Balancing the costs of GLP-1 weight loss drug coverage: New CBO report has some answers

For Medicare, offering the new GLP-1 agonist drugs to all enrollees who are obese and to overweight enrollees with health problems could save about $650 per year per medication user by 2034, according to new estimates from the Congressional Budget Office.

Offering broad GLP-1 agonist access could also lead to about $4,300 per user in direct 2034 federal health care spending, CBO analysts predict.

By 2044, the savings resulting use from the drugs would probably be higher, because of the growing effects of improved overall health on spending, and the direct spending would probably be much lower, because the cost of the drugs would drop, but the cost of offering broad access would probably still exceed the savings, the analysts suggest.

Phillip Swagel, the CBO director, summarizes the analysts’ findings, in a letter summarizing the analysts’ work.

What it means: Any Medicare decisions about coverage of GLP-1 agonists could have a direct effect on any employers that use Medicare Advantage plans in their retiree health benefits programs.

Related: Patients start to see savings, ahead of IRA’s Medicare drug price negotiations

Medicare’s moves could also have a big effect on all employer health plans because Medicare is such a big part of the health care market. Whatever the big gorilla does reshapes the market for the gerbils.

The CBO’s cost-benefit analysis for Medicare could also help all payers think about how to perform their own GLP-1 agonist cost-benefit analyses.

The question: For an employer, offering all obese employees, or all employees with weight problems, access to Wegovy, Zepbound and similar types of drugs could lead to obvious increases in health plan spending.

Offering easy access to the drugs could also reduce some types of health plan spending, by reducing some of the damage done by conditions such as diabetes and heart disease.

How can an employer balance the obvious costs with the possible health care savings?

The savings analysis: Today, Medicare covers GLP-1 agonists for help with controlling diabetes, but federal law prohibits Medicare from covering weight-loss drugs.

The CBO team based its analysis on research studies, evidence from simulations and a review of the effects of bariatric surgery on actual health care spending.

Studies have found that bariatric surgery appears to be somewhat more effective than the GLP-1 agonists and lowering people’s weight.

“Some observational studies showed health care spending after surgery, and others showed no change or higher health care spending,” Swagel writes.

CBO took the models in the existing studies, replaced the care prices used with what Medicare pays for care, and gave higher-quality studies more weight than lower-quality studies. The team also tried to filter out any post-bariatric surgery costs that appear to be related to surgical complications.

That analysis showed that savings could range from about none during the first year after surgery to $1,000 10 years after surgery.

It’s possible that, in the long run, GLP-1 agonists could do more to improve people’s health and lead to bigger care cost savings than bariatric surgery does, Swagel writes.

The usage analysis: Only about 31% of Medicare’s 64 million enrollees are underweight or at a normal weight. The share with type 2 diabetes is 8% for the underweight enrollees, 9% for the normal-weight enrollees, 16% for the overweight enrollees and 28% for the enrollees who are obese.

The CBO analysts believe that offering GLP-1 agonists to all people with obesity and overweight people with health problems would make about 12.5 million of the 64 million Medicare enrollees eligible for GLP-1 agonist coverage.

The analysts think the number of Medicare enrollees using the drugs will increase to 11.9 million in 2023, from 300,000 in 2026.