The FDA’s recent approval of Wegovy (semaglutide) for reducing the risk of heart attacks and stroke in overweight or obese individuals with cardiovascular disease marks a significant milestone. This groundbreaking decision not only enhances the therapeutic landscape for patients but also holds implications for Medicare coverage and healthcare spending.

With the FDA’s green light, Wegovy’s eligibility for Medicare coverage takes a monumental leap forward. Formerly prohibited from Medicare coverage when prescribed specifically for obesity, Wegovy’s new indication broadens its accessibility to millions of beneficiaries. The Centers for Medicare & Medicaid Services (CMS) swiftly responded to the FDA’s decision, signaling that Medicare Part D plans can incorporate Wegovy into their formularies. However, coverage will fall under Part D, catering to self-administered injectable drugs, rather than Part B, which covers physician-administered treatments.

Potential Reach and Impact of Wegovy’s

The expanded use of Wegovy has the potential to benefit a sizable population within Medicare. Based on 2020 data analysis by the Kaiser Family Foundation (KFF), an estimated 3.6 million Medicare beneficiaries, constituting 7% of the total, meet the criteria for Wegovy’s new indication—established cardiovascular disease coupled with obesity or overweight. This substantial demographic represents a quarter of the 13.7 million beneficiaries diagnosed with obesity or overweight in 2020.

While the FDA’s decision brings hope, potential barriers to access loom large. Concerns regarding adverse effects, out-of-pocket expenses, and coverage restrictions might deter some eligible individuals from availing themselves of Wegovy. With a list price of $1,300 per month, out-of-pocket costs could reach $325 to $430 monthly, posing a financial strain for many beneficiaries. Moreover, coverage limitations and prior authorization requirements could further impede accessibility.

Implementation and Future Outlook

While some Part D plans have announced plans to include Wegovy in their coverage, the extent of adoption remains uncertain for 2024. Plan decisions hinge on balancing the potential patient benefits with the associated costs, considering Wegovy’s relatively high price point. Broader coverage in 2025 appears more likely, given plans’ inability to adjust premiums mid-year to offset increased expenses.

Expanded coverage of Wegovy could have significant implications for Medicare spending. Factors such as plan adoption rates, patient uptake, and negotiated prices will influence spending outcomes. Assuming a 50% rebate on the list price, net costs per person could amount to around $7,800 annually. If 10% of the target population embraces Wegovy, additional net Medicare Part D spending could soar to $2.8 billion for the year.

Shaping the Future of Anti-Obesity Drugs

The FDA’s nod to Wegovy’s expanded use signals a pivotal moment in the landscape of anti-obesity drugs and Medicare coverage. While the current law excludes coverage for obesity-specific treatments, the approval of GLP-1 agonists for broader indications opens new avenues. Future approvals for alternative uses, such as addressing sleep apnea, could further reshape Medicare’s coverage landscape and influence healthcare policy.

As the healthcare landscape evolves, the path to broader Medicare coverage for anti-obesity drugs remains dynamic. The FDA’s approval sets the stage for transformative changes, holding promise for improved patient outcomes and healthcare accessibility.