Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - GLP-1’s and Medicare 💉

3. Compliance Chatter 📢 - Use of AI in insurance and more in this week’s Insurance Regulatory Insights newsletter.

4. Sponsor Snapshot 🚀 - brought to you by Telos Actuarial

5. Data Visual of the week 📊 - Increased Medicare Part D spending by select GLP-1’s

DEEP DIVE 📚

GLP-1’s and Medicare 💉 

This week’s Deep Dive is going to look at a class of drugs that has been at the forefront of many healthcare and insurance news stories over the past several years. The drugs have been sweeping the nation as thousands of patients have been taking them to undergo dramatic physical changes. This week we are diving into GLP-1’s!

What are GLP-1’s?

GLP-1 stands for “Glucagon-Like Peptide 1”. 

GLP-1 is a naturally occurring hormone made in your small intestines that tells your pancreas to release insulin into your blood and results in lower levels of blood sugar. 

GLP-1 drugs work by attaching to a cell receptor and triggering the same actions as the natural hormone.

Liraglutide was one of the first GLP-1 drugs approved for use in the United States and experience sustained commercial success. It was developed by Novo Nordisk and marketed as ‘Victoza’ and ‘Saxenda’. You can get more details on the development of liraglutide here in this WSJ podcast. The whole “Trillion Dollar Drug” podcast series is excellent.

Liraglutide is effective but it requires daily use and can cause adverse side effects.  So, the scientists at Novo Nordisk began looking for ways to improve the drug and over the next several years they were able to develop its successor, semaglutide.

Semaglutide also helps manage blood sugar levels, but it comes with fewer side effects and only requires one dose per week! In 2017 it was approved by the U.S. Food and Drug Administration and is marketed as ‘Ozempic’ and ‘Wegovy’.

Since then, other similar drugs have been introduced in the U.S. – here are the most common ones:

Why are GLP-1‘s ALWAYS in the news?

Over the past twelve months GLP-1’s have generated hundreds of news stories!

• Stories about the effectiveness of the drugs and associated positive patient outcomes. 

• Stories about drug shortages and how that scarcity is reflected in the high costs for patients to fill their prescriptions. 

Let’s take a look at both topics.

GLP-1 drugs are highly effective at helping Type 2 Diabetics manage their blood sugar levels and have been found to have a highly desirable off-label use. Ever since the early clinical trials of liraglutide, patients taking GLP-1’s have experienced significant weight loss when using the drug.

This side effect was documented in a 2018 study by the New England Journal of Medicine. Individuals that received a weekly dose of semaglutide lost an average of 14.9% of their body weight.  Not only did the participants lose weight, but they also improved several body composition measures (i.e., total fat mass, regional visceral fat mass and the ratio of lean body mass to total body mass).

These miraculous weight loss side effects have made the drugs very popular with the American public.

So, what about the cost?

The cost for a one-month supply of GLP-1 drugs is currently around $1,000 before factoring in any insurance coverage or manufacturer rebates. Here is a sampling of the one-month supply list prices that the manufacturers include on their websites.

It is common for commercial insurance plans to cover these drugs, but the plans typically include some utilization hurdles (e.g., Type 2 Diabetes diagnosis or step therapy processes) to manage the number of patients that can access the drugs. 

Without cost containment measures, the plans would face significant costs that were not included in pricing. Over the past two years several large insurers have cited growth in GLP-1 costs as a key component driving up their loss ratios.

But this is a Medicare newsletter… How does Medicare handle these drugs?

Currently, Medicare will provide coverage of GLP-1 drugs if they are prescribed for the treatment of Type 2 Diabetes and/or to reduce the risk of cardiovascular disease. 

The drugs are typically self-administered so they would fall under Medicare Part D and are covered by stand-alone PDPs and MA-PD plans and subject to the plan’s cost-sharing structure. 

When covered by a Part D plan the Out-of-Pocket cost is reduced significantly from the manufacturer list prices above. But the actual costs will vary based on the other types of drugs that the patient is taking.

Medicare plans are currently prohibited from covering drugs that have the treatment of weight-loss as the only medical indication. This prohibition goes back to the original Medicare Part D regulations where it lists several classes of drugs that have coverage restrictions.

Even though these drugs are not covered when prescribed solely for weight loss purposes they are having a material impact on the total amount of Medicare spending. 

• In 2022, Ozempic accounted for $4.6 billion of total Part D gross spending (before rebates), which was about 2% of the total Part D expenditures.  This was up from $2.6 billion in 2021 (a 77% increase).

However, just last year there was a bill proposed by Senator Thomas Carper (D-DE) that would relax Medicare’s GLP-1 coverage rules. The proposed bill is called the “Treat and Reduce Obesity Act of 2023” and would include two key modifications to the Medicare program:

(1) it would expand access to intense behavioral therapy; and

(2) it would allow for the coverage of anti-obesity (weight loss) drugs if there is at least one co-morbidity (such as cardiovascular disease).

There are several questions about the impact that expanded access to GLP-1s could have on the Medicare program. The Congressional Budget Office has not provided a cost estimate for full GLP-1 coverage due to ‘significant gaps in the relevant research’ but they do expect that usage would increase and that total federal spending would increase.

Many people believe that increased use of GLP-1’s would help to slow down increases in the prevalence of obesity in America and that this would result in better health outcomes. 

Obesity is linked to increases in the incidence of:

• cancer

• cardiovascular disease

• neurodegenerative diseases

• diabetes

Given the costs associated with these conditions, I would be a staunch supporter of finding fiscally responsible ways to expand access to the drugs.

That’s all for this week!

DATA VISUAL of the Week 📊

This week’s data visual comes from KFF (link). It shows the dramatic growth of Medicare Part D spending by select GLP-1’s in recent years.

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

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