House Bill to Expand Medicare Weight Loss Drug Coverage, The Novo Nordisk CEO to Testify in Senate, Lilly’s Approval in China and More
Welcome to PoundsPunch's Periodical of July 2024. In this month, you will get:
House panel passes the bill to expand Medicare obesity drug coverage
Biden & Sanders calling for pharmaceuticals to lower the weight loss drug prices
Senate passed the bill to lower drug costs by reducing number of patents a manufacturer can hold
Novo Nordisk CEO will testify in front of US Senate on September 24
States are tightening their hands on compounding weight loss drugs
75% of patients stopped using weight loss drugs within two years
Eli Lilly’s weight loss drug was approved by China regulators
1 Insurance & Employer
House panel passes the bill to expand Medicare obesity drug coverage
In a landmark decision on June 27, the House Ways and Means Committee approved The Treat and Reduce Obesity Act of 2023, paving the way for Medicare to potentially cover weight loss medications. The committee vote was 36 vs 4. This bill now moves to the full House for further consideration.
For over twenty years, existing legislation has blocked Medicare from covering weight loss drugs, limiting access for countless individuals. The urgency of this matter has grown with the FDA's approval of highly effective yet costly medications like Wegovy and Zepbound, which remain out of reach for many without insurance.
This recent committee vote marks a crucial breakthrough for the bill, which has been stalled in Congress for over a decade. Despite multiple attempts to reintroduce it, this is the first time it has advanced past the committee stage.
The next step for the legislation is the full House, where its future is uncertain. Should it pass, this bill could dramatically expand access to weight loss treatments for millions of Medicare beneficiaries.
PoundsPunch Comments:
This is definitely good news for Medicare beneficiaries and nearly-65 Americans. That being said, there are several challenges before this dream comes true:
This bill has only made its baby step by passing a House Committee. While historic, it still awaits a full House vote, Senate vote, and the President's signature to become law. With the current Congress ending on January 3, 2025, and it being an election year, there's a need to hurry this process along amidst tons of other bills. Otherwise, the bill will have to restart from step one.
This bill allows Medicare Part D to cover drugs for weight loss, not requires such coverage. Given the sky-high prices of Wegovy and Zepbound, even with some negotiation power, private health insurers can still opt out of the coverage.
In the commercial insurance world, some employers, such as the federal government, require their insurers to cover weight loss drugs to secure contracts. Medicare Advantage, under which Medicare Part D operates in private insurance, deals with individual patients, where the buyer’s bargaining power is significantly lower than that of employers. Medicare Stars, a critical measure for federal reimbursement to private insurance, only includes BMI in one of the display measures through its Health Outcome Survey (HOS), meaning that whether a patient’s BMI is being managed or not is not impacting the insurer’s performance.
On the other hand, if insurers cover weight loss drugs, Medicare Part D beneficiaries will likely lose weight and improve their overall health. Guess what? This means the risk adjustment factor (RAF) score for these beneficiaries will drop as they become healthier. But here's the kicker: the higher the RAF, the more money private insurers get paid by the government. So, covering weight loss drugs could first aggravate the financial burden on insurers and second, reduce their revenue. It's a conflicting situation.
To summarize, despite the promising momentum, there's still a long way to go before weight loss drugs become widely covered for Medicare patients. The Center for Medicare & Medicaid Services (CMS), the mastermind behind Medicare policy at the federal level, needs to consider regulatory upgrades to make sure the new bill becomes a financially viable option for insurers to actually cover it.
Insurers are expanding access to weight loss surgery
As the frenzy driven by weight loss drugs swept across the country, their high cost and the tendency for patients to regain weight after stopping the medication made them a tricky choice for both patients and health insurers. Interestingly and reasonably, bariatric surgery has become a more appealing option, especially for patients with morbid obesity or type 2 diabetes, due to its cost-effectiveness and long-term effects.
