Fiscal Impact of Expanded Medicare Coverage for GLP-1 Receptor Agonists to Treat Obesity

JAMA Health Forum. 2025 Apr 4;6(4):e250905. doi: 10.1001/jamahealthforum.2025.0905.

ABSTRACT

IMPORTANCE: Despite the clinical benefits of treating obesity and related complications, glucagon-like peptide-1 receptor agonists (GLP-1RAs) are not yet covered by Medicare Part D, partly due to high drug costs. The Biden administration’s proposal to expand Part D coverage underscores the need to assess the balance between fiscal costs and benefits to guide policy decisions.

OBJECTIVE: To estimate the 10-year net fiscal impact of expanded Medicare coverage for GLP-1RAs for obesity treatment.

DESIGN, SETTING, AND PARTICIPANTS: In this economic evaluation, a 10-year fiscal impact analysis was conducted between 2026 and 2035 using the validated Diabetes, Obesity, Cardiovascular Disease Microsimulation model. The base-case analysis incorporated a 10% 1-time uptake rate for eligible adults in each new cohort, 40% adherence beyond the first year, and a 10% additional price discount beyond current net prices. A 3-way sensitivity analysis was conducted with varying uptake, adherence, and additional price discounts. The model included current and future Medicare beneficiaries with body mass index (calculated as weight in kilograms divided by height in meters squared) of 30 and higher or 27 and higher with at least 1 obesity-related comorbidity. Data were analyzed from March to December 2024.

EXPOSURE: GLP-1RA therapy.

MAIN OUTCOMES AND MEASURES: Total Medicare drug costs for GLP-1RAs for obesity indications not covered by Medicare, long-term health care cost offsets from reduced obesity-related comorbidities, and net fiscal impact.

RESULTS: Among 30 million cumulative Medicare beneficiaries (survey-weighted mean [SE] age, 64.5 [0.4] years; 54.1% female) identified as eligible for new GLP-1RAs for obesity treatment over the next 10 years, the base-case analysis estimated that 3 million would receive treatment. Medicare’s total drug costs were projected at $65.9 billion and health care cost offsets from clinical benefits at $18.2 billion, resulting in net increased spending of $47.7 billion. Three-way sensitivity analysis estimated that higher uptake and adherence would lead to increased health care savings from clinical benefits. However, these savings were estimated to remain less than additional spending on GLP-1RAs and to extensively increase net spending.

CONCLUSIONS AND RELEVANCE: This economic evaluation estimates that expanded Medicare coverage for GLP-1RAs would increase access and reduce obesity-related comorbidities but impose substantial costs over 10 years. Even with a moderate scenario (5% uptake, 20% adherence, and 30% additional price discount), net spending was still projected to reach $8 billion over a decade, underscoring the need for further price reductions, lower-cost strategies to prevent weight regain, and reductions in spending on low-value care.

PMID:40279111 | DOI:10.1001/jamahealthforum.2025.0905