Proposal for a Value-Based Agreement to Reimburse Anti-obesity Medicines in Traditional Medicare

Anti-obesity medicines (AOMs), such as glucagon-like peptide-1 (GLP-1) agonists, hold great promise for slowing the chronic disease epidemic in the United States. Treatment with semaglutide and tirzepatide produces substantial weight loss and significant reductions in obesity-related diseases. Prior research shows expanding access to AOMs would generate trillions of dollars in social value to Americans today in the form of better life expectancy and fewer years spent with chronic diseases. The Medicare program, itself, could save around $245 billion in Part A and Part B spending over 10 years. Yet, despite the potential value, access to GLP-1s for weight loss remains frustratingly low. Medicare and most private insurance plans do not cover the newly approved GLP-1 treatments. This paper presents a payment mechanism to resolve many insurers' concerns regarding coverage of GLP-1s. We propose a value-based agreement for Medicare beneficiaries where The Centers for Medicare & Medicaid Services (CMS) pays a lower upfront price and shares the long-term savings with manufacturers if and when they are realized. For simplicity, we use a straightforward reimbursement approach building on Medicare's existing risk-adjustment infrastructure to identify savings in treating obesity-related (ICD-10) conditions.