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Medicare to cover Novo’s obesity drug for some patients

Medicare will cover the costs of Novo Nordisk’s obesity drug Wegovy for some patients with a history of heart disease, a policy shift that could significantly open up access to the in-demand weight loss medicine. 

A spokesperson for the Centers for Medicare & Medicaid Services confirmed on Thursday that obesity drugs receiving Food and Drug Administration approval for an “additional medically accepted indication” may now be covered under so-called Part D plans. Those accepted uses include an approval to reduce the risk of heart problems or treat diabetes, the spokesperson said. 

The new guidance currently only applies to Novo’s Wegovy, use of which the FDA expanded earlier this month based on clinical testing showing it can protect heart health. In a large study, treatment with Wegovy was associated with a 20% reduction in the risk of heart attacks, strokes or cardiovascular death compared to a placebo. 

Those findings separated Wegovy from rival medicines developed by Eli Lilly, which makes Zepbound for obesity and Mounjaro for diabetes, at least for now. Results from a similar trial of Mounjaro are expected later this year. A study of Zepbound could follow a few years later. 

The results were also seen as critical to spurring broader use of Wegovy, as such evidence can convince insurers to cover treatment. Wegoy has a list price of over $1,300 per month and payers have resisted covering the drug.

Medicare is prohibited by law from covering obesity medicines, meaning up until now, people with Part D plans had to cover the drug’s costs out of pocket. The CMS spokesperson said that Part D plans may consider using prior authorization for obesity drugs to “ensure they are being used for a medically accepted indication,” and not only weight loss. Those seeking coverage without a history of heart disease would need their plans to offer a supplemental benefit.

Even with those barriers, Wegovy has gotten off to a fast start. The drug generated about $4.5 billion in sales in 2023 despite manufacturing issues that made it difficult for the company to meet surging demand. Mounjaro, too, has quickly become a blockbuster, making obesity medicines one of the most lucrative opportunities in the history of the pharmaceutical industry. Analysts at investment bank Leerink Partners expect obesity drugs to generate $158 billion in yearly sales by 2032. 

Medicare’s shift in guidance could boost those estimates, broadening access to Wegovy and other weight loss drugs.