fairly broad bipartisan support. Nevertheless, it faces an uphill battle given the budgetary consequences of reimbursing relatively costly medicines for potentially large numbers of Medicare beneficiaries.
The Treat and Reduce Obesity Act was reintroduced into the 117th Congress by Senators Tom Carper (D-DE) and Bill Cassidy (R-LA) in the Senate and Representatives Ron Kind (D-WI), Tom Reed (R-NY), Raul Ruiz (D-CA) and Brad Wenstrup (R-OH) in the House, respectively. This bill would expand Medicare coverage to include screening and treatment of obesity. The latter would include coverage of medications approved by the Food and Drug Administration for chronic weight management.
The new classes of obesity medications—GLP-1 and GIP/GLP-1 receptor agonists—have approved uses for diabetic patients. But they’re being prescribed for obesity both on- and off-label, depending on the drug in question. The pharmaceuticals include Saxenda (liraglutide), two semaglutide-based agents, Ozempic and Wegovy, and Zepbound (tirzepatide). Saxenda, Wegovy and Zepbound have labeled obesity indications, while Ozempic does not.
There’s certainly plenty of demand for and hype around the new wave of weight loss agents. But as noted last summer commercial insurers are often hesitant to reimburse and appear to be pulling back on coverage, according to a recent survey published by the obesity care provider Found.
When insurers restrict coverage, in payers’ lingo this can mean outright reimbursement denials. But it can also imply more subtle ways of limiting their financial exposure. These include requiring prior authorization, usually in the form of a specific diagnosis and data on the patient, such as their body mass index and the existence of co-morbidities, before dispensing and reimbursing a product. Payers could also impose step edits, which is a policy that entails a patient first having to fail on a cheaper therapy before being allowed to step up to the more expensive treatment.
Nonetheless, in the commercial sector coverage of obesity drugs is at least possible. On the other hand, in the public sector coverage is either spotty, as in Medicaid, or prohibited, as in Medicare.
Patient advocacy groups, such as the Obesity Action Coalition, but also pharmaceutical industry lobbyists seek to, in their words, “update” Medicare to include anti-obesity medications and behavior therapy treatments. They’re actively promoting the Treat and Reduce Obesity Act of 2023 that would allow such coverage under Medicare.
It goes without saying that reimbursement would result in greater use of anti-obesity medications by Medicare enrollees. According to the Congressional Budget Office, at the drugs’ current net prices, this would increase overall federal spending significantly. In turn, this could lead to the need for an increase in beneficiary premiums.
The counterargument is that in the long-term the weight loss agents could save money by reducing hospitalizations, for example, as such drugs can reduce the risk of cardiovascular events.
However, the cost saving argument is not the slam dunk that some make it out to be. For one thing, there’s the high attrition rate—people who after starting on an obesity drug decide to no longer take it—and ensuing weight rebound effect create a dilemma for payers that are contemplating whether to reimburse or not.
In addition, for insurers that do cover weight loss products, in the short term the drugs may be adding costs to the healthcare system without necessarily providing a commensurate benefit. A real-world analysis was released in July showed that total healthcare costs for those on GLP-1 drugs increased sharply compared to people who were not taking the medications.
Net prices could come down further, both through competition among products and—starting in a few years—Medicare drug price negotiation. The CBO expects Ozempic (semaglutide), currently only indicated for diabetes, to be selected for negotiation by the Secretary of Health and Human Services by 2027, which would likely lower its net price. This could yield a more favorable cost-effectiveness profile.
Should the Treat and Reduce Obesity Act pass it would not give Medicare beneficiaries a carte blanche with access to all obesity drugs. In fact, Medicare Part D plans would only have to cover two drugs per therapeutic class on their formularies. Also, it wouldn’t dictate to payers which conditions of reimbursement they’re allowed to institute, such as prior authorization and step edits, with the exception of the standard patient cost-sharing framework for the Medicare Part D (outpatient) benefit.
Besides changing the laws and regulatory stipulations regarding Medicare, the program could cover a drug such as Wegovy as a cardiovascular medication should it obtain regulatory approval as such. However, coverage would likely be strictly limited to Medicare beneficiaries who have similar clinical profiles to those in the SELECT study: The trial subjects were at very high risk for subsequent cardiovascular events with 68% having had a previous heart attack, 82% with coronary artery disease, and the remainder with prior stroke or peripheral arterial disease or a combination of these study entry criteria and a median body mass index of roughly 33.
Here, too, caution is in order as the CBO report explains when it states that to date the “best available evidence suggests that the amount of potential savings on cardiac care and other healthcare would be less than the current net federal cost of obesity drugs.”
If researchers developed methods to reliably identify cases in which the use of prescription obesity drugs would substantially lower healthcare costs in addition to improving health outcomes, then policymakers could specify that Medicare cover the drugs in only those specific instances. Such a protocol that narrowly targets an expansion of drug coverage would result in less federal spending than a broad coverage policy, though it may be difficult for payers to implement.
In sum, loosening Medicare rules on obesity drug coverage, by either passing legislation or amending regulations—even when policymakers agree with the policy goals of reducing weight and improving health outcomes—will be challenging.
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