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New weight loss therapies could cause a significant strain on Medicare due to cost implications, a group of health experts warned in an article published in The New England Journal of Medicine on Saturday amid legislative efforts to gain coverage.
New anti-obesity therapies such as Wegovy and Saxenda from Novo Nordisk (NVO) and tirzepatide from Eli Lilly (NYSE:LLY) have shown a 15% – over 20% weight loss, signaling a clear benefit over older weight loss therapies such as Qysmia.
While some Medicaid programs and private health insurers cover weight loss therapies, the federal health insurance, Medicare, which benefits more than 60M Americans, most over 65, is prohibited from covering obesity prescriptions.
“The budgetary effects of covering anti-obesity medications under Medicare Part D are likely to be substantial,” the researchers wrote, referring to the Medicare program for prescription drugs.
With a 10% uptake, Wegovy, known as semaglutide in generic terms, could lead to ~$26.8B potential annual Part D spending compared to ~$1.3B from phentermine and topiramate (Qysmia), the researchers noted.
Additionally, they found that those amounts could make up ~18.5% to ~0.9% of the net total Medicare Part D spending of $145B in 2019, respectively, assuming a ~42% obesity prevalence in those aged 60 years and older.
Even considering Medicare claims to estimate people who are more likely to undergo weight loss treatments (21% of beneficiaries), the annual cost for Wegovy could reach $13.6B compared to $667M for phentermine and topiramate (~9.4% to ~0.5% of 2019 Part D spending).
“Depending on the types of medications used by beneficiaries and their rate of use, it’s likely that Part D premiums would increase to accommodate, spending on these products,” the researchers led by Khrysta Baig, a health policy Ph.D. student at Vanderbilt University, wrote.
The article points to legislative efforts aimed at gaining Medicare coverage for weight loss therapies with lobbying from patient advocacy groups and drug makers.
The Treat and Reduce Obesity Act which would require the Centers for Medicare & Medicaid Services (CMS) to cover obesity therapies, has been introduced and reintroduced with bipartisan support over the past ten years.
It is expected to be reintroduced in 2023, while Novo (NVO) faces soaring demand for its weight loss medications and Lilly (LLY) advances its diabetes therapy Mounjaro (tirzepatide) for a weight loss approval this year.
“A thorough understanding of the health benefits and risks associated with anti-obesity-medication use, particularly in the Medicare population, is needed to guide coverage and reimbursement decisions so that access is focused on the people most likely to benefit,” the researchers concluded.
Novo’s (NVO) Wegovy and its older obesity drug Saxenda generated $2.4B for the Danish drugmaker last year in a market expected to reach $54B globally by 2030, according to Morgan Stanley.
In addition to Novo (NVO) and Lilly (LLY), drugmakers such as Amgen (NASDAQ:AMGN), Pfizer (NYSE:PFE), Altimmune (ALT), vTv Therapeutics (VTVT), Rhythm Pharmaceuticals (RYTM), Viking Therapeutics (VKTX) are also advancing weight loss candidates.
WW International (WW) also entered the weight loss space last week with a deal to acquire Sequence, a telehealth platform focused on anti-obesity meds. Issuing a Strong Buy rating on the stock, Seeking Alpha contributor Sabra Capital Partners argued that the transaction “removes a potential existential risk to the company.”
Image and article originally from seekingalpha.com. Read the original article here.