Medicare Coverage of Wegovy Raises Questions Regarding the Affordability and Accessibility of Novel Medications

Duaine

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Last week, the Centers for Medicare & Medicaid Services (CMS) announced that it would allow health plans under Medicare Part D (the Medicare prescription drug benefit) to cover Wegovy and other weight-loss medications if they receive Food and Drug Administration (FDA) approval for an additional medically accepted indication.

In Wegovy’s case, the FDA recently approved an additional indication “to reduce the risk of major cardiovascular events (such as cardiovascular death, non-fatal myocardial infarction, or non-fatal strokes) in adults with established cardiovascular disease and either obesity or overweight” in combination with a reduced caloric diet and increased physical activity. As a result, Wegovy can be available for Medicare beneficiaries who have an established cardiovascular disease and are either overweight or obese. Part D coverage is still not available for weight-loss medications in beneficiaries who do not have the additional medically accepted indication.

The decision to cover this new medication under Medicare made headlines because the high cost of the drug combined with the millions of beneficiaries eligible for the treatment will substantially increase costs for Medicare and Part D plans. Medicare coverage for Wegovy also raises questions regarding the affordability and accessibility of novel medications such as this one as well as sustainability of Part D plans.
The current list price of Wegovy is $1,349.02 per month. Under the Medicare Part D benefit, enrollees pay a monthly premium ($34.70), an initial deductible ($545), and then a 25% coinsurance up until a certain level (some of these cost-sharing amounts do vary by plan.) Starting in 2025, the Inflation Reduction Act will put in place an annual out-of-pocket cap of $2,000 for drugs covered by Medicare Part D, which will be indexed annually for inflation thereafter. Leading up to that change next year, when Medicare beneficiaries reach $8,000 in total out-of-pocket spending for the year, they reach the catastrophic benefit threshold and no longer have to pay any cost-sharing. The Inflation Reduction Act also requires the secretary of the US Department of Health and Human Services to negotiate the price of a certain number of drugs per year that are covered by Medicare Part B and D, starting with 10 drugs that will have negotiated prices in place starting in 2026. Depending on the cost to Medicare and utilization by Medicare beneficiaries, Wegovy could be a candidate for drug price negotiation in the future. However, the Inflation Reduction Act mandates that a small-molecule drug must be on the market for at least seven years without any generic competition to be eligible for negotiation.

While there are some protections in place for Medicare beneficiaries under Medicare Part D against high drug costs, and even more subsidies available for low-income beneficiaries and those dually enrolled in Medicare and Medicaid, the high cost of the drug could still be a barrier to many.

SUSTAINABILITY OF PART D PLANS​


Adding such an expensive drug to a plan’s formulary may also result in an increase in each plans’ expected costs – which could drive up Part D premiums in future years. Since 2015, the Part D premium amount has been relatively stable, ranging between $32.74 and $35.63. However, in the 2023 Trustees Report – which was released before this most recent announcement – the CMS actuaries had already projected that the premiums would gradually increase over the next years, reaching $49.08 in 2032 (an increase of 41% over the 2024 premium amount). This decision could cause the CMS actuaries to revisit their premium estimates and could drive up premiums even higher. Importantly, this could also increase federal spending on Medicare Part D, as it is statutorily required that the federal government subsidize 74% of Part D spending.


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