A greenlight in heart disease and an endorsement by Medicare could lead to wider reimbursement for GLP-1s — an already popular, yet pricey, class of weight-loss medications. 

Three insurers reportedly have become the first to agree on initiating coverage for one of the drugs. CVS Health, Elevance Health and Kaiser Permanente said they will start covering Novo Nordisk’s Wegovy for members with heart-related conditions who are covered by a Medicare drug-benefit plan, according to a report Thursday in The Wall Street Journal.

While the insurers’ decisions exert pressure on other Medicare and private plans to follow their lead, payers aren’t likely to begin putting the treatments on formulary en masse, drug policy experts caution.

“In Medicare, it means plans have the option at least to cover them for cardiovascular risk reduction. We will see what they do,” noted Inmaculada Hernandez, a professor at the University of California, San Diego, whose research has focused on how insurers could pay for the drugs, known as GLP-1 receptor agonists.

Medicare, the federal health plan for people who are 65 years and older, already covers  GLP-1 agonists, including Novo Nordisk’s liraglutide (Victoza) and semaglutide (Ozempic), along with Ei Lilly’s dulaglutide (Trulicity) and tirzepatide (Mounjaro), only for type 2 diabetes. 

Earlier this month, the Centers for Medicare and Medicaid Services announced that, in privately administered Part D plans, the agency will allow insurance companies to permit coverage for the higher-strength version of semaglutide, sold as Wegovy, for people who are obese or overweight and have a history of cardiovascular disease. 

The guidance from CMS stipulates that these anti-obesity medications can be covered, if approved for an additional use that is considered medically accepted under federal law.

That came a week after the Food and Drug Administration approved a label expansion for Wegovy to be used as a treatment in heart disease. 

Clinical evidence of positive cardiovascular outcomes associated with Wegovy was first announced by Novo last summer and then published in the New England Journal of Medicine in December. The study showed that the drug cut cardiovascular risk by about 20% versus a placebo.

All of which has raised speculation as to when Medicare reimbursement for the popular drugs could kick in, and to what extent the floodgates may open for GLP-1 coverage among commercial payers, as well. 

“CMS said it’s OK for Part D and Medicare Advantage plans to cover, but I don’t think that means that most of them will start covering right away,” said Jeff Levin-Scherz, MD, population health leader for WTW, an employer benefits consultancy.

Small, meaningful coverage progress 

Indeed, while the CMS guidance is a meaningful first step, it will take time for changes to manifest across the insurance industry. 

For one, the Part D plans have already determined their 2024 premiums, Levin-Scherz pointed out. 

“To add a drug which is very expensive — and which a lot of people might be eligible for — it’s a challenge,” he explained.

The drugs list for between $1,100 and $1,300 per month in the U.S. That high-cost/high eligibility profile can result in a substantial net new cost to any Part D or other private health plan, potentially putting them beyond the affordability of many employers and the employees who share the cost of coverage.

For this reason, while most employers cover the treatments for type 2 diabetes, only a fraction does so for obesity. Those that do — about 38%, according to an analysis by WTW’s pharmacy economics team — are likely to cover them for the subset of those who are obese and also have a history of cardiovascular disease. 

“The question is,” asked Levin-Scherz, “what portion of those 62% will now either start to cover in general or will now start to cover specifically for this much smaller group?” 

The three insurers mentioned in the Journal report agreed to cover Wegovy for members in that smaller group, as long as they are in a Medicare plan and meet certain body-weight criteria. Elevance told the paper that it would also make coverage available to those insured by a commercial plan. The company operates multiple Blue Cross Blue Shield health plans. Kaiser Permanente is said to be initiating coverage immediately, others in coming weeks.

More insurers might be motivated to follow suit.

“The cardiovascular risk reduction indication opens the doors for Part D coverage for those that meet this indication,” noted Hernandez.

Preliminary indications are that manufacturers will offer discounts on GLP-1 drugs to plans in the commercial market. 

In late 2022, Hernandez and colleagues at the UC San Diego Skaggs School of Pharmacy and Pharmaceutical Sciences estimated a 41% rebate for Wegovy and Novo’s Saxenda, a version of liraglutide for obesity, translating into a monthly net price of $717 to $761, she noted in a LinkedIn post.

Productivity persuasion

Another potential incentive involves a jolt in workplace efficiency, as helping certain patients maintain a healthy weight sends their diabetes into remission and avoids other costly chronic conditions. 

Lowering such obesity-related complications through widespread use of the drugs in the U.S. could boost gross domestic product by 1%, Goldman Sachs recently predicted. Medicare coverage for the treatments could generate $175 billion in cost offsets in the first decade alone, per an estimate by USC’s Leonard D. Schaeffer Center for Health Policy & Economics.

“Others may be using GLP-1 coverage as a way to attract or retain top talent,” according to a white paper from Morgan Health.

Nevertheless, GLP-1s are expected to add considerable strain to healthcare budgets, and are already doing so. The Congressional Budget Office estimated this month that, at current prices, the treatments would cost the federal government more than it would save from reducing other healthcare spending, compounding the budget deficit over the next decade. 

Employers press PBMs

In the meantime, some employers have begun working with pharmacy benefit managers (PBM) to negotiate preferred pricing and purchase only the most cost-effective GLP-1 therapies, according to Morgan Health. 

Many of those health plans that cover the drugs are limiting coverage such as placing limits on duration and quantity. PBMs may use prior-authorization (PA) requirements to restrict coverage to those who have a history of cardiovascular disease rather than open coverage up to anyone with obesity, said Levin-Scherz.

There’s also emerging evidence that GLP-1s may be effective in treating a common form of liver inflammation known as metabolic dysfunction-associated steatohepatitis (MASH). Thanks to its FDA approval this month, Madrigal Pharma’s Rezdiffra became the first-in-class therapeutic for the disease and is launching at a price tag of $47,400 per year.

“If payers are generally paying $9,000 a year for GLP-1s after discounts and rebates, it’s not as bad,” said Levin-Scherz. “But with 42% of the adult population having obesity and qualifying for these drugs, it is potentially unaffordable.”

The most important factor in allowing more employers to cover these drugs, he added, would be for the cost to come down. The CBO noted in its report that semaglutide will be subject to Medicare price negotiations within the next few years, which would lower its price and that of other drugs in the class. Not to mention, generic competition for semaglutide and tirzepatide will kick in eventually.

Meanwhile, WTW says another 6% of employers are planning to provide coverage for the drugs this year. Among those that did so last year, the drugs accounted for about 10% of their monthly medical and Rx spend, or about $11 per employee.

Given many private health plans and self-insured employers take cues from Medicare regarding coverage decisions, they’re going to feel more pressure to do so. Especially as the medical community is in the midst of shifting how obesity is viewed, not as the result of poor habits but as a medical condition to be diagnosed and treated. For now, they can avoid it if they want to.

“Many of them would very much like to cover it,” concluded Levin-Scherz. “It’s just a matter of figuring out how to afford it.”

This story has been updated to reflect a report from another paper that appeared at press time.