According to Modern Healthcare, health insurers are increasingly willing to cover bariatric surgery, expanding access by eliminating prior authorization requirements and broadening coverage for more conditions. For instance, Blue Cross Blue Shield of Michigan removed prior authorization for bariatric surgery in September, and similar updates were made by Blue Cross and Blue Shield carriers in Massachusetts and Vermont.
"We saw, at the end of the day, that we were making people go through unnecessary hoops for bariatric surgery," said Jim Grant, CMO of Blue Cross Blue Shield of Michigan. "Why make our physicians and our members go through unnecessary hassles?" This sentiment is echoed by Geisinger Health Plan, which has also expanded its coverage to include more conditions. "If you have patients who benefit from GLP-1s but can't tolerate them, they may be great candidates for bariatric surgery," said Geisinger CMO John Bulger.
Insurers maintain that their updated bariatric surgery policies result from regular reviews, not as a reaction to new weight-loss medications. "Our policies don't prioritize bariatric surgery over GLP-1s," Grant stated. "The decision between a GLP-1 and bariatric surgery is not ours to make. That's a decision made by the patient in consultation with their physician."
PoundsPunch Comments:
Let’s cut to the chase. The major reason, if not the only, that health insurance is more willing to cover bariatric surgery versus weight loss drugs is likely financially driven. As I commented earlier in the Medicare Bill news, weight loss drug coverage presents a very challenging situation for payers. Although large insurance companies or groups of companies can negotiate better prices from Novo Nordisk or Eli Lilly, the cost remains several hundred dollars per month for at least six months, if not longer, or even for a lifetime.
More and more research and reports have shown that weight regain after stopping these drugs is a serious issue. This isn't too hard to understand, as weight loss drugs replace the patient's willpower during the weight loss process. When the medication is stopped, that void in willpower still exists in the weight loss equation, leading to weight regain. Therefore, the only feasible solution is long-term drug use, which can easily surpass the cost of bariatric surgery. Bariatric surgery typically costs around $7,500 to $30,000, depending on the type of surgery and the payer’s negotiated rate.
Studies have shown that bariatric surgery, which usually involves removing part of the stomach or small intestines, has better efficacy in reducing weight long-term. In most cases, this will be cheaper than taking Wegovy or Zepbound for two years, which would roughly equal or even exceed the cost of surgery. Of course, surgery is a much more invasive process compared to weekly self-injections with a pen.
The decision between weight loss drugs and bariatric surgery should be made solely between the patients and their doctors. However, if both options are viable and the patient does not have a preference as long as it is effective, insurance coverage becomes a key differentiator in the decision-making process.
2 Regulatory & Government Updates
Biden & Sanders calling for pharmaceuticals to lower the weight loss drug prices
On July 2, President Joe Biden and Senator Bernie Sanders have teamed up to criticize the high prices of GLP-1 medicines, produced by Novo Nordisk and Eli Lilly, in an op-ed published in USA Today. They argue that American consumers are being unfairly charged up to six times more for Novo's semaglutide brands, Ozempic and Wegovy, compared to citizens in other developed countries like Canada and Germany. They also highlighted the prohibitive cost of Lilly’s obesity treatment, Zepbound (tirzepatide), which is around $1,100 per month.
Biden and Sanders emphasize that these exorbitant costs are unacceptable, posing a significant financial burden on American consumers. They warned that widespread use of these GLP-1 treatments could potentially bankrupt the U.S. healthcare system, citing an estimated annual cost of $411 billion if half of all adults with obesity began treatment with Wegovy. They denounce this situation as neither morally nor fiscally responsible, pointing out that Novo Nordisk's $12 billion profit in 2023 was partly due to charging Americans excessively for drugs that can be produced for much less.
The op-ed also challenges the pharmaceutical industry's justification for high prices, which is often attributed to the costs of research and development and the value these innovative treatments provide. Biden and Sanders counter that fair prices for consumers and the development of innovative treatments are not mutually exclusive. They argue that the current pricing strategy represents corporate greed rather than a reasonable return on investment.
