Anti-Obesity Medications: Noteworthy Developments As Policymakers Weigh Coverage Considerations

Key Points

• GLP-1 agonists have ushered in a new era in anti-obesity medication policy considerations against the backdrop of a continued focus by policymakers on both drug access and pricing.
• CMS has taken steps to clarify the current Medicare coverage but is working within statutory constraints that go back to the enactment of the Medicare Modernization Act of 2003.
• Bipartisan legislation to provide for Medicare coverage of anti-obesity medications has been introduced in both the House and Senate.
• The path forward for anti-obesity medication related legislation is complicated by Congressional Budget Office (CBO) scoring implications.
• The Federal Trade Commission (FTC) recently included anti-obesity medications in a group of letters sent to pharmaceutical companies challenging various Orange Book-listed patents.

Background

Obesity takes a staggering toll on patients, public health and our nation's health care system, including the Medicare and Medicaid programs. The National Institutes of Health (NIH) has reported that obesity and overweight are now the second leading cause of death nationally, accounting for an estimated 300,000 deaths a year. The Food and Drug Administration (FDA) has approved glucagon-like peptide-1 (GLP-1) agonists¹for the treatment of diabetes, weight loss and most recently, cardiovascular disease. This class of medications has ushered in a new era in anti-obesity medication (AOM) policy considerations, raising questions about patient access amid the current coverage landscape, and challenging the status quo when it comes to treating weight loss. These developments are also happening in a policy environment that continues to be hyper-focused on drug pricing issues. Recent policy developments by the Biden-Harris administration and Congress underscore the importance of stakeholders closely watching how potential policy changes may unfold as Washington weighs the path forward for these products.

CMS Clarifies the Current Coverage Landscape, Somewhat

Since its creation, Medicare Part D has been statutorily prohibited from covering anti-obesity medications (AOMs),² but the recent GLP-1 agonist approvals are challenging this status quo. In March, the Centers for Medicare and Medicaid Services (CMS) acknowledged that the introduction of AOMs has raised questions regarding Medicare coverage of these products and issued a memorandum clarifying that AOMs that receive FDA approval for an additionally medically accepted indication can be considered for Part D coverage for that specific use.³ As an example, the memo cites that a GLP-1 agonist that receives approval to treat diabetes or reduce the risk of a major cardiovascular event (cardiovascular death, non-fatal myocardial infarction or non-fatal stroke) in adults with established cardiovascular disease and either obesity or overweight, would then be considered a Part D drug for those specific uses only. The CMS memo comes ahead of the 2025 plan year and stakeholders will be watching to see how plans incorporate coverage consistent with CMS' approach.

Legislators Look to Change the Status Quo

In July 2023, a group of bipartisan lawmakers introduced the Treat and Reduce Obesity Act of 2023 (TROA), in both the House and Senate. Rep. Brad Wenstrup (R-OH) sponsored the House bill (H.R. 4818), which has been referred to both the House Ways and Means and Energy and Commerce Committees. Sen. Thomas Carper (D-DE) sponsored the Senate bill (S. 2407), which has been referred to the Senate Finance Committee. TROA would pave the way for Medicare coverage of AOMs by changing the law to allow coverage under Medicare's prescription drug benefit of drugs used for the treatment of obesity or for weight loss management for individuals who are overweight. Neither the House nor Senate Committees have yet to take up the bill for further consideration.

The path forward for TROA will include consideration of how the Congressional Budget Office (CBO) scores the bill. In the wake of the GLP-1 approvals, CBO put out a call for new research in the area of obesity.⁴ In that publication, CBO noted the introduction of TROA and their expectation that the policy set forth in the bill would result in greater use of AOMs by Medicare beneficiaries. CBO noted that the budgetary effect of that increased use would depend on the prices of those drugs as well as any effect of that use on other health care spending, and went on to state that in their assessment, Medicare's coverage of AOMs at their current prices would increase overall federal spending. However, CBO made clear that new research in the AOM space would be helpful in informing their analysis of legislation. CBO pointed to the research related to factors affecting the use, such as take-up rates, patients' adherence to drugs currently on the market and expectations about the prices and effectiveness of AOMs, as well as near- and long-term clinical impacts, as being especially valuable in their considerations with respect to AOM legislation. More recently, CBO reiterated the considerations they are taking into account with respect to coverage of AOMs in a March 2024 publication on the same and the price of the medications continues to be a significant factor.⁵

As yet the latest example of the growing bipartisan interest in policy issues related to obesity, on May 23, Congressman Vern Buchanan (R-FL) and Congresswoman Gwen Moore (D-WI) announced the launch of a bipartisan Congressional Preventive Health and Wellness Caucus and identified obesity as a key area of focus for this newly formed caucus.

Congressional Oversight Focused on Costs

AOMs have also drawn the attention of Senator Bernie Sanders (I-VT) who has made drug pricing a key area of focus as Chairman of the Senate Health, Education, Labor and Pensions Committee (HELP). In April, Chairman Sanders announced that he had launched an investigation into the cost of Ozempic and Wegovy. More recently, earlier this month Chairman Sanders released a report suggesting that weight loss drugs could "bankrupt" America's health care, at a cost of up to $1 Trillion a year. Stakeholders will watch to see if Chairman Sanders will look to hold a hearing on GLP-1 agonists as a next step in his focus on this class of medication and related pricing and access considerations. Meanwhile, debate continues on what the cost of AOMs actually will be, with a recent IQVIA report indicating that net spending on AOMs will be approximately $35 Billion by 2028 (at a $111 Billion list price of those drugs).⁶ There is also significant ongoing debate as to whether the spending on AOM drugs will result in a net savings to the healthcare system as a result of reductions in co-morbidities linked to obesity and overweight.

