FDA approval of Wegovy expands coverage access for Medicare beneficiaries

Following new FDA approvals for Wegovy, one in four Medicare beneficiaries with obesity may gain coverage access to the drug to reduce the risk of heart attacks and stroke, according to KFF data.

The FDA’s approval of using Wegovy to combat the risk of heart attacks and stroke in people with cardiovascular disease who are overweight or obese opened the door for increased Medicare coverage. CMS issued a memo stating that Medicare Part D plans could add Wegovy to their formularies when it is used for these reasons and not specifically for obesity.

Beneficiaries with established cardiovascular disease, including a prior heart attack, prior stroke, or peripheral arterial disease, and obesity or overweight, can access Wegovy under the new approval.

KFF estimated that 7 percent of Medicare beneficiaries (3.6 million) had established cardiovascular disease and obesity or overweight in 2020. These beneficiaries represent 26 percent of the 13.7 million beneficiaries diagnosed as being overweight or obese in 2020.

Among the 3.6 million beneficiaries, 1.9 million also had non-Type 1 diabetes and may have already been eligible for Medicare coverage of GLP-1 drugs as diabetes treatments, the brief noted.

Although the FDA’s approval expands Wegovy coverage opportunities for one in four beneficiaries with obesity, costs may still pose a barrier to the drug. The drug has a list price of $1,300 per month and may be covered as a specialty tier drug, meaning Part D plans can charge coinsurance of 25 percent to 33 percent. Beneficiaries may face monthly costs of $325 to $430 before reaching the cap on annual out-of-pocket drug spending of around $3,300 in 2024 and $2,000 in 2025.

Total out-of-pocket spending for beneficiaries will depend on Part D plan coverage and the formulary tier placement of Wegovy. Access may also be hindered by prior authorization and step therapy policies that Part D plans could implement to control costs and ensure proper use.

Some Part D plans have announced plans to start covering Wegovy this year, but plans are not required to coverage every new drug that comes to the market. Plans may be hesitant to add the drug to their formularies this year, as they have already set premiums and cannot adjust them to account for potentially higher costs associated with using Wegovy.

Total Medicare spending is dependent on how many Part D plans expand coverage of the drug, the extent of utilization management strategies applied, how many people use it, and the negotiated prices paid by plans. If a plan receives a 50 percent rebate on the list price of $1,300 per month, annual net costs per person could total $7,800. If 10 percent of the target population uses the drug for a full year, Medicare Part D spending would grow by $2.8 billion.

If Medicare selects semaglutide for drug price negotiation when it becomes eligible in 2025, Medicare and out-of-pocket spending on Wegovy, Ozempic, and Rybelsus could be significantly lower.