Employer implications of Medicare’s limited coverage of obesity drugs
April 1, 2024
The Centers for Medicare and Medicaid Services (CMS) announced last month that it will allow carriers to cover Wegovy (semaglutide) for Medicare beneficiaries to prevent major adverse cardiovascular events (MACE) for those who have had previous MACE or are at high risk. This follows a New England Journal study that showed a 20% decrease in MACE in those who were on semaglutide, and the FDA’s addition of this indication for Wegovy.
This doesn’t mean that most Medicare beneficiaries who are obese or overweight and have a history of cardiovascular disease will now have insurance coverage of Wegovy! CMS will allow Medicare Part D plans and Medicare Advantage plans to cover the drug, but that doesn’t mean these plans will add this drug to their coverage. Insurers did not consider this cost when they were planning their 2024 rates, so are unlikely to begin coverage quickly.
For next year, insurance plans might still be leery of adding this coverage. They will likely worry that coverage of Wegovy for those with a history of heart disease could cause adverse selection, or enrollment of sicker members, in two ways. First, those who are overweight or obese with a history of heart disease would be more likely to choose these plans. Second, plans covering Wegovy would have higher premiums, which can lead to healthier people moving into less expensive plans. More expensive and generous plans attract more adverse selection with each passing year and eventually are so expensive that they are not viable in the market. In insurance, this is called a “death spiral.”
What does this mean for employer sponsored health plans? Thirty eight percent of employers cover GLP-1 medications for obesity now, and I think some employers will consider adding coverage for those with obesity and a history of heart disease. This will require PBMs to implement prior authorization to be sure those who are approved truly have cardiovascular disease. It is our understanding that rebates would be available to employers that cover for obesity only with cardiovascular risk.
Implications for employers:
As the GLP-1 drugs are approved for new indications, more employers are likely to begin to cover these.
The next big potential indication is treatment of MASH (metabolic associated steatohepatitis, previously known as non-alcoholic fatty liver disease). The drug that was recently approved for this indication is three times as expensive as GLP-1 medications. A baby aspirin a day was also recently shown to be beneficial for those with MASH.
It’s likely that GLP-1s will be shown to benefit a variety of clinical conditions going forward. Whether or not they cover GLP-1s for obesity, employers should develop a global strategy for this class of medications.
Employer coverage for this indication alone, without adding coverage for obesity, will require that PBMs implement prior authorization.
Rebates for these medications are high (as much as 40% of the list price,) so expenses would be much higher if employers did not receive rebates.
Thanks for reading. You can find previous posts in the Employer Coverage archive
Please subscribe, “like” and suggest this newsletter to friends and colleagues. Thanks!
Tomorrow: Employers can drive improvements in kidney failure treatment even before genetically altered pig kidneys become widely available