Zinger Key Points
- SURMOUNT-OSA trials: Zepbound reduced apnea events by 62.8%, improving sleep apnea outcomes.
- CMS spokesperson said that Medicare Part D can only cover obesity drugs if they are FDA-approved for another medically accepted use.
Medicare drug plans can now cover Eli Lilly And Co's LLY popular obesity drug, Zepbound (tirzepatide) when prescribed for obstructive sleep apnea, which affects breathing while sleeping.
This change could expand access to Zepbound, which is not yet widely covered by Medicare or other insurance plans for weight loss.
In December, the FDA approved Zepbound as the first and only prescription medicine for adults with moderate-to-severe obstructive sleep apnea (OSA) and obesity.
It should be used with a reduced-calorie diet and increased physical activity.
In SURMOUNT-OSA phase 3 trials, tirzepatide achieved all primary and key secondary endpoints for both the efficacy and treatment-regimen estimands and demonstrated a mean reduction of up to 62.8% on the apnea-hypopnea index (AHI), or about 30 fewer events restricting or blocking a person's airflow per hour of sleep, compared to placebo.
A Centers for Medicare & Medicaid Services (CMS) spokesperson told CNBC that Medicare Part D can only cover obesity drugs if they are FDA-approved for another medically accepted use.
The spokesperson noted that prior authorization might be required to ensure the drug is prescribed for the approved condition.
Medicaid coverage for Zepbound varies by state, depending on its prescribed use and whether the manufacturer has signed a Medicaid drug rebate agreement. Under this agreement, drugmakers provide rebates to states in exchange for Medicaid coverage, with states sharing the rebates with the federal government.
In November, the Biden-Harris Administration proposed expanding Medicare and Medicaid coverage for anti-obesity medications to address the high costs that have drawn criticism.
The proposed rule seeks to make these treatments more accessible, benefiting an estimated 3.4 million Medicare recipients and 4 million Medicaid enrollees. For some, the expanded coverage could cut out-of-pocket expenses by up to 95%.
The President of the United States, Joe Biden, and Sen. Bernie Sanders, the Senate Chairman of the Health, Education, Labor, and Pensions Committee, have long been vocal about the exorbitant prices the pharmaceutical industry charges for prescription drugs in the U.S.
Americans pay the highest prices globally for essential medications, with one in four unable to afford the prescriptions their doctors recommend. Biden said the argument that high domestic prices subsidize fair prices abroad is unacceptable.
Price Action: LLY stock closed at $773.29 on Wednesday.
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