Commercial Insurance Dominated Weight Loss Prescriptions, Medicare May Target Wegovy for Price Cuts, FDA Reported Eased Drug Shortages
Welcome to PoundsPunch’s Periodical of August 2024. In this month, you will find:
1 Insurance & Employer
Study Shows Commercial Insurance Covers the Majority of Weight Loss Prescriptions
A study published in JAMA Health Forum reveals a significant surge in semaglutide prescriptions between January 2021 and December 2023. The number of prescriptions filled for this medication, used for diabetes and weight loss, increased by an astonishing 442%, rising from nearly 472,000 to over 2.5 million.
Ozempic, the most popular brand of semaglutide, accounted for over 70% of these fills. The drug peaked in popularity in August 2023 before stabilizing. Another brand, Wegovy, also saw a notable increase, particularly starting in early 2023. Wegovy experienced a remarkable 1361% rise from July 2021 to December 2023, underscoring its growing appeal for weight loss.
This surge in semaglutide prescriptions was observed across all payment methods. Commercial insurance emerged as the most common way to pay for these medications, especially for Wegovy. In 2023, commercial insurance covered the majority of Wegovy fills, nearly 90%, and over 60% of Ozempic fills.
In contrast, Medicare Part D and Medicaid covered a much smaller share of these prescriptions. Specifically, Medicare accounted for just 1.2% of Wegovy fills in 2023, highlighting a significant gap in coverage for this weight-loss drug.
Interestingly, self-pay without insurance only played an ignorable small portion.
PoundsPunch Comments:
This is a very interesting study. However, the data does not tell us how many of those Ozempic prescriptions were for diabetes as intended.
We all know that the off-label use of Ozempic for weight loss purposes was, and probably still is, very high. This is especially true given that it is roughly 40% cheaper than its weight-loss approved sibling, Wegovy.
The large dominance of commercial insurance in covering these prescriptions echoes the concerns we’ve heard from employers. They worry that weight loss drugs are pushing their benefit budgets to dangerous limits.
Medicare needs to catch up—not only because it serves a large beneficiary population, representing 19% of the total U.S. population. More importantly, Medicare's drug prices are often used as a reference point by many pharmacy benefit managers (PBMs) and insurance companies during drug negotiations.
If Medicare allows, or even enforces, coverage for weight loss drugs, combined with the new negotiation powers granted by the Inflation Reduction Act, it could be a real game-changer. Since it also sets the guidelines for coverage among Medicare Advantage plans, this will mean that more people will have access to these drugs.
This could lead to reducing the exorbitant prices that are currently burdening individuals, employers, and the government.
We will see how that goes.
2 Regulatory & Government Updates
Medicare has negotiated lower prices for 10 drugs, and Wegovy, the weight-loss star, is likely next on the list
After Biden Administration signed the Inflation Reduction Act in August 2022, the long-awaited federal drug negotiation has come with the first batch of results.
Recently Center for Medicare and Medicaid (CMS) announced its first cycle of drug negotiation results. Medicare has selected 10 drugs based on total expenditures and other legal criteria. These negotiations will result in "Maximum Fair Prices" (MFPs), which are set to take effect on January 1, 2026.
Credits: CMS.gov https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf
The negotiated prices for these drugs, covering a 30-day supply, will be updated annually to reflect inflation adjustments and other necessary changes, such as the inclusion of new drug codes or the removal of drugs no longer under negotiation.
CMS has also released draft guidance for the second cycle of negotiations and has sought public input on the requirements and parameters for implementing the MFPs in 2026 and 2027. The comment period for this guidance ended on July 2, 2024, after which CMS will finalize the rules.
As a bill to expand Medicare coverage to include weight loss drugs moves forward in Congress, it is highly likely that medications like Wegovy will be considered for inclusion on the negotiation list. An analysis published earlier in 2024 by the Congressional Budget Office (CBO), the budget expert for the legislative branch of the U.S. government, has further reinforced this expectation due to the prohibitively high prices of these drugs.
PoundsPunch Comments:
Medicare has negotiated lower prices for 10 drugs, and Wegovy, the weight-loss star, is likely next on the list—if the winds in DC continue to blow in the same direction next year.
After years of debate, lobbying, or whatever else happened in DC, this negotiation has finally started. This is undoubtedly good news for Medicare beneficiaries, and for all of us—commercial payers will have more leverage and a reference price point to negotiate with Pharma.
I’m curious: if Wegovy is on the negotiation list, how much lower can the price go? Currently, PBMs can cut the price by roughly 50% to 60%, and that still leaves it over $500 a month. No kidding—it’s bankrupting US healthcare if more diagnoses are covered and more patients start to use it. Some even argue that at the current usage scale, there’s no way we can afford this drug, or others like it, as a country.
In Canada, Wegovy costs $155 per month, while in Germany, it’s just $59. How hilarious is that?
Wegovy is pretty much Ozempic under a weight-loss name to sell you at a higher price—funny, right?
And we’re in an election year. If there’s an administration change in 2025, will these negotiations continue as we hope? We’ll see.
Weight Loss Drugs Supply Shortage Eased per FDA
On August 8th, the U.S. Food and Drug Administration (FDA) has updated its shortages list, showing that two more doses of Novo Nordisk's weight-loss drug Wegovy are now available. While the smallest dose of 0.25 milligrams is still listed under limited availability, all other doses of Wegovy and Ozempic, another Novo Nordisk GLP-1 therapy, are now accessible in the United States. Both drugs, which are chemically known as semaglutide, have faced shortages since early 2022 due to high demand.
Credits: FDA.gov https://www.accessdata.fda.gov/scripts/drugshortages/dsp_ActiveIngredientDetails.cfm?AI=Semaglutide%20Injection&st=c
Novo Nordisk announced that four of the five dose strengths of Wegovy are now available in the U.S., but the company will continue to manage the distribution of the initial 0.25 mg dose. This surge in demand for GLP-1 therapies like Wegovy and Ozempic has prompted Novo Nordisk to increase its supply efforts. Similarly, Eli Lilly, a competitor with its own GLP-1 drugs Mounjaro and Zepbound, has made significant investments to boost production.
Eli Lilly's efforts have been successful, as all doses of its weight-loss drug Zepbound and diabetes drug Mounjaro were recently listed as available on the FDA's shortages list. Originally developed for diabetes, GLP-1 therapies have demonstrated the ability to reduce weight by up to 20% in clinical trials. Analysts predict that the market for these weight-loss therapies could reach $150 billion in revenue by the early 2030s.
Credits: FDA.gov https://www.accessdata.fda.gov/scripts/drugshortages/dsp_ActiveIngredientDetails.cfm?AI=Tirzepatide%20Injection&st=c
PoundsPunch Comments:
This is definitely good news from the FDA. The shortage of weight loss drugs has been haunting U.S. patients for quite a while. It wasn’t just an issue of patient access; it also opened the door to compounded drugs, which may carry significant health risks. Now, we might be able to breathe a little easier without worrying too much about that.
However, this is far from a happy ending. Why? The price, of course. The hefty price tag is undeniably the elephant in the room. Perhaps Medicare’s drug negotiation efforts, along with political pressure, can finally reveal the light at the end of this long tunnel.
On another front, promising new contenders from other pharmaceutical companies may intensify competition and drive down prices, as the free market typically does. Pfizer is advancing trials for its once-a-day oral weight loss pill, and Viking Therapeutics, a California-based small biotech, has developed a weight loss pill called VK2735, which showed positive results in Phase 2a trials and is now headed into Phase 3.
Once a Phase 3 study is completed, a pharmaceutical company can request FDA approval to market the drug.
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