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The recent FDA approval of a cardiovascular risk reduction indication for Wegovy (semaglutide) could point toward a significant opportunity for pharma companies seeking to reshape payer perceptions and expand coverage for next-gen metabolic therapies. This regulatory shift, allowing Wegovy to be prescribed for reducing the risk of major adverse cardiovascular events such as heart attack and stroke in addition to weight loss, aligns with mounting payer pressure to address the worsening obesity epidemic, which could impact 60% to 80% of the population of Western nations by the middle of the century. The dynamic has the potential to break down long-standing reimbursement barriers for effective yet costly medications.
Payers reckoning with the complex economics of obesity
There were already signs of change. While around 25% of employers provided coverage for GLP-1 drugs like Wegovy and Ozempic for weight loss last year, 43% planned to do so this year. The cardiovascular label could make these drugs more palatable to traditional payers like Medicare and Medicaid, which have previously been hesitant. “Obesity was never a category that was considered a payer management priority,” said Dinesh Kabaleeswaran, head of advisory and insights at MMIT. Just 24-36 months ago, it didn’t even feature in the top 30 categories outside of oncology, he said. Now, it’s climbed into the top 10–15 indications managed by payers, he estimated.
Dinesh-Kabaleeswaran
Yet the relatively high cost of GLP-1 drugs remains a major barrier, one the cardiovascular label alone may not fully overcome. Payers could employ various strategies to manage costs, including negotiating capped price increases, promoting comprehensive weight loss programs to improve adherence, and potentially tapering patients off medication after initial weight loss. To justify coverage despite the high price tag, manufacturers will need to provide robust pharmacoeconomic analyses demonstrating the cardiovascular benefits alongside cost-effectiveness data.
Precedent in the hepatitis C treatment market
Kabaleeswaran also drew parallels with the hepatitis C treatment market, where drugs like direct-acting antiviral (DAA) drugs like Harvoni (ledipasvir/sofosbuvir) and Sovaldi (sofosbuvir) debuted roughly a decade ago with high efficacy but also high costs. “It was like a one-time use and then patients would be cured of hepatitis C,” he said. “What really happened there was it was a huge learning exercise for payers because they were not prepared for the onslaught of demand and they ended up spending a lot of money on these therapies.” In subsequent years, payers become more selective in backing new high-cost therapies, demanding thorough reviews of budget impact, efficacy, safety, and toxicity.
That experience has influenced the development of new drug launch policies, specifically targeting GLP-1 receptor agonists among other high-cost medications. Given the high prevalence of obesity in the U.S., which is around 40%, a degree of uncertainty remains of how payers might respond. Payers will need very comprehensive budget impact models spanning a 10-year horizon, Kabaleeswaran said. “It’s a tricky situation, and especially with Medicare – that decision will heavily influence the whole obesity market.”
Off-label use disrupts the already-disruptive GLP-1 market
Kabaleeswaran highlighted the complex dynamics within the pharmaceutical industry. The limited supply of GLP-1 drugs in 2023 led to an uptick in off-label use — for obesity. That development “was not at all welcome by any means,” Kabaleeswaran said. Such off-label use can lead to regulatory concerns and exacerbate drug supply disruptions, for instance.
GLP-1 therapies are already among the pharmaceutical industry’s bestsellers. Novo Nordisk’s Wegovy, especially, has experienced a hockey-stick growth trajectory over the past two years. Lilly has also seen robust growth of its metabolic segment.
Uncharted waters
While the cardiovascular label expansion for Wegovy represents a significant opportunity to reshape the GLP-1 obesity market, challenges remain. Cost will continue to be a major point of payer scrutiny, but GLP-1 therapies’ potential to treat chronic disease is hard to ignore. The American Medical Association, which notes that cardiovascular disease is the costliest in the U.S., is advocating for coverage parity for FDA-approved GLP-1 drugs as evidence-based obesity treatments, citing the costs of untreated obesity.
How pharma can navigate the next-gen obesity/cardiovascular market
Given that dynamic, pharma companies can strengthen their position in this evolving landscape by continuing to provide robust analyses demonstrating the long-term cardiovascular benefits and cost-effectiveness of GLP-1 therapies. “Right now, a lot of the messaging that goes out to payers is really focused on the fact that okay, if you’re going to be taking my product for obesity, then you’re probably going to be causing a lot of downstream costs,” Kabaleeswaran said. “And it’s going to get you x number of dollars in terms of savings.” But he also cautions that “the pricing for these products and how much money is being spent on these products” could be understated.
Kabaleeswaran predicts the growing number of drugs and studies will compel payers to expand coverage. “Payers who haven’t even covered these products will have to, given the demand and potential revenue,” he said. The large, currently undertreated patient population (those with obesity) could represent significant potential revenue for payers if they begin covering GLP-1 medications as increased enrollment and premiums from this new patient base could boost their bottom line. Meanwhile, if a payer’s competitors start offering GLP-1 coverage and attract more members, the payer who remains restrictive risks losing market share and revenue.
Given such dynamics, Kabaleeswaran suggests payers will focus on creating competition between drugs based on price, discounts, and rebates, using data as a lever to manage utilization and cost. This shift could open the door to broader payer coverage for obesity treatments in the coming years.