A Budget Impact Analysis of Anti-Obesity Medications in the Medicare Population in the United States

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Publication Date

4-3-2025

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Presentation: 21:28

Abstract

The development of Glucagon-like peptide-1 receptor agonists (GLP-1 RAs), such as semaglutide and tirzepatide, has introduced effective pharmaceutical options for weight loss to treat the growing problem of obesity. However, Medicare Part D currently excludes coverage of weight-loss medications. In 2024, the Biden-Harris administration proposed allowing coverage for anti-obesity medications beginning in 2026, a policy reversal that could have significant financial implications for the Medicare program. The purpose of this capstone was to evaluate the budget impact on the Centers for Medicare & Medicaid Services (CMS) of adding GLP-1 RAs to the Medicare formulary. A budget impact analysis (BIA) was conducted using a one-year and five-year time horizon. The model targeted the Medicare population aged 65 and older and assumed 10% uptake among eligible individuals, with equal utilization of semaglutide and tirzepatide. Adherence was modeled at 40%, and clinical effectiveness was translated into obesity class reductions, based on published effectiveness data. Costs included drug prices and adjusted obesity-related healthcare expenditures by obesity class. Results showed that adding GLP-1 RAs would increase Medicare spending by $8 billion in the first year and $27 billion over five years. This represents a 1% increase in total Medicare spending in year one and 0.7% over five years. Sensitivity analyses identified adherence rates as key drivers of budget impact. Higher adherence increased costs in the short term but led to cost savings in later years due to improved health outcomes. In conclusion, while the cost is in the billions, the percentage change is small. Promoting medication adherence may optimize both clinical benefits and long-term cost savings, supporting the value of such a policy shift.

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English

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