Should Medicare cover weight-loss drugs under Part D plans? Currently Medicare drug plans do not cover drugs for weight-loss.
Medicare coverage of obesity services and treatments currently includes obesity screening, behavioral counseling, and bariatric surgery, but not drugs that are prescribed for weight loss. The 2003 law that established the Medicare Part D prescription drug benefit explicitly prohibits Part D plans from covering drugs used for weight loss, along with some other types of drugs, including agents used for cosmetic purposes or hair growth, fertility drugs, and drugs prescribed to treat sexual or erectile dysfunction.
The drug Ozempic and others like it were developed to treat diabetes. A pleasant side-effect is that you also lose weight. As one lady put it, you forget to eat. At the Oscars, the awards show that attracts everybody famous in Hollywood, host Jimmy Kimmel walked around the stage and announced:
“Everybody looks great,”
“When I look around this room, I can’t help but wonder: Is Ozempic right for me?”
There was some scattered laughter, but it seemed like maybe the joke hit a little too close to home. After all, Ozempic has been called “the worst-kept secret in Hollywood.”
A physician on Twitter mentioned that Ozempic was a big topic among the “private school” set at a recent school event he attended. Ozempic has become the drug of choice for people with the money to afford it. He observed many of the women touting its benefits were excessively slender. He wondered how they found physicians willing to prescribe Ozempic to people who were not only not diabetic, but not even overweight.
The drugs actually work, and not just a little. Ozempic produces noticeable results without having to rely on sophisticated analytics that claim, for example, weight-loss is statistically significant at the P>0.10 level. The results can be measured in pounds lost, not just ounces or P values. Experts are even noticing that besides reducing the craving to overeat, it seemingly reduces other compulsive behaviors:
Earlier this year, she began taking semaglutide, also known as Wegovy, after being prescribed the drug for weight loss. (Colloquially, it is often referred to as Ozempic, though that is technically just the brand name for semaglutide that is marketed for diabetes treatment.) Her food thoughts quieted down. She lost weight. But most surprisingly, she walked out of Target one day and realized her cart contained only the four things she came to buy. “I’ve never done that before,” she said. The desire to shop had slipped away. The desire to drink, extinguished once, did not rush in as a replacement either. For the first time—perhaps the first time in her whole life—all of her cravings and impulses were gone. It was like a switch had flipped in her brain.
Ozempic and similar drugs are likely to become the best-selling drugs in history. By some measures, nearly three-fourths of Americans are overweight, while about four-in-ten are obese. Many of these have serious health problems due to their weight, such as Type 2 diabetes, hypertension, heart failure, while others would love to lose weight for vanity reasons. The market is huge. The problem currently is: 1) Ozempic costs nearly $20,000 a year and your health insurance won’t pay for it except under very strict circumstance; 2) Ozempic is currently an injection. Drug makers are racing to figure out how to put drugs like Ozempic in pill form.
Perhaps 50% of the Medicare population is carrying too much weight but not to the point of being clinically unhealthy. Many of those may want Ozempic but won’t want to pay for it out of pocket. Health care is weird in that regard. People will buy a Mercedes when a Chevy would do. They will buy high-end clothing from Nordstroms when clothing at Target would suffice. They will buy designer shoes and Rolex watches, while balking at paying for drugs believing their health plan should pay for those.
There are currently about 65 million Medicare beneficiaries. If, say, 25 million of them want to be on Ozempic at a net price after rebates of $1,200 a month, the costs would be $360 billion a year. The current cost of Medicare Part D drug spending is $119 billion in 2023. At that rate Ozempic would quadruple the current budget for Medicare drugs. The Kaiser Family Foundation uses far more conservative calculations for obesity among Medicare beneficiaries under various take up rates. Its calculations are worth reading.
Lifting the current law prohibition on coverage of weight-loss drugs would come at a cost to Medicare, given the high price and expected demand. Wegovy, for example, has an annual estimated net price of $13,600. According to a recent study, if 10% of Medicare beneficiaries with obesity use Wegovy, the annual cost to Medicare could be $13.6 billion (based on a 19% obesity rate from traditional Medicare diagnoses in 2021) to $26.8 billion (based on a 41.5% obesity rate from survey data for adults ages 60 and older). Higher take-up rates would mean higher Medicare spending.
Whichever figures you use the cost will be high. As more weight-loss drugs come to market competition will (likely) drive down prices. Adding downward pressure on prices is the fact that insurance doesn’t cover the drugs for weight-loss. If Medicare holds out long enough prices may become affordable.