Novo Nordisk and Eli Lilly Face Challenges in Getting Medicare Coverage for Weight Loss Drugs


Medicare, the primary health insurer for Americans, is a coveted market for pharmaceutical companies seeking reimbursement for their drugs. Novo Nordisk and Eli Lilly, leaders in the weight-loss drug market, have been advocating for the Treat and Reduce Obesity Act, a bill reintroduced in Congress for over a decade, to gain Medicare coverage for their medications. However, the bill has faced resistance and has not been passed.

In the absence of legislative success, Novo Nordisk and Eli Lilly are pursuing alternative strategies to secure Medicare coverage for their GLP-1 drugs. Novo Nordisk’s Wegovy was recently granted Medicare coverage due to its demonstrated cardiovascular benefits. Eli Lilly, on the other hand, has applied for expanded-use approval for its weight-loss drug, Zepbound, as a treatment for sleep apnea.

Lilly presented the complete results of its sleep apnea study at the American Diabetes Association event, indicating up to a 51% reduction in sleep problems. The trial showed benefits for both individuals using pressurized air machines and those who do not. Lilly anticipates a decision on expanding the label for Zepbound by the end of the year.

The announcement of Lilly’s expanded-use application caused a significant decline in the stock prices of PAP machine makers, such as ResMed and Inspire Medical Systems. However, some analysts warn that it is too early to definitively assess the impact on PAP machine makers, as the trial results showed more substantial improvements for individuals using PAP machines compared to those who did not.

Anthony Petrone, an expert in medical devices and diagnostics at Mizuho, commented, “We expect the debate to continue as LLY seeks FDA approval and attempts to enter the market.”

Legislative Efforts in Washington

Congress is actively working to overturn the ban on Medicare coverage for weight-loss drugs. Lawmakers are considering a modified version of the TROA bill, addressing concerns over the high cost to Medicare. This proposal has caused division within the House Ways and Means Committee.

Weight-loss drugs, with a monthly cost exceeding $1,000 for four injections in the U.S., have become a focal point in the Senate. Senator Bernie Sanders plans to question Novo Nordisk CEO Lars Jørgensen about the high prices in the U.S. compared to other countries during a Senate Committee on Health, Education, Labor, and Pensions hearing scheduled for September 24.

Rep. Jason Smith, chair of the House Ways and Means Committee, and other committee members are working on revising the bill to allow Medicare coverage for weight-loss drugs but with eligibility limitations.

The Congressional Budget Office has yet to estimate the cost of these drugs to Medicare. However, the CBO has stated that the current prices “would cost the federal government more than it would save from reducing other health care spending — leading to an overall increase in the deficit over the next 10 years.”

The CBO also noted that the high cost of the drugs would partially be borne by Medicare enrollees through increased premiums and cost-sharing. Furthermore, the potential impact of these drugs on other healthcare costs, such as bariatric surgery, remains unclear. While empirical evidence is not yet available, simulation models suggest potential benefits.