Michael Monostra , 2025-04-25 15:13:00
April 25, 2025
3 min read
Key takeaways:
- A microsimulation model projected Medicare expenditures to increase $47.7 billion over 10 years with obesity drug coverage.
- Net health costs could be influenced by price changes, drug uptake and other factors.
Medicare Part D coverage of obesity medications could lead to a large increase in health care costs due to the prices of the drugs, according to data from a microsimulation model published in JAMA Health Forum.
As Healio previously reported, CMS decided to not move forward with a previously proposed rule to have Medicare begin covering obesity medications in the 2026 calendar year, though the agency said it could reconsider the proposal in future rulemaking.
Data were derived from Hwang JH, et al. JAMA Health Forum. 2025;doi:10.1001/jamahealthforum.2025.0905.
If Medicare were to cover obesity medications, however, there could be huge financial implications, according to David D. Kim, PhD, assistant professor of medicine and public health sciences at University of Chicago.
“Our finding is that obesity drugs [would be] a pretty substantial cost, [about] $47 billion over the next 10 years,” Kim told Healio. “These are important numbers, because a lot of people say that GLP-1s will save a lot of money in health care because obesity is a risk factor for many other conditions. … Our paper highlighted that in some sense, GLP-1s do save money, but not enough to offset the high prices of the medication.”
Researchers created a microsimulation model using National Health and Nutrition Examination Survey data from 2017 to 2020. The modeled population included 30 million current or future Medicare Part D beneficiaries with overweight or obesity. The base-case for the model assumed a 10% annual uptake rate over a 10-year period, with 100% of adults who initiated a drug using it for 1 year and 40% adhering to therapy over 2 years. The net annual cost of semaglutide (Wegovy, Novo Nordisk) was estimated at $8,412 and the net annual cost of tirzepatide (Zepbound, Eli Lilly) was estimated to be $6,236. The model assumed the cost of both drugs would be offered at a 10% discount from the annual list amount. Net health costs were calculated using savings resulting from reduced body weight and lower risk for cardiometabolic risk factors.
Increased Medicare costs
The model estimated Medicare would spend $65.9 billion on obesity medications over 10 years. An estimated $18.2 billion would be saved in health spending from a reduction in obesity-related comorbidities, resulting in net Medicare spending of $47.7 billion over 10 years.
Sensitivity analysis showed that spending and net health costs varied with changes in uptake, projected price discounts and adherence. Ten-year medication costs dropped to $17.9 billion when obesity drugs were offered at an additional 30% discount and when 20% of adults were adherent to therapy. Conversely, with uptake at 5%, adherence at 60% and obesity prices offered at a 10% discount, 10-year drug costs rose to $43.1 billion.
Kim said the range of projected health costs and savings in the sensitivity analysis highlights how shifts in drug prices, adherence and uptake could lead to large changes in Medicare spending.
“Based on what we know today, [obesity drugs] have a substantial fiscal impact,” Kim said. “But there are a lot of moving pieces that we don’t know.”
The cost of obesity drugs was projected to increase from $11.3 billion in 2026 to $65.9 billion in 2035, $148.2 billion in 2045 and $266.5 billion in 2055. Obesity-related health savings increased from $1 billion in 2026 to $18.2 billion in 2035, $44.6 billion in 2045 and $89.3 billion in 2055. Net Medicare spending was projected at $10.2 billion in 2026, $47.7 billion in 2035, $103.6 billion in 2045 and $177.3 billion in 2055.
Lower prices, interventions needed
The findings from the microsimulation add more evidence to the need to lower the cost of semaglutide and tirzepatide. A study from Kim and colleagues published in JAMA Health Forum in March found semaglutide and tirzepatide were not cost-effective therapies due to their high list prices. Kim noted that semaglutide was one of 15 drugs selected by CMS for the second round of Medicare Part D price negotiations.
“The prices need to be lower,” Kim said. “It will happen, whether its through [Inflation Reduction Act] Medicare price negotiations or competition, the prices eventually will go down to the level where they provide good value.”
Even with lower prices, Kim added that more research is needed into alternative drugs or interventions following semaglutide or tirzepatide therapy that could allow people to maintain their weight loss at a lower cost.
For more information:
David D. Kim, PhD, can be reached at david.kim@bsd.uchicago.edu.
Sources/Disclosures
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Disclosures:
The study was funded by the NIH. Kim reports receiving grants from the National Heart, Lung, and Blood Institute and the National Institute on Minority Health and Health Disparities. Please see the study for all other authors’ relevant financial disclosures.
