Yahoo Finance How Lilly is joining Novo in the crusade to circumvent Medicare's block on weight loss drugs
Medicare is the largest individual insurance payer of health costs in the country. So it's no wonder that drugmakers want its seal of approval for reimbursement.
That's especially true of the weight-loss drug market leaders Novo Nordisk (NVO) and Eli Lilly (LLY). Both companies have lobbied for support for a bill — the Treat and Reduce Obesity Act (TROA) — which has been reintroduced annually in Congress for over a decade, with little attention until recently.
The two companies are also pursuing another avenue to gain Medicare coverage for their GLP-1 drugs: coming up with other benefits that will get Medicare's blessing.
Novo's weight-loss drug, Wegovy, recently scored a win with its cardiovascular benefit and will now be covered by Medicare. And on Friday, Lilly announced it had applied to get expanded-use approval for its weight-loss drug, Zepbound, as a solution for sleep apnea.
Lilly revealed its full results for sleep apnea at an American Diabetes Association event last week, with data showing an up to 51% reduction in sleep problems. The trial showed benefits for both non-users and users of pressurized air machines known as PAP machines. Lilly expects to hear about its decision to expand Zepbound's label for sleep apnea by the end of the year.
The results sent stocks of PAP makers like ResMed (RMD) and Inspire Medical Systems (INSP) down by double digits in Monday's trading.
But some analysts warn it's too early to estimate the impact on PAP machine makers since results showed greater improvement for PAP users than non-users.
Mizuho's medical devices and diagnostics expert, Anthony Petrone, said in a note Monday that "we expect the debate to rage on as LLY pursues FDA clearance and attempts to enter the market."
Meanwhile in the Beltway...
Congress is working to lift the ban on Medicare coverage for weight-loss drugs.
Lawmakers have a plan to scale back the TROA bill, as the high cost to Medicare, if required to cover weight-loss drugs, is splitting support in the House Ways and Means Committee.
At more than $1,000 per month for four shots in the US, the drugs have also been a focal point in the Senate.
Sen. Bernie Sanders plans to grill Novo Nordisk CEO Lars Jørgensen about the high price tag in the US compared to other countries at a hearing for the Senate Committee on Health, Education, Labor, and Pensions (HELP) scheduled for September 24.
Meanwhile, members of the House Ways and Means Committee, chaired by Rep. Jason Smith, are working on rewording the bill to allow payment for weight-loss drugs under Medicare — which the Centers for Medicare and Medicaid Services has been prevented from doing since 2003 — but limit who qualifies for weight-loss drug coverage.
The Congressional Budget Office (CBO) has not yet provided an estimated cost of the drugs to Medicare but said that the drugs at current prices "would cost the federal government more than it would save from reducing other health care spending — which would lead to an overall increase in the deficit over the next 10 years."
CBO also noted that the high cost of the drugs would be, in part, covered by Medicare enrollees through higher premiums and high cost sharing.
It is also unclear if the drugs reduce costs of other healthcare needs in the future, such as bariatric surgery. CBO said there is no empirical evidence available yet to base a decision on but that simulation models show potential benefits.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms @AnjKhem.
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