Medicare Likely to Negotiate Prices for Obesity Drugs in Next Few Years: CBO

HHS entrance_iStock, hapabapa

Pictured: Entrance to the Department of the Health and Human Services/iStock, hapabapa

The Centers for Medicare and Medicaid Services is highly likely to negotiate the price for Novo Nordisk’s obesity therapy Wegovy (semaglutide) in the coming years, according to a Wednesday report from the Congressional Budget Office.

The prediction comes after Congress introduced the Treat and Reduce Obesity Act (TROA), which would expand Medicare Part D coverage to anti-obesity medication (AOM) indicated for weight loss. According to the Congressional Budget Office (CBO) analysis, the TROA would also allow for overweight or obese beneficiaries with at least one related comorbidity.

Currently, Medicare only covers certain obesity interventions such as bariatric surgery, screenings, intensive behavioral therapy and behavioral counselling by primary care providers. Obesity medications, such as semaglutide and Eli Lilly’s tirzepatide, are covered only for the treatment of type 2 diabetes.

With a current cost of around $1,000 to $1,300 for a four-week supply, Medicare cannot sustainably cover AOMs, according to the analysis from the CBO, a nonpartisan agency that studies various budgetary and economic issues to guide Congress.

“At their current prices, AOMs would cost the federal government more than it would save from reducing other healthcare spending—which would lead to an overall increase in the deficit over the next 10 years,” the CBO noted in its analysis. Covering AOMs at their current prices could also pass costs onto program enrollees as higher premiums.

The CBO also expects that the Department of Health and Human Services will select semaglutide for price negotiations under the Inflation Reduction Act (IRA) “within the next few years.” This would have the effect of lowering its cost as well as that for other obesity medications.

Semaglutide and tirzepatide prices would also be strongly affected by generic competition, which the CBO expects to “start in earnest” by the second decade following a policy that allows Medicare Part D coverage of AOMs. Next-generation AOMs, with potentially better safety and efficacy profiles, are also likely to affect the overall costs associated with the drug class.

The CBO’s coverage analysis comes as the industry wrangles with several campaigns from the federal government to lower drug prices across the board. A centerpiece of this effort is the IRA’s Drug Price Negotiation Program, which allows the CMS to negotiate the prices for some of the most widely prescribed drugs.

Pharmaceutical companies have launched several legal challenges seeking to block the program but have been unsuccessful. Earlier this month, a New Jersey federal judge was not convinced by the industry’s arguments that the negotiation program violates their constitutional rights.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. Reach out to him on LinkedIn or email him at tristan@tristanmanalac.com or tristan.manalac@biospace.com.

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