Medicare, the largest individual payer for health costs in the U.S., is highly sought after by drugmakers for its approval on reimbursements. Leading the charge in the weight-loss drug market, Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY) have been lobbying for the Treat and Reduce Obesity Act, which has been reintroduced in Congress for over a decade with little success until recently.
Novo Nordisk and Eli Lilly are exploring alternative strategies to secure Medicare coverage for their GLP-1 drugs by highlighting additional health benefits. Novo Nordisk’s Wegovy recently gained Medicare coverage thanks to its cardiovascular benefits. On Friday, Eli Lilly announced it had applied for expanded-use approval for its weight-loss drug, Zepbound, as a treatment for sleep apnea.
Lilly presented full results for sleep apnea at an American Diabetes Association event, showing up to a 51% reduction in sleep problems. The trial indicated benefits for both users and non-users of pressurized air machines. Lilly expects a decision on Zepbound’s label expansion by the end of the year.
The announcement impacted the stocks of PAP machine makers like ResMed (NYSE:RMD) and Inspire Medical Systems (NYSE:INSP), which fell by double digits on Monday. However, some analysts caution that it’s premature to predict the impact on PAP machine makers since the results showed more significant improvement for PAP users than non-users.
Mizuho’s medical devices and diagnostics expert, Anthony Petrone, noted, “We expect the debate to rage on as LLY pursues FDA clearance and attempts to enter the market.”
Legislative Efforts in Washington
Congress is actively working to lift the ban on Medicare coverage for weight-loss drugs. Lawmakers are considering a scaled-back version of the TROA bill due to concerns over the high cost to Medicare, which has divided the House Ways and Means Committee.
With weight-loss drugs costing over $1,000 per month for four shots in the U.S., they 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 members are working on rewording the bill to allow Medicare to cover weight-loss drugs but with limitations on eligibility.
The Congressional Budget Office has yet to estimate the cost of these drugs to Medicare. However, the CBO noted 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 highlighted that the high cost of the drugs would partially be covered by Medicare enrollees through higher premiums and cost-sharing. Additionally, it remains unclear if these drugs will reduce other healthcare costs, such as bariatric surgery, in the future. While there is no empirical evidence available yet, simulation models suggest potential benefits.
Featured Image: Freepik