In line with their stance, Sanders, as the chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, has been investigating the high prices of Ozempic and Wegovy. He has threatened to subpoena Novo Nordisk's president, Doug Langa, to testify before the committee. In response, Novo CEO Lars Jørgensen has agreed to appear before the committee, with the hearing scheduled for early September 2024.
PoundsPunch Comments:
It's hard to argue against Biden and Sanders' call for lower drug prices. The cost disparity between the U.S. and other countries for these life-changing GLP-1 medications is staggering. It's not just about the sticker shock—it's about the broader impact on public health and the economy. Paying six times more than people in Canada or Germany for the same drug is a tough pill to swallow, especially when these medications can be manufactured for a fraction of the retail price. This kind of pricing feels less like a fair market practice and more like corporate greed taking advantage of a captive audience.
Moreover, the potential financial strain on the U.S. healthcare system is alarming. If widespread use of these treatments costs hundreds of billions annually, it's a wake-up call that current pricing strategies are unsustainable. The argument that high prices are necessary to fund innovation doesn't quite hold water when profits are soaring into the billions.
It’s entirely reasonable to expect that pharmaceutical companies can still innovate and make a healthy profit without bankrupting the consumers who need their products. Fair pricing should not be a revolutionary idea; it should be a standard practice.
Healthcare is not a luxury good but a fundamental human right. While the pharmaceutical industry operates for profit, there must be a line where unlimited profit reaping stops.
Looking ahead, there's hope on the horizon with new drugs from other companies in the pipeline and generic versions expected to hit the market in a few years. This increased competition, coupled with regulatory efforts to control prices, should help bring down the costs.
It’s a reminder that the market can and should work in favor of consumers, making these essential medications more accessible to everyone who needs them. Let's hope that both industry and policymakers will act to make this a reality sooner rather than later.
Senate passed the bill to lower drug costs by reducing number of patents a manufacturer can hold
On July 11, The Senate unanimously passed the Affordable Prescriptions for Patients Act, spearheaded by Senators John Cornyn (R-TX) and Richard Blumenthal (D-CT). This bipartisan legislation aims to lower drug prices by preventing pharmaceutical companies from abusing the patent system to block competition. Cornyn emphasized that this bill will promote competition and reduce costs without hindering innovation, urging the House to pass it promptly. Blumenthal highlighted that the measure targets Big Pharma's anti-competitive practices, ensuring that patients can afford essential medications.
The bill is supported by Senate Judiciary Committee Chairman Dick Durbin (D-IL) and Senators Ted Cruz (R-TX), Amy Klobuchar (D-MN), Chuck Grassley (R-IA), Peter Welch (D-VT), Mike Braun (R-IN), and Lisa Murkowski (R-AK). It addresses the issue of "patent thickets," where manufacturers erect numerous patents to delay the entry of lower-cost biosimilar products into the market. By limiting the number of patents a manufacturer can assert, the legislation aims to prevent these tactics and foster a more competitive marketplace.
Biosimilars, akin to generics for biologics, are crucial for reducing drug prices. In 2010, Congress created a patent dispute resolution process, known as the "patent dance," to facilitate the entry of biosimilars. However, the current lack of limits on patent assertions has allowed some companies to exploit this system. The new bill places reasonable restrictions on patent contests, deterring manufacturers from gaming the system while still encouraging innovation in biologic treatments.
Overall, the Affordable Prescriptions for Patients Act seeks to strike a balance between protecting competition and maintaining incentives for pharmaceutical innovation. By addressing anticompetitive practices like product hopping and excessive patenting, the legislation aims to ensure that drug prices become more affordable for American consumers.
PoundsPunch Comments:
The unanimous Senate approval of the Affordable Prescriptions for Patients Act is a promising step towards tackling the exorbitant costs of medications, including weight loss drugs. This bipartisan effort aims to curb the pharmaceutical industry's abuse of the patent system, which often leads to inflated drug prices. This is especially relevant as Americans struggle with high costs for essential medications like Ozempic and Wegovy.
