Surge in Medicare’s Ozempic & Other GLP-1s Spending
TL/DR –
GLP-1 drugs, originally developed to treat type 2 diabetes, are increasingly being used as weight loss medication and have now received FDA approval for use to reduce the risk of adverse cardiovascular events. However, their high annual cost, upwards of $11,000, has raised concerns about the financial impact on Medicare, health insurers, and patients. Medicare Part D spending data shows that the total gross spending on these medications has risen from $57 million in 2018 to $5.7 billion in 2022, and this could increase further as the drugs find additional medical applications and demand grows.
Ozempic, Wegovy, Mounjaro and Excitement in GLP-1 Anti-Obesity Drug Market
GLP-1 drugs like Ozempic, Wegovy, and Mounjaro, initially designed to treat type 2 diabetes, are now being acknowledged for their anti-obesity properties. The FDA has approved Wegovy to minimize the risk of harmful cardiovascular events. Despite their escalating demand, the high annual cost in the US raises concerns about the financial impact on Medicare and other health insurers.
Medicare Coverage and GLP-1 Drugs
Current law prevents Medicare from covering weight-loss drugs. However, Medicare Part D plans can cover GLP-1s for other medically-accepted indications as per recent guidelines from the Centers for Medicare & Medicaid Services (CMS). Despite the cost barrier, covering these drugs has made them rank among the top-selling drugs under Part D.
GLP-1 Drugs and Medicare Spending
The Medicare Part D spending data reveals a surge in total gross Medicare spending on these drugs, from $57 million in 2018 to $5.7 billion in 2022. Medicare Part D covers three GLP-1s for diabetes: Ozempic, Rybelsus, and Mounjaro.
Spending on Ozempic alone dramatically increased from 2021 to 2022. Ozempic was the 6th top-sold Part D drug in 2022 with a spending of $4.6 billion. In total, gross spending under Medicare Part D was $240 billion in 2022; Ozempic accounted for 2% of this amount.
Future Implications of Coverage of GLP-1 Drugs
Given the high spending for the semaglutide products Ozempic and Rybelsus, Medicare could select this for drug price negotiation by 2025. This could reduce Medicare spending on semaglutide products, including Ozempic, Rybelsus, and Wegovy.
Despite the fiscal pressure due to high costs, new uses, and intense demand, GLP-1 drugs under Medicare Part D are showing significant potential health benefits. As GLP-1 drugs become more accepted and legislation authorizes Medicare coverage for obesity drugs, high spending and premium costs are anticipated.
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