Medicare spending on GLP-1 drugs reached $5.7 billion in 2022

Medicare spending on GLP-1 drugs, including Ozempic, surpassed $5 billion in 2022 and is likely to continue growing as coverage expands, according to a KFF analysis.

GLP-1 drugs Ozempic, Wegovy, and Mounjaro were initially developed to treat type 2 diabetes, and the Food and Drug Administration (FDA) has approved the use of Wegovy to reduce the risk of adverse cardiovascular events. However, the drugs’ ability to work as anti-obesity medications has increased demand.

Medicare cannot cover drugs for weight loss, but Medicare Part D plans can cover GLP-1s used to treat diabetes and minimize cardiovascular risk. These coverage terms have led GLP-1s to rank in the top-selling drugs covered by Part D.

Part D started covering Ozempic (semaglutide injection) in December 2017, Rybelsus (semaglutide tablets) in September 2019, and Mounjaro (tirzepatide) in May 2022—all to treat diabetes.

KFF found that total gross spending on these three drugs increased significantly between 2018 and 2022, from $56.8 million to $5.7 billion. Gross spending does not account for rebates paid by drug manufacturers to pharmacy benefit managers.

Between 2018 and 2019, Medicare spending on Ozempic alone grew from $56.8 million to $552.4 million. In 2020, spending on Ozempic totaled $1.5 billion, while spending on Rybelsus was $73.4 million. The total gross spending in 2021 was $3.1 billion, with $2.6 billion spent on Ozempic and $454.6 million spent on Rybelsus.

By 2022, the $5.7 billion total spending breakdown included $4.6 billion spent on Ozempic, $974.9 million on Rybelsus, and $144 million on Mounjaro. In 2021, Ozempic was tenth on the list of top ten Medicare Part D drugs by total gross spending. The drug moved into sixth place in 2022.

With semaglutide products Ozempic and Rybelsus accounting for most of 2022 spending, Medicare may select the medication for drug price negotiation as early as 2025. In this scenario, a negotiated Medicare price would be available starting in 2027 and could lower total Medicare spending on Ozempic, Rybelsus, and Wegovy.

Part D program spending will likely continue to grow with the new coverage terms for Wegovy and potential additional approved uses for GLP-1 drugs. Policymakers are also considering legislation allowing Medicare to cover weight loss drugs.

While GLP-1 drugs may offer health benefits, the high demand, new uses, and substantial prices will likely increase Medicare spending, Part D plan costs, and premiums. At the same time, Medicare coverage of weight loss drugs may help reduce access disparities as Black beneficiaries experience higher rates of obesity and tend to have lower incomes compared to White beneficiaries.