Covering Novo Nordisk A/S’s new obesity drug Wegovy could strain the budget of US government insurance program Medicare, according to a new analysis in the New England Journal of Medicine.
Even if only 10% of Medicare beneficiaries with obesity take Wegovy, it could cost around $27 billion a year, or about 18.5% of Medicare net drug spending, according to the analysis.
“The cost would exceed the entire Part D budget” if all Medicare beneficiaries with obesity take the Novo drug, the co-authors wrote, referring to Medicare’s Part D prescription drug benefit. The cost would also “be greater than the total excess health care spending associated with obesity.”
New obesity drugs like Wegovy are in demand, but expensive. Wegovy costs about $1,350 per month, and other drugmakers have started to enter the lucrative market.
About 42% of Americans live with obesity, according to the US Centers for Disease Control and Prevention. Studies have found that only a small percentage of patients take obesity medication, suggesting it’s unlikely all of those eligible would seek treatment. Still, as highly effective new treatments like Wegovy come to market and their makers, including Novo, lobby the US to pay for them, a contentious political battle looms.
Eli Lilly & Co.’s type 2 diabetes drug tirzepatide, also known as Mounjaro, was shown last year to help patients lose about 21% of their body weight, or about 50 pounds. The demand for these drugs has also led to shortages of similar diabetes drugs, including Novo’s Ozempic. Mounjaro and Ozempic are currently approved to only treat diabetes.
Medicare, which provides government-paid health insurance to Americans age 65 and older, doesn’t cover obesity drugs for the nearly 50 million Americans who participate in the Part D program. A proposed bill, the Treat and Reduce Obesity Act, would change that, but activists have lobbied for it for many years without success. That may change as pharmaceutical companies enter the space and seek to build a larger market for their products.
The ultimate effect depends on whether Medicare beneficiaries use cheaper or costlier drugs, and how much. “It’s likely that Part D premiums would increase to accommodate spending on these products,” wrote the authors, who work for Vanderbilt University’s medical school and the University of Chicago. “To the extent that other payers follow Medicare’s lead, such costs could be felt throughout the U.S. health care system.”
Novo Nordisk did not immediately respond to a request for comment.
