Introduction to Zepbound and CVS Health Coverage
Eli Lilly’s stock wobbled Thursday after a looming coverage hit was detailed for its blockbuster weight-loss drug Zepbound. CVS Health said the drugs Wegovy and Saxenda from rival drugmaker Novo Nordisk will become the preferred options on its standard formulary, or list of covered drugs, as of July 1. Zepbound will be excluded.
Impact on Zepbound Accessibility
This could complicate access to a drug that many patients cannot afford to pay for on their own. The formulary is maintained by CVS Health’s pharmacy benefits management business, which runs prescription drug coverage for millions of people. Employers and insurers — who pay most of the prescription bill — use the formulary to decide which drugs get coverage. They can customize their coverage plans to include Zepbound. But CVS Health spokesman David Whitrap said most employers wind up using the standard formulary because of the discounts negotiated for them.
Alternative Options for Patients
Patients taking Zepbound will be able to switch to Wegovy if the Lilly drug is excluded from their coverage, Whitrap said. CVS Health also said Thursday that it will start selling Wegovy at a discounted price of about $500 monthly at thousands of drugstores for people without coverage. Novo had announced its new lower price last month.
Background on Obesity Medications
Wegovy and Zepbound are part of a wave of obesity medications known as GLP-1 receptor agonists that have soared in popularity due to the amount of weight people lose while taking the injections. Coverage of these drugs has been patchy due to in part to their cost and the wide swath of patients who could take them. Shortages of the drugs also have made access challenging, but those have eased recently. That allows pharmacy benefit managers to pit the products against each other to negotiate lower prices in exchange for inclusion on a formulary.
Potential Price Cuts and Market Impact
Lilly may have to make some price cuts to restore formulary access, said Daniel Barasa, who follows the company for Gabelli Funds. But he said he thinks big employers will still include both treatments on their lists of covered drugs, leaving the choice on what to use up to patients and doctors. Lilly said late last year that a head-to-head study of the two drugs showed that Zepbound helped patients drop more pounds.
Zepbound Sales Performance
Zepbound has emerged as one of Lilly’s top sellers. Its sales jumped to $2.3 billion in the recently completed first quarter. That’s up from $517 million a year ago, during the drug’s first full quarter on the market. Lilly shares shed more than $90 in value, falling nearly 11% to $804.06 Thursday afternoon. Broader indexes, meanwhile, rose slightly.
Conclusion
The coverage challenge from CVS Health poses a significant hurdle for Zepbound, potentially affecting its accessibility and sales. However, the drug’s effectiveness and the demand for obesity treatments may still drive its adoption, even if at a slower pace. Lilly’s response to the challenge, including potential price adjustments, will be crucial in determining the drug’s future market performance.
FAQs
- Q: What is Zepbound, and what is it used for?
A: Zepbound is a weight-loss drug developed by Eli Lilly, used for the treatment of obesity. - Q: What is the coverage challenge faced by Zepbound?
A: CVS Health has announced that Zepbound will be excluded from its standard formulary as of July 1, in favor of rival drugs Wegovy and Saxenda from Novo Nordisk. - Q: How might this affect patients currently taking Zepbound?
A: Patients may be able to switch to Wegovy if Zepbound is excluded from their coverage, or they might have to pay out-of-pocket for Zepbound if their employer or insurer does not customize their coverage plan to include it. - Q: What is the potential impact on Lilly’s sales and market performance?
A: The exclusion from CVS Health’s standard formulary could lead to reduced sales for Zepbound, potentially forcing Lilly to consider price cuts to regain formulary access and maintain market share.
