CMS has announced that Medicare Part D plans are permitted to include Zepbound in their coverage for the treatment of sleep disorders.
Medicare drug plans can now cover Eli Lilly & Co.'s obesity drug Zepbound as a treatment for obstructive sleep apnea, news that's expected to prove a big boost for the drug company.
On December 20, the U.S. Food and Drug Administration granted approval for Zepbound, marking it as the first treatment available for the approximately 20 million individuals suffering from obesity and mild to moderate obstructive sleep apnea.
According to a spokesperson from the Centers for Medicare and Medicaid Services, Medicare Part D plans are permitted to cover obesity medications only when they are prescribed for medical reasons other than just weight loss. This information was initially reported by CNBC late Wednesday, as noted by MarketWatch.
Zepbound is not included in Medicare or numerous other insurance policies for weight loss treatment. The price for the injectable therapy is approximately $1,000 each month if you do not have insurance coverage.
Obstructive sleep apnea happens when the upper airway of an individual gets obstructed, leading to interruptions in breathing while they sleep. This condition can impact anyone, but it is particularly prevalent among individuals who are overweight.
Zepbound is a medication classified as a GLP-1 drug, with GLP representing glucagon-like peptide. Its mechanism of action involves imitating a hormone in the body that regulates digestion and curbs hunger.
Obstructive sleep apnea is typically managed with positive airway pressure through a medical device; however, some patients may find it difficult to utilize PAP machines.
Leerink analyst David Risinger highlighted a substantial opportunity for Eli Lilly in a note released on Wednesday, estimating that this initiative could result in over 3.7 million additional prescriptions for Zepbound, as reported by Barron's, a publication affiliated with MarketWatch.
According to his estimates, approximately 700,000 patients in the U.S. were using Zepbound during the third quarter.
Lilly, alongside its primary competitor in the obesity medication sector, Denmark's Novo Nordisk (NVO) (DK:NOVO.B), is currently running trials to assess the effectiveness of GLP-1 drugs for treating various other conditions, including chronic kidney disease and fatty liver disease.
Wegovy, developed by Novo Nordisk, has received approval for its use in lowering cardiovascular risk.
Medicare and the majority of insurance plans provide coverage for the diabetes medications Ozempic and Mounjaro from the two companies.
Eli Lilly's stock (LLY) has gained 26% in the last 12 months, while the S&P 500 SPX has gained 24%.
-Ciara Linnane
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01-09-25 11:01 AM ET
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