Inflation Reduction Act Implications

Under the Inflation Reduction Act (IRA), CMS selects the top 10 drugs that have the highest total cost to the Medicare program for price "negotiation", although in reality it is a price-setting process with CMS having the final say as set forth in our previous alert on this topic. So far, none of the GLP-1 drugs have been selected in the first year of the program, although this could change. None are in the group selected by CMS in 2023 for price reductions effective on January 1, 2026, because: Ozempic, first approved by FDA in December 2017, was too new to be included in the program despite its significant sales; Victoza was approved in 2010 and thus is old enough for inclusion, but its sales are too small to qualify for the program's first year. Trulicity is not on the list yet because it is a biologic drug by definition (compared to Ozempic and Victoza, which are defined as small-molecule drugs by FDA). Thus, Trulicity, approved by FDA in September 2014, also is still "too new" to enter the program, which provides an 11-year grace period for biologics and 7 years for small molecule drugs. Of note, Victoza, Ozempic and Trulicity are all indicated only for diabetes-related or cardiovascular indications and not for weight loss. However, the same active ingredient of each is approved under separate New Drug Applications (NDAs) specifically for weight loss, with different dosing and under unique brand names: Saxenda, Wegovy and Zepbound, respectively. What remains to be seen is whether CMS will use the same "formulation" provisions of IRA to aggregate sales of diabetes and weight loss indications and an NDA/BLA sponsor's multiple brands across multiple NDAs to potentially bring GLP-1 products into the price negotiation program earlier than would happen without aggregation. If that occurs, there could be legal challenges to that effort: Novo Nordisk has already brought suit against CMS challenging its aggregation of its two insulin-based products filed under different NDAs, NovoLog and Fiasp. Price reductions in the GLP-1 class as a result of IRA could significantly impact the value and cost aspect of the ongoing policy and legislative debate on the issue of CMS coverage by providing a minimum statutory 25% reduction in price (technically, a reduction in Non-FAMP) for each of these GLP-1 products.

FTC Patent Challenges

The Federal Trade Commission (FTC) recently included popular anti-obesity medications in a group of letters sent to ten pharmaceutical companies for twenty brand products challenging their Orange Book-listed patents. The FTC argues that patents for self-injection pens used for all of the currently marketed GLP-1 weight loss drugs should not be listed in the FDA's Orange Book, claiming that the Orange Book should only list patents for active drug ingredients, not device patents. According to the FTC, its recent actions challenging Orange Book listings seek to increase competition by preventing delays of competition from generic copies, including any automatic 30-month stay of FDA approval, on the basis of device patents listed in the Orange Book. In the event the 30-month stay is not available to any of the GLP-1s based on their proprietary injection devices, it is possible in certain cases that generic competition could emerge sooner and thus lower list prices, potentially impacting the cost and value aspects of the CMS coverage debate.

Outlook and Next Steps

The legislative path forward for TROA is not linear, as the legislation faces an increasingly challenging legislative environment in the 118^th Congress. CBO scoring implications will have to be worked through in some fashion and could raise the issue of how to offset the costs associated with the bill. As recently as March 2024, CBO stated that it is "not aware of empirical evidence that directly links the use of AOMs to reductions in other health care spending,"⁷ although CBO's official scoring of TROA has yet to be released. CBO has previously stated that additional research on AOMs is needed.⁸ However, it is clear that the development and approval of GLP-1 agonists has ushered in a new era of policy considerations for AOMs. Stakeholders will continue to closely watch for further developments by Congress, CBO and the Biden-Harris administration as policymakers continue to weigh how to modernize Medicare coverage of AOMs to reflect the most current innovation for patients and access to this class of products in an IRA drug pricing world.

Footnotes

1. Novo Nordisk and Eli Lilly have received FDA approvals for their glucagon-like peptide-1, or GLP-1 agonists for the treatment of diabetes, weight loss and most recently, cardiovascular disease. GLP-1 agonists act as a hormone to help reduce appetite and food intake, which provide patients sustained weight loss and improved health over the span of use.

2. See P.L. 108-173 "exclusions" citation to section 1927(d)(2) of the Social Security Act which applies to "agents when used for anorexia, weight loss, or weight gain".

3. See HPMS E-Mail, "Part D Coverage of Anti-Obesity Medications with Medically Accepted Indications" (March 20, 2024), available at https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-march-18-22.

4. https://www.cbo.gov/publication/59590

5. https://www.cbo.gov/system/files/2024-03/60116-Duchovny.pdf

6. IQVIA Institute, "The Use of Medicines in the U.S. 2024", available at https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/the-use-of-medicines-in-the-us-2024, at 64.

7. Slide Presentation: "The Federal Perspective on Coverage of Medications to Treat Obesity: Considerations From the Congressional Budget Office" (March 20, 2024), available at https://www.cbo.gov/system/files/2024-03/60116-Duchovny.pdf.

8. See "A Call for New Research in the Area of Obesity" (October 5, 2023), available at https://www.cbo.gov/publication/59590.

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