The act addresses anti-competitive practices that delay the availability of cheaper alternatives. By limiting the number of patents a manufacturer can assert, it aims to dismantle "patent thickets" and promote competition. This is crucial for weight loss drugs, where limited competition has led to soaring prices.
However, timing is critical. With the bill now in the House and the congressional session ending this year, there's a narrow window to act. It’s imperative for the House to pass this legislation promptly to ensure it becomes law.
Balancing profit with fair pricing is essential to ensure that everyone has access to the medications they need without facing financial ruin. Let's hope the House recognizes the urgency and acts swiftly to pass this critical legislation
Novo Nordisk CEO will testify in front of US Senate on September 24
Senator Bernie Sanders (I-Vt.), Chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP), announced that Novo Nordisk CEO Lars Jørgensen will testify before the committee on September 24 at 10 a.m. ET. The hearing will address the high prices of Novo Nordisk's drugs, Ozempic and Wegovy, in the United States.
Sanders highlighted the stark price differences, noting that Americans pay $969 a month for Ozempic, compared to $155 in Canada, $122 in Denmark, and $59 in Germany. Similarly, Wegovy costs Americans $1,349 a month, while it is priced at $186 in Denmark, $140 in Germany, and $92 in the United Kingdom.
Sanders expressed his frustration with the inflated costs, emphasizing that Americans are tired of paying the highest prices globally for prescription drugs. The committee expects Jørgensen to explain why Novo Nordisk charges Americans significantly more than consumers in other countries for the same medications.
PoundsPunch Comments:
This news was mentioned earlier in this Periodical, but I think it deserves a separate slot.
Let’s see what Mr. Jørgensen will say.
States are tightening their hands on compounding weight loss drugs
The popularity and high costs of weight loss drugs like Mounjaro, Ozempic, Wegovy, and Zepbound have led some pharmacies and clinics to offer compounded versions of these medications.
Compounded drugs are created by pharmacists who reformulate active ingredients to customize them for individual patients. The active ingredients in many weight-loss drugs, semaglutide and tirzepatide, are currently in short supply, which has increased demand for compounded versions. However, this situation has posed challenges for state regulators who are struggling to keep up with the oversight of compounding pharmacies and clinics.
According to a story published by Stateline, regulations and enforcement vary by state, with some states taking stricter stances than others. For instance, Mississippi has banned the prescription of compounded medications for weight loss, while other states like Kansas and New Jersey have issued clarifications on their regulations. The FDA enforces strict safety and quality requirements for commercial drug manufacturers and registered outsourcing facilities, but many compounding pharmacies are not subject to the same level of oversight.
The rise in compounded weight-loss drugs has also led to legal actions from pharmaceutical giants like Novo Nordisk and Eli Lilly. They have filed lawsuits against medical spas, weight-loss clinics, and pharmacies for falsely marketing their compounded products as commercial medications. Ultimately, the burden falls on patients to ensure that their medications are from licensed and reputable compounders, highlighting the importance of consumer awareness in this complex regulatory landscape.
PoundsPunch Comments:
The high cost and short supply of weight loss are pushing patients to seek alternative options. While lifestyle changes are the ideal solution, we all know that it's easier said than done. Compounding pharmacies offer a tricky solution, providing customized versions of these medications at a lower cost, but this comes with regulatory and safety challenges.
The real cure lies in expanding the supply of these essential medications, fostering more competition, and ultimately bringing down prices. It's crucial for pharmaceutical companies, health insurance, and lawmakers to work together to ensure that these life-changing drugs are accessible and affordable for everyone who needs them. Only then can we address the root of the problem and provide patients with safe, effective, and reasonably priced treatments.
