GLP-1 (glucagon-like peptide-1) drugs, initially a treatment for type 2 diabetes for over a decade, have recently gained traction as an effective treatment for obesity. While these drugs present new possibilities for obesity treatment, questions surrounding access and affordability have arisen. The crux of the issue lies in the high out-of-pocket costs and the limited coverage offered by Medicaid, ACA Marketplace plans, and most large employer firms. However, this is evolving, with a number of state Medicaid programs and other payers re-evaluating their coverage policies.
The Role of GLP-1s in Weight Management and Diabetes
Ozempic and Wegovy, both containing semaglutide and manufactured by Novo Nordisk, function similarly but have different dosages and FDA approval for different uses. Ozempic is approved for controlling blood sugar levels for adults with type 2 diabetes, while Wegovy is prescribed for long-term weight management and certain forms of liver disease. Other GLP-1 agonists included in the analysis were approved for treatment of obesity, Saxenda (liraglutide), Zepbound (tirzepatide) and corresponding formulations that may potentially be used off-label for treatment of obesity, Mounjaro (tirzepatide), Rybelsus (semaglutide), Victoza (liraglutide), mirroring another recent KFF analysis.
Your blood glucose (sugar) levels should start to fully decline within the first week after you start using Ozempic (semaglutide) at your regular dose.
Medicaid Coverage: A State-by-State Decision
States have the autonomy to decide whether to cover obesity drugs under Medicaid. The Medicaid Drug Rebate Program mandates coverage for nearly all FDA-approved drugs from participating manufacturers for medically accepted indications. However, weight-loss drugs fall into a category that can be excluded from coverage. As of August 2024, only 13 state Medicaid programs covered GLP-1s for obesity treatment. Twelve states in KFF’s annual budget survey reported coverage of GLP-1s for obesity treatment under FFS as of July 1, 2024, and North Carolina reported adding coverage in August of 2024. All 12 states that reported coverage of GLP-1s as of July 1, 2024 also reported that utilization control(s) applied, with the most common being prior authorization (11 of 12 states) and/or BMI requirements (11 of 12 states). Eleven of the 12 states reported covering all three GLP-1s currently approved for the treatment of obesity (Saxenda, Wegovy, or Zepbound).
While the survey only asked about FFS coverage, MCO drug coverage must be consistent with the amount, duration, and scope of FFS coverage. MCOs, however, may apply differing utilization controls and medical necessity criteria unless the state’s MCO contract specifies otherwise.
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For Medicaid, you may still need to meet certain qualifications to be prescribed these drugs for weight loss, even if your state covers them.
CareSource Coverage Policies
CareSource covers all medically necessary Medicaid-covered drugs at many pharmacies. CareSource also covers many commonly used over-the-counter (OTC) medications with a written prescription from your doctor. CareSource uses Preferred Drug Lists (PDLs), which are lists of drugs that they prefer their providers to prescribe. Changes to the PDL are also posted every quarter.
Prior Authorization and Exceptions
For some drugs, including those on the PDL, CareSource may require prior authorization, meaning your doctor needs to provide information justifying the need for the drug. This may be needed if there is a generic or pharmacy alternative available, the drug could be misused/abused, or there are other drugs that should be tried first. CareSource will review and give a decision within 24 business hours of the original receipt of a pharmacy prior authorization request. If it is an emergency, a 72-hour override may be used so that you can get your medicine.
You can ask for a medicine that is not on our preferred drug list. This is called asking for an exception. To ask for an exception, please fill out an exception request form and submit it.
Generic Substitution and Therapeutic Interchange
CareSource utilizes generic substitution, where a generic drug is provided if available in place of a brand-name drug. Members and health care providers can expect the generic to produce the same effect and have the same safety profile as the brand-name drug. If a brand-name product is requested when a generic equivalent is available, a prior authorization request will need to be submitted from your provider.
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Step therapy is also employed, where a member must try a medicine on the PDL before a drug that is not on the PDL would be approved by CareSource.
Quantity Limits and Drug Safety Recalls
Some drugs have limits on how much can be given to a member at one time. Quantity limits are based on the drug makers’ recommended dosing frequencies. Patient safety is also considered.
CareSource PASSE pays for all medically necessary, CMS participating, Medicaid-covered FDA-approved products on the Preferred Drug List (PDL) at many pharmacies.
The Cost Factor and Medicaid Spending
Expanding Medicaid coverage of obesity drugs could increase access for the almost 40% of adults and 26% of children with obesity in Medicaid. However, it could also increase Medicaid drug spending and put pressure on overall state budgets. In the longer term, reduced obesity rates among Medicaid enrollees could also result in reduced Medicaid spending on chronic diseases associated with obesity, such as heart disease, type 2 diabetes, and types of cancer.
The number of Medicaid prescriptions and gross spending on GLP-1s have increased rapidly in recent years, with both nearly doubling from 2022 to 2023. Overall, from 2019 to 2023, the number of GLP-1 prescriptions increased by more than 400%, while gross spending increased by over 500%. Spending per prescription before rebates reached more than $900 per prescription in 2023.
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Prescriptions and spending on Ozempic, approved to help control blood sugar levels for adults with type 2 diabetes in 2017, have grown considerably from 2019 to 2023, nearly doubling every year since 2019. Looking from 2022 to 2023, the latest year of data available, Wegovy (first approved in 2021) and Mounjaro (approved in 2022) also saw substantial growth, with prescriptions and gross spending for both drugs increasing twelvefold or more. From Medicaid data publicly available, there is no way yet to disentangle how much of the growing use of GLP-1s is related to treatment for diabetes versus obesity, or a combination of both.
Many state Medicaid programs are considering covering obesity drugs in the future but are concerned about the cost implications. States are likely considering various cost containment strategies for these drugs and may even be re-evaluating their broader approach to obesity treatment, including the use of obesity medications along with other treatments such as nutritional counseling or behavioral therapy.
Medicare Coverage
Yes, Ozempic is usually covered under Medicare and state Medicaid programs to treat approved indications like type 2 diabetes, cardiovascular risk reduction and chronic kidney disease in type 2 diabetes, but not for weight loss, which is not approved by the FDA.
Most Medicare prescription drug plans (Medicare Part D) cover Ozempic for the treatment of approved indications like type 2 diabetes or for prevention of chronic kidney disease in people with type 2 diabetes, but not for weight loss. In March 2024 the FDA approved Wegovy (semaglutide) for cardiovascular risk reduction in people with either obesity or overweight. Contact your Medicare Part D drug plan to determine your eligibility for Ozempic or Wegovy. In some cases, you may have to follow a stepped-plan, where you have to try other treatments first, before Ozempic or Wegovy would be approved.
Challenges and Considerations
The popularity and increased demand for GLP-1s has led to drug shortages, sometimes causing people to switch products or ration doses or sometimes leaving individuals without access to needed prescriptions.
When asked about the key factors contributing to their obesity medication coverage decision, almost two-thirds of responding states mentioned cost, though states are also weighing a number of other factors including the need for legislative action, adherence concerns, clinical criteria development, and potential side effects. Conversely, 4 in 10 states noted that positive health outcomes and longer-term savings on chronic diseases associated with obesity were key factors in their decision to cover or consider covering in the future along with increasing enrollee access and health equity, recommendations from providers, and ability to negotiate supplemental rebate agreements.
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