Eli Lilly’s stock experienced fluctuations on Thursday following news of anticipated changes in coverage for its successful weight-loss medication, Zepbound. Starting July 1, CVS Health announced that Wegovy and Saxenda, two drugs from competitor Novo Nordisk, will be prioritized on its standard formulary, with Zepbound set to be excluded. This decision could complicate matters for patients who are unable to bear the cost of Zepbound out-of-pocket.
CVS Health’s pharmacy benefits management division, which manages prescription drug coverage for a vast number of individuals, maintains this formulary. Employers and insurers rely on it to determine which medications receive coverage, as they shoulder the majority of prescription costs. Although employers and insurers have the option to tailor coverage plans to include Zepbound, CVS Health spokesperson, David Whitrap, noted that most tend to adopt the standard formulary due to the negotiated discounts.
Patients who are currently taking Zepbound may transition to Wegovy if Zepbound is excluded from their insurance coverage, according to Whitrap. Furthermore, CVS Health revealed that Wegovy would be available for sale at drugstores at a reduced cost of approximately $500 monthly for those without insurance coverage, following Novo’s earlier announcement of a lowered price.
Both Wegovy and Zepbound are among a new class of obesity treatments, GLP-1 receptor agonists, that have gained substantial popularity given the significant weight loss achieved by individuals using these injectable drugs. However, coverage for these treatments has been inconsistent, largely because of their high cost and the broad demographic of potential users. Recent alleviations in shortages have made it feasible for pharmacy benefit managers to leverage products against each other to secure lower pricing in return for formulary inclusion.
Market analyst Daniel Barasa from Gabelli Funds suggested that Lilly might need to lower Zepbound’s price to regain formulary access. Nonetheless, he believes major employers will likely continue to offer both Zepbound and Wegovy, allowing patients and their doctors to determine which medication to pursue.
Eli Lilly previously disclosed that direct comparison studies favored Zepbound over its rival, with patients achieving greater weight loss. As a leading product for Lilly, Zepbound’s sales soared to $2.3 billion in the first quarter, a substantial increase from the $517 million reported in the corresponding quarter the previous year.
In response to these events, Lilly’s shares plummeted by over $90, representing a nearly 11% decrease, closing at $804.06 on Thursday afternoon, while broader market indexes saw modest gains.