Weight-loss drug concessions are positive, but not seminal reform.
The Trump administration announced yet another major development on the drug pricing front.
In an October 9 blog, I told you about a set of initial drug price concessions President Donald Trump got from a few Big Pharma companies. On November 3, I discussed a related topic on the drug front – Cigna’s pharmacy benefits manager, Express Scripts, announcing a slow migration away from gross and rebate pricing to a net basis. You can go to the blog tab and those dates to read more.
Now, Trump announced drug price concession deals with two GLP-1 weight-loss brand drug makers – American firm Eli Lilly and Danish firm Novo Nordisk.
What are GLP-1s?
The two leading types of GLP-1 weight-loss drugs are semaglutide (sold by Novo Nordisk as either Ozempic or Wegovy) and tirzepatide (sold by Eli Lilly as either Mounjaro or Zepbound). The drugs are all the rage in the developed world for weight loss and control of a number of disease states, especially diabetes and various heart issues. A recent poll by healthcare policy group found that almost one in eight American adults (18%) report having ever taken a GLP-1 agonist, including 12% who say they are currently taking the medication. KFF says this is a 6-percentage point increase from 18 months ago.
Obesity is a huge problem
Obesity is a huge problem in the U.S. The Centers for Disease Control and Prevention (CDC) says about 40% of U.S. adults are obese, with that rate impacting both males and females equally. America’s Health Rankings show that over 30% of adults age 65 or older are obese.
What do studies say on GLP-1s?
Studies are a bit mixed on long-term clinical outcomes as well as the cost-savings overall that these drugs bring. In my mind, there is little doubt that they will help those with diabetes and heart disease better control their conditions. People seem to benefit from both the weight-loss effects and the other pharmacological impacts.
On weight-loss alone, some studies suggest that people have mixed results. Studies suggest that ongoing compliance on the drugs are mixed and that most people regain the pounds they lost. Studies show populations that are quickly stopping usage or stopping and starting. Admittedly some of that could be related to current high costs.
But other studies are more positive. A new study by Epic Research found that 56% of semaglutide, 52% of liraglutide (another GLP-1), and 55% of tirzepatide patients kept the weight off or lost additional weight after stopping GLP-1 use. The study tracked 188,722 patients who stopped taking the drugs after at least 90 days of use for treatment of obesity and had an initial weight loss of 5+ pounds. Complete weight regains occurred in 23% of semaglutide, 21% of tirzepatide, and 27% of liraglutide users at 24 months.
So that is a fairly good record of maintaining weight loss overall and, combined with price concessions, could usher greater adoption of GLP-1s over time. This could lead to greater acceptance of expansion of weight-loss drugs in government programs.
But no studies are showing immediate or short-term reductions in overall healthcare costs – at least in year 1. Some speculate that longer term savings will be seen to help deal with the obesity epidemic in America and the long-term effects and healthcare costs.
GLP-1 costs
All GLP-1s right now are brands and a monthly dose is $900 to $1,350. PBMs may receive substantial rebates from the brand drug makers, but they largely do not get passed fully through (if at all) to the consumer at the point of sale. These rebates that go to PBMs and in some part later to employer groups and health plans are between 40% and 60% according to latest estimates. That puts the net price at $360 to $810 a month. But because of the rebate not being passed through, a monthly cost with insurance could still be in the hundreds of dollars – out of reach for many Americans. The KFF poll found that most GLP-1 users say their insurance covered at least some of the cost. But over half (56%) say these drugs were difficult to afford, including one in four who say they were “very difficult” to afford. About a quarter (27%) of GLP-1 users report having insurance but paying the whole cost of the medication themselves. A good part of the difficulty revolves around the rebate not getting passed through in full as well as the overall high price.
A Peterson-KFF Health Systems Tracker study finds that a month’s supply of Ozempic in other developed countries is $70 to $200. Wegovy is about $300 a month. Mounjaro is $300 to $450 a month. Note that coverage for weight loss in other developed countries can be limited due to restrictive formulary approaches and the fact hat obesity rates in these countries is about half what it is in the United States. Mounjaro also appears less available in some developed countries. I would also note that Novo Nordisk is busy reducing prices for cash-pay customers because it is being out-competed in the GLP-1 market.
The price concessions
Appearing with representatives of Eli Lily and Novo Nordisk, President Trump personally announced lower prices for self-pay customers for GLP-1s and some other drugs. In addition, Medicare will cover GLP-1 semaglutide and tirzepatide at much lower prices and this appears true for chronic conditions, these conditions with underlying obesity, and apparently obesity alone.
