MW Medicare can cover Zepbound for sleep apnea, creating a significant opportunity for Eli Lilly

By Ciara Linnane

CMS confirms that Medicare Part D plans can cover Zepbound for the sleep disorder

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.

The U.S. Food and Drug Administration approved Zepbound for patients with obesity and mild to moderate obstructive sleep apnea on Dec. 20, making it the first approved treatment for the roughly 20 million people with the disorder.

Medicare Part D plans can only cover obesity drugs if they are used for a medical purpose beyond weight loss, a spokesperson for the Centers for Medicare and Medicaid Services told MarketWatch. The news was first reported late Wednesday by CNBC.

Zepbound is not covered by Medicare or many other insurance plans as a treatment for weight loss. The injectable treatment costs about $1,000 a month without insurance.

Obstructive sleep apnea occurs when a person's upper airway becomes blocked, causing pauses in breathing during sleep. The disorder can affect any individual but is more common in people who are overweight.

Zepbound is a GLP-1 drug, where GLP stands for glucagon-like peptide. It works by mimicking a hormone in the body that controls digestion and reduces appetite.

Obstructive sleep apnea is usually treated using positive airway pressure via a medical device, but not all patients are able to use PAP machines.

The opportunity for Eli Lilly is significant, according to Leerink analyst David Risinger, who estimated in a Wednesday note that the move could add more than 3.7 million new Zepbound prescriptions, MarketWatch's sister publication Barron's reported.

About 700,000 U.S. patients were taking Zepbound in the third quarter, according to his calculations.

Lilly and its main rival in the obesity-drug race, Denmark's Novo Nordisk $(NVO.AU)$ (DK:NOVO.B), are conducting trials to evaluate GLP-1 drugs as a treatment for other illnesses such as chronic kidney disease and fatty liver disease.

Novo Nordisk's Wegovy has also been approved as a treatment for reducing cardiovascular risk.

The two companies' diabetes treatments, Ozempic and Mounjaro, are covered by Medicare and most insurance plans.

Eli Lilly's stock $(LLY)$ has gained 26% in the last 12 months, while the S&P 500 SPX has gained 24%.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 09, 2025 11:01 ET (16:01 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.