3 Consumer's Experience
75% of patients stopped using weight loss drugs within two years
According to an Reuters report, an analysis of U.S. pharmacy insurance claims reveals that only one in four patients prescribed Novo Nordisk’s Wegovy or Ozempic for weight loss continue taking the medications after two years. The study, conducted by Prime Therapeutics and Magellan Rx Management (a PBM, middleman between pharma and health insurance), highlights a steady decline in usage over time. Initially, 32% of patients remained on these GLP-1 receptor agonists after one year, but this number dropped to around 15% at the two-year mark. The reasons for discontinuation were not detailed, but factors likely include side effects, high out-of-pocket costs, and supply shortages.
The high cost of these medications, over $1,000 per month, and their requirement for prolonged use to achieve significant benefits have sparked debate. Novo Nordisk and Eli Lilly have struggled to meet the soaring demand for these popular treatments, which has also impacted patient adherence.
Further complicating the issue, some patients switch between different GLP-1 drugs due to shortages or changes in insurance coverage. The analysis found that 26% of patients switched medications during their therapy. Despite these challenges, the newer GLP-1 drugs have shown promising results in clinical trials, helping people lose over 15% of their body weight and offering additional health benefits, such as reducing the risk of strokes and heart attacks.
PoundsPunch Comments:
There are many factors that might contribute to these findings. The data only tracked 3,364 patients whose drugs were covered by their commercial insurance, so the number might slightly differ from the whole picture. Still, we don’t need a PhD to understand people’s behavior here: short supply, high cost (even with insurance, it’s far from a “you don’t pay a dime” situation, considering deductibles, copays, coinsurance, etc.), weekly belly injections, and side effects.
It's not surprising to see these trends. The high cost, inconvenience of injections, and potential side effects make it challenging for many patients to stick with these treatments long-term. More sustainable solutions, such as affordable oral medications and improved supply, are needed to support patients in achieving and maintaining their weight loss goals.
4 New Horizon
Eli Lilly’s weight loss drug was approved by China regulators
On May 21, 2024, the National Medical Products Administration of China (NMPA) announced on its official website that Eli Lilly's Tirzepatide has been approved for the treatment of blood sugar in adults with type 2 diabetes.
Less than two months later, on July 19, Tirzepatide received approval as a weight loss drug in China, intended for long-term weight management in adults who are obese or overweight with at least one weight-related comorbidity, when used alongside a low-calorie diet and increased physical activity.
Tirzepatide is currently the most effective weight loss drug available, consistently setting new records for weight reduction in clinical trials.
Developed by Eli Lilly, Tirzepatide is a dual GLP-1/GIP receptor agonist. It acts on both the glucose-dependent insulinotropic polypeptide (GIP) receptor and the glucagon-like peptide-1 (GLP-1) receptor, producing a synergistic effect on appetite, caloric intake, and metabolic function.
Previously, in May 2022, Tirzepatide was approved by the U.S. FDA for improving blood sugar control in adults with type 2 diabetes under the brand name Mounjaro. In November 2023, it also received FDA approval as a weight loss medication, marketed under the name Zepbound, for adults with obesity (BMI of 30 or higher) or overweight (BMI of 27 or higher with at least one weight-related comorbidity, such as hypertension, type 2 diabetes, or high cholesterol). The treatment is intended to be used in conjunction with a reduced-calorie diet and increased physical activity.
PoundsPunch Comments:
Though the recent stock market turmoil has removed Lilly from the $800 billion market cap club, investors still maintain strong confidence in the company’s growth The recent approval from China NMPA has opened up a vast market for obesity treatment. According to a 2020 study released by the State Council Information Office of China, more than 50% of Chinese adults are either obese or overweight. This widespread issue calls for effective solutions, and so far, Tirzepatide is the most potent option available.
While the pricing strategy Lilly will use in China remains uncertain, one thing is clear: they will not charge over $1,000 per month to Chinese patients, as such price would be unaffordable. China's state-run medical insurance is known for its aggressive drug price negotiations to ensure inclusion in their covered catalog, akin to a drug formulary in the U.S. In 2023, Chinese regulators successfully suppressed drug prices by over 60% on average.
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