Finding novel ways to pay for new obesity drugs

While the recent wave of new obesity drugs appeals to many patients due to their effectiveness in reducing weight and even diminishing the risk of major cardiovascular events for some, data suggests that at current prices they’re not cost-effective. Amid increased concern about the costs of using therapeutics such as glucagon-like peptide 1 agonists, some U.S. insurers are imposing further restrictions or eliminating coverage of the drugs altogether.

To boost access, a recent Financial Times article discussed the possibility of introducing value-based pricing arrangements for weight loss drugs. Under such “risk-based contracts,” healthcare providers could spread the cost over a period of time during which savings are possible, for example, from not having to treat as many heart attacks. Alternatively, drug makers and payers may negotiate value-based contracts which include patient persistency as a prerequisite. Persistency is known to be an issue with obesity drugs, as many patients stop taking the medications owing to side effects and other issues. If patients discontinue treatment weight rebound occurs, which implies that payers and patients must be properly incentivized to be persistent.

To effectively implement value-based agreements requires reliable cost of care analytics, modeling capabilities and outcomes-based agreement templates, which Lyfegen can provide stakeholders to calculate and forecast return on investment for use in the contracting process.

Value-based arrangements could ease the projected financial burden for commercial insurers, but also public payers such as Medicaid and Medicare. At present, most Medicaid state agencies don’t reimburse obesity therapeutics, while Medicare still prohibits their coverage if prescribed as weight loss medications alone. The drug Wegovy (semaglutide) did secure a supplemental cardiovascular indication from the Food and Drug Administration in March. This allows limited access for certain Medicare beneficiaries who fulfill weight and major cardiovascular risk criteria. But it doesn’t follow that plans will necessarily jump to pay for the product, given the high cost and limited cost-effectiveness. Introducing pay-for-performance agreements could facilitate access.

Lyfegen can accommodate information requests concerning relevant measures. The Lyfegen Library specifically offers access to one central resource with more than 4,500 public agreements and 20 innovative pricing models. For a deeper understanding of how value-based pricing models can transform the accessibility of obesity treatments and optimize your healthcare investments, book a demo with us.