New weight loss therapies can burden Medicare – experts (NYSE:NVO)
A group of health experts published in New England Journal of Medicine mid saturday Legislative efforts to gain coverage.
New anti-obesity therapies such as Wegovy and Saxenda from Novo Nordisk (NVO) and tirzepatide (NYSE: LLY) has been shown to reduce body weight by 15% – over 20%, indicating clear benefits over older weight loss treatments such as Qysmia.
While some Medicaid programs and private health insurers cover weight loss therapy, Medicare, the federal health insurance program that covers more than 60 million Americans, most of them over age 65, prohibits coverage for obesity prescriptions.
“The budgetary implications of covering anti-obesity drugs under Medicare Part D could be substantial,” the researchers wrote, referring to Medicare's prescription drug plan.
With an uptake rate of 10% for Wegovy (known in generic terms as semaglutide), the potential annual Part D spend is about $26.8B, compared with $1.3B for phentermine and topiramate (Qysmia), the researchers noted.
Additionally, they found that these amounts could account for between 18.5% and 0.9%, respectively, of the $145B net Medicare Part D spending in 2019, assuming an obesity prevalence of approximately 42% among those 60 and older.
Even accounting for those Medicare claims estimate are more likely to receive weight loss treatment (21% of beneficiaries), Wegovy's annual cost could reach $13.6B, compared to $667M for phentermine and topiramate (approximately $9.4B in 2019 % to approximately 0.5%) for Part D expenses).
“Depending on the types of drugs a beneficiary is using and their rate of use, Part D premiums may increase to accommodate spending on these products,” said the researchers, led by Khrysta Baig, Ph.D., health policy. The Vanderbilt University student wrote.
The article points to legislative efforts aimed at gaining Medicare coverage for weight loss treatments through lobbying by patient advocacy groups and drugmakers.
Over the past decade, the Cure and Reduce Obesity Act, which requires the Centers for Medicare and Medicaid Services (CMS) to cover obesity treatment, has been introduced and reintroduced with bipartisan support.
It's expected to be back on the market in 2023, while Novo (NVO) faces soaring demand for its weight-loss drug and Lilly (LLY) pushes ahead with weight-loss approval for its diabetes treatment Mounjaro (tirzepatide) this year.
The researchers concluded: “A thorough understanding of the health benefits and risks associated with anti-obesity drug use, particularly in the Medicare population, is needed to guide coverage and reimbursement decisions so that access can be focused on those most likely to benefit .” .
Novo (NVO) Wegovy and its older obesity drug Saxenda generated $2.4B in revenue for the Danish drugmaker last year, and the global market is expected to reach $54B by 2030, according to Morgan Stanley.
In addition to Novo (NVO) and Eli Lilly (LLY), drugmakers such as Amgen (Nasdaq: AMGN), Pfizer (NYSE: PFE), Altimmune (ALT), vTv Therapeutics (VTVT), Rhythm Pharmaceuticals (RYTM), Viking Therapeutics (VKTX) are also advancing weight loss candidates.
WW International (WW) also entered the weight loss space last week with a deal to acquire Sequence, a telehealth platform focused on anti-obesity drugs. Seeking Alpha contributor Sabra Capital Partners has a Strong Buy rating on the stock, saying the deal “removes potential existential risk to the company.”