Wegovy Coverage Question Puts Part D Plans in Tricky Position

In newly released guidance, CMS told Medicare Part D plans that they’re allowed to cover weight-loss drugs if they’ve been approved for another medical use — a description fitting Novo Nordisk’s Wegovy (semaglutide) after it recently received an FDA nod for preventing major heart problems.

So far, CVS Health Corp., Elevance Health, Inc. and Kaiser Permanente have said their Part D plans will cover Wegovy for its newest approved use: reducing the risk of heart attacks and strokes in people who have cardiovascular disease and who meet body-weight criteria, the Wall Street Journal reported on March 28.

For other insurers that sell Part D plans, the decision about whether to cover Wegovy represents an additional challenge to grapple with, as they’re also facing significant regulatory changes.

“This is big because Medicare does not pay for weight loss [drugs],” says Debra Devereaux, principal and chief pharmacy/clinical officer at Rebellis Group. Taken together with the looming restructuring of the Part D benefit, “2025 is going to be something,” she predicts.

The Medicare program is barred from paying for anti-obesity treatments under federal law, which appears unlikely to change in the near-term — largely due to cost concerns — despite the meteoric rise in popularity of weight loss drugs known as GLP-1s. But the FDA on March 8 approved a label expansion for Wegovy, saying it can now be used to reduce the risk of major adverse cardiovascular events — including cardiovascular death, non-fatal myocardial infarction or non-fatal stroke — in adults with established cardiovascular disease and who are either obese or overweight.

Semaglutide was first approved to treat Type 2 diabetes and is sold under the brand name Ozempic for that indication. While Ozempic is sometimes used off-label for weight loss purposes, insurers have taken steps to crack down on the practice. Wegovy, which typically is prescribed at a higher dose than Ozempic, was first approved by the FDA to treat obesity in June 2021. While Wegovy brought in sales of about $4.5 billion for Novo Nordisk in 2023, Ozempic brought in about $14 billion, the Danish drugmaker has said.

The FDA’s label expansion for Wegovy was based on a large, five-year trial that showed Wegovy reduced the risk of cardiovascular complications by 20% in the targeted adult population. “Wegovy is now the first weight loss medication to also be approved to help prevent life-threatening cardiovascular events in adults with cardiovascular disease and either obesity or overweight,” said John Sharretts, M.D., director of the FDA’s Division of Diabetes, Lipid Disorders, and Obesity. Sharretts added that the treatment option represents “a major advance for public health.”

With that recent FDA decision in mind, CMS on March 20 issued new guidance to Part D plans stating that anti-obesity medications that receive FDA approval for an additional medically accepted indication can be considered a Part D drug for that specific use.

“For example, a drug that receives FDA approval for chronic weight management alone would not be considered a Part D drug,” a CMS spokesperson tells AIS Health. “If this same drug also receives FDA approval to treat diabetes or reduce the risk of major adverse cardiovascular events in adults with established cardiovascular disease and either obesity or overweight, then it would be considered a Part D drug for those specific uses only.”

CMS said in its guidance that Part D plans are free to alter their formularies midyear to include anti-obesity medications, like Wegovy, that receive approval for an additional medically accepted indication.

“Utilization management tools such as prior authorization, step therapy, and quantity limits that are approved by the Pharmacy & Therapeutics committee may be applied at the point-of-sale at the same time the drug is added to the formulary,” CMS reminded health plans. The agency added that “Part D sponsors may consider using prior authorization for these products to ensure they are being used for a medically accepted indication.”

To Cover or Not to Cover?

Before CMS released its guidance, some equities analysts expressed skepticism that Part D plans will rush to change their coverage policies.

“Given that any formulary changes mid-year come directly out of plan profits and the already-high demand for GLP-1 products, Capstone believes that very few plans will cover Wegovy,” analysts Angela Lamari and Hunter Hammond advised investors on March 11. Additionally, inexpensive generic drugs like statins are already covered for the same indication, they wrote.

“For the few plans that may choose to add coverage, Wegovy will likely be placed on a high tier with extensive utilization management requirements — thereby only marginally increasing the total volume of Wegovy scripts,” according to the Capstone analysts.

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Devereaux suggests that Part D plans will have many competing factors to weigh when deciding how to approach Wegovy — and not all plans will take the same tactics.  

“You’re going to get a lot of enrollment if you have it on the formulary,” she points out. However, she says she expects stand-alone Prescription Drug Plans will largely avoid covering the drug, since they aren’t able to reap savings from any long-term health benefits that Wegovy is able to provide for beneficiaries.

But it’s a different story for Medicare Advantage Prescription Drug (MA-PD) plans, which offer both medical and pharmacy benefits. The clinical trial that found Wegovy reduced the risk of serious cardiovascular events by 20% is “compelling,” Devereaux says, and “if you’re an MA-PD plan, it’s going to be hard to ignore that.”

Wegovy Cost Could Inflate Premiums

Any Part D plans that decide to follow in the footsteps of CVS, Elevance and Kaiser with regard to Wegovy coverage will have to grapple with the high cost of the drug. A 2.4 mg injection of Wegovy has a list price of about $1,350 for a 28-day supply. But the net price — after discounts negotiated by insurers and PBMs — for a 28-day supply of Wegovy appears to be around $700, American Enterprise Institute researchers estimated in a September 2023 paper.

According to the Wall Street Journal, Elevance also said its commercial plans would cover Wegovy for the new cardiac indication, and it said it is working with states to determine Medicaid coverage for the drug.

Meanwhile, the Wegovy development comes at a time when Part D plans are already contending with a major overhaul of the benefit mandated by the Inflation Reduction Act (IRA). Starting in 2025, the IRA will cap seniors’ out-of-pocket drug costs at $2,000 annually, putting them in the catastrophic coverage phase much faster. And once in the catastrophic phase, Part D plans will be on the hook to cover 60% of those beneficiaries’ drug costs, compared to just 15% before the IRA was enacted.

Taken together with those regulatory shifts, “this is really going to be a hit for plans and their Part D benefits,” Deveraux says of the new coverage guidelines for Wegovy. “So I can only assume that premiums are going to have to go up.”

Part D plans are likely to subject Wegovy to strict prior authorization rules to ensure they’re only paying for the drug when it’s prescribed to prevent major heart problems in adults with both obesity and cardiovascular disease (CVD), Devereaux says. That will likely mean setting body mass index thresholds and requiring patients to have a documented diagnosis of CVD in their medical records.

But Devereaux points out that even with such restrictions, many Part D enrollees would still qualify for coverage given the prevalence of obesity and CVD in the U.S. senior population. “There’s just not a lot of opportunity to really get it down to a teeny number of people that will be eligible,” she says.

This article was reprinted from AIS Health’s subscription publication Radar on Drug Benefits.