A new analysis from the Kaiser Family Foundation (KFF) sheds light on a dramatic increase in Medicare spending on Glucagon-like peptide-1 (GLP-1) drugs, a class of medications used to treat type 2 diabetes. The report highlights a specific surge in spending on Ozempic, a brand name GLP-1 drug manufactured by Novo Nordisk.
Researchers at KFF analyzed recently released data from the Centers for Medicare & Medicaid Services (CMS) on spending within the Medicare Part D prescription drug program. Their findings reveal a significant jump in spending on Ozempic since its FDA approval for diabetes treatment in 2017. In 2018, Medicare Part D spent just $56.8 million on the drug. However, that number skyrocketed to $552.8 million by 2019, according to the KFF analysis. The trend continued with spending reaching $2.6 billion in 2021 and a staggering $4.6 billion in 2022.
The KFF report goes beyond Ozempic, also examining spending on other GLP-1 drugs covered by Medicare Part D. This includes Rybelsus (another Novo Nordisk product) and Mounjaro from Eli Lilly. In 2019, Part D plans spent $73.4 million on Rybelsus, with that figure growing to $974.9 million by 2022. Spending on Mounjaro reached $144 million in 2022. When combined, Part D spending on these three GLP-1 medications totaled a staggering $5.7 billion in 2022.
While acknowledging the potential health benefits offered by GLP-1 drugs, the KFF researchers expressed concern about the financial implications of their rising popularity. “The combination of intense demand, new uses, and high prices for these treatments is likely to place tremendous pressure on Medicare spending, Part D plan costs and premiums for Part D coverage,” they wrote.
The study highlights a particularly noteworthy jump in Ozempic’s ranking within the highest-grossing drugs covered by Part D. In 2021, Ozempic ranked tenth on the list. By 2022, it had climbed to sixth place, surpassing established medications like Humira. It’s important to note that these rankings reflect gross spending, which doesn’t account for rebates offered by drug manufacturers.
The KFF analysis also explores the potential impact of Medicare’s ability to negotiate drug prices under the Inflation Reduction Act of 2022. Given the high demand and cost of GLP-1 drugs, particularly semaglutide (the active ingredient in Ozempic), the report suggests it could be selected for negotiation as early as 2025. A successful negotiation could lead to a significantly lower price by 2027.
Looking ahead, the KFF report raises concerns about the potential for even higher spending on GLP-1 drugs. Medicare Part D plans are now authorized to cover Wegovy, another GLP-1 medication, for weight management in certain patient populations. Additionally, broader coverage for other GLP-1 indications, alongside potential future legislation authorizing Medicare coverage of obesity drugs, could further escalate spending.
The KFF report concludes by stating, “The fact that covering GLP-1s under Medicare Part D for authorized uses is already making a mark on total Part D program spending could be a sign of even higher spending to come as Part D plans are now able to cover Wegovy for its heart health benefits, as other uses for GLP-1s are approved, and as policymakers consider legislation that would authorize Medicare to cover obesity drugs,” This underscores the need for policymakers and stakeholders to carefully consider the financial implications associated with the growing use of GLP-1 drugs within the Medicare program.
