By Ahmed Aboulenein and Patrick Wingrove
WASHINGTON (Reuters) -Heart patients insured under the U.S. Medicare program would be covered for Novo Nordisk (NYSE:NVO)'s weight-loss drug Wegovy as long as it is prescribed to reduce their risk of heart attacks and strokes, the agency overseeing the program said on Thursday.
Medicare prescription drug plans administered by private insurers, known as Part D, currently cannot cover obesity drugs. Under the new guidance, however, such drugs would be paid for if they receive U.S. approval for a secondary use that Medicare does cover, the U.S. Centers for Medicare and Medicaid Services(CMS) said.
Based on positive results from a large clinical trial, the FDA approved Wegovy earlier this month for lowering the risk of stroke and heart attack in overweight or obese adults who do not have diabetes.
"CMS has issued guidance to Medicare Part D plans stating that anti-obesity medications that receive FDA approval for an additional medically accepted indication can be considered a Part D drug for that specific use," a CMS spokesperson said in an emailed statement.
Analysts have forecast the market for weight-loss drugs could reach at least $100 billion a year by the end of the decade, with production of Wegovy and Eli Lilly (NYSE:LLY)'s Zepbound and Mounjaro unable to keep up with astonishing demand.
A Novo spokesperson said the company was encouraged to see the guidance, but more work was needed because Medicare still does not cover obesity drugs for chronic weight management.
The CMS guidance on Wegovy was reported earlier by the Wall Street Journal.
Medicare's coverage of Wegovy opens the drug up to government price negotiations under President Joe Biden's Inflation Reduction Act. CMS has said the prices it negotiates will apply to drugs that share the same active ingredient rather than specific brands.
Novo Nordisk last year told analysts it expected Medicare to negotiate the price it will pay for diabetes drug Ozempic, which has the same active ingredient as Wegovy, semaglutide, and publish new prices for the drugs in 2027. It said it expected Wegovy to be affected by the negotiations.
Medicare is barred from covering certain drugs including those used to treat anorexia, weight loss, and weight gain, under the Social Security Act. CMS said in its guidance that weight loss drugs still cannot be covered when used solely to treat obesity.
"A drug that receives FDA approval for chronic weight management alone would not be considered a Part D drug," the CMS spokesperson said. "If this same drug also receives FDA approval to treat diabetes or reduce the risk of major adverse cardiovascular events in adults with established cardiovascular disease and either obesity or overweight, then it would be considered a Part D drug for those specific uses only," the spokesperson said.
About 65 million people are enrolled in Medicare, the U.S. government health insurance program for people aged 65 and older or who are disabled.
State Medicaid programs for low income people and families would be required to cover Wegovy when used to prevent heart disease for people with obesity, the CMS spokesperson added.