“Until now, neither of these two popular drugs have been covered by Medicare for weight loss, and only rarely by Medicaid,” Trump said during a press conference in the Oval Office. “That ends starting today …. This will improve the health of millions and millions of Americans.” Medicare will pay $245 for semaglutide and tirzepatide, with $50 copays for the medicine for enrollees.
As well, in 2026, doses of Novo Nordisk and Eli Lilly’s blockbuster drugs for patients without insurance will be priced at $350 through TrumpRx for a month’s supply. Starter doses will be as low as $149 per month. They are currently well over $1,000 per month on a list basis. Starting doses of new pill versions of the treatments that will come to market will cost $149 a month.
Eli Lilly and Novo Nordisk also agreed to discount other medicines. Eli Lilly will provide Emgality at $299 per pen and Trulicity at $389 per month. Novo Nordisk will offer insulin products, including NovoLog and Tresiba, at $35 per month.
Both companies also committed to repatriating foreign revenue, applying MFN pricing to future drugs, and extending pricing to all state Medicaid programs. Novo Nordisk will invest an additional $10 billion in U.S. manufacturing, and Eli Lilly pledged at least $27 billion.
The agreement is separate from ongoing Medicare drug price negotiations.
What do we make of the concessions?
There has been a great deal of confusion since the announcement. The administration gave few details. But drug makers’ press releases give us some hints.
Will obesity alone be covered in Medicare and how –There is confusion about whether GLP-1s will be covered in Medicare for obesity alone and whether aspects of the announcement are mandatory or voluntary. In November 2024, the Biden administration proposed Medicare and Medicaid coverage of GLP-1s for obesity alone. The Trump administration did not finalize the rule, which reinterpreted obesity as a qualifying disease state in Medicare. The Trump administration argued at the time it would lead to huge cost increases at current prices.
But that may have changed with the new prices. Trump’s remarks and other officials seem to say that Medicare will be opened up to GLP-1 coverage for obesity alone. The government provided few details, however. Reports suggest that savings generated for existing prescriptions will be used to provide new coverage for GLP-1s to patients with obesity.
How will it be implemented — A big question is how all this will be implemented and does Trump have the legal authority to do so and how. A Novo-Nordisk press release says that Part D coverage for anti-obesity medicines will be enabled through a pilot program designed to cover a majority of Part D beneficiaries.” CMS does have wide experimental authority.
But does that voluntary program cover both extending the coverage to those with obesity alone as well as capping cost-sharing at $50 for everyone on the drug for any disease state? The latter copay issue would be similar to what Trump did in Trump 45 for insulin prices. And could a pilot program extend covered benefits? If so, could plans for electing to participate in the pilot see major adverse selection and costs?
Will we see a regulation instead — To address this issue of adverse selection and coverage of GLP-1s for obesity alone, might the Trump administration have done this via rule, effectively backtracking on striking down what Biden proposed. And would that re-interpretation now by Trump on obesity as a covered condition stand up in court as allowable via rule?
Will broader action be needed by Congress – These broader reforms might well need an act of Congress and would Congress support such an expansion.
How soon will this begin for Medicare — An Eli Lilly press release suggests the $50 cap in costs for enrollers begins as early as 2026. But benefit design and bids have long been put to bed.
Will rebates for such drugs go away — The rebates today on weight-loss drugs are significant. The drug price negotiations will take these out for sure, and this announcement likely furthers that. So, the true net reductions in costs will likely be much less than the gross one, but consumers will see bigger savings at the drug counter.
What about costs in Medicare — Medicare has already expanded GLP-1 coverage from diabetes and heart disease to other disease states, such as prediabetes with obesity. Even with the discounts, liberal expansion of GLP-1 coverage could mean a huge surge in Medicare Part D costs. The $245 Medicare price appears good for Mounjaro/Zepbound compared with other nations, but still very high for Ozempic/Wegovy.
Impact on Medicare plans — The impact on plans though could be major. The standalone Part D plans or PDPs are already financially precarious. Greater costs of weight-loss drugs even with price reductions could further complicate PDP solvency. It could lead to cutbacks in other areas or increased premiums or deductibles. Similar things could happen in MA.
Conclusion
In the end, the price concessions on GLP-1 weight-loss drugs are a step in the right direction. The president should be congratulated for moving usually intractable Big Pharma. But a great deal is unclear. Are prices low enough to truly pay for expansion into obesity? Will Trump settle for the deals or push forward as I have encouraged for a true remake of price in law across all lines of business via more aggressive Medicare drug price negotiations and his most-favored-nation pricing proposal. Most importantly, these GLP-1 deals do not do anything for employer and commercial coverage, where a majority of Americans get their coverage.
#drugpricing #trump #branddrugmakers #glp1s #weighlossdrugs
— Marc S. Ryan
