Obesity Drugs for Medicare: What the GLP-1 Pricing Agreement Means for Access
Adam Colborn, JD, associate vice president for congressional affairs at the Academy of Managed Care Pharmacy, discusses how the Trump administration’s “most favored nation” drug-pricing agreements test the limits of executive authority, signal potential long-term shifts in obesity treatment policy, and could drive broader market and regulatory realignments across both public and private payers.
Please introduce yourself by stating your name, title, and any relevant experience you’d like to share.
Adam Colborn, JD: I'm Adam Colborn. I am the associate vice president for congressional affairs at the Academy of Managed Care Pharmacy.
How does this new ‘most favored nation’ agreement fit within existing drug-pricing authorities? Do these deals rely on executive authority alone, or do they anticipate further legislative or regulatory reinforcement to withstand legal challenges?
Colborn: They don't really fit inside of existing authority, which isn't to say that they're illegal or impermissible under the law. This administration has told us from the beginning that they wanted to shake things up with their health care agenda—that this was not going to be business as usual in Washington, DC, and at the US Department of Health and Human Services (HHS).
Part of this process, which we saw—this is not exclusive to the Trump administration, the Biden administration as well as Trump's first administration [also did this]—is testing the boundaries of executive action. We are in this period of very narrowly divided Congresses, so no one is hitting a super majority in the Senate. That means that we're increasingly seeing policymaking happen on the administration side.
There's a little bit of a question mark about where the line is, and finding that line might take some time, but if what the Trump administration is doing seems like it's popular or the Republican Party feels like they're on the right track, they could take additional legislative and regulatory steps to cement these actions in a more stable way than we get through executive actions.
In your question about withstanding legal challenges, I think they do probably have some innate protection against lawsuits because they are voluntary agreements. I wouldn't say that the threat on that front is totally gone. They have been conducted in a way that probably insulates them somewhat from claims that they are unduly coercive or otherwise prohibited takings under the Fifth Amendment.
The big test for that is if other companies don't enter into these agreements. There were 17 letters that the Trump administration sent out to pharmaceutical manufacturers in June, we've got deals from 5 of those 17. If these other companies, or some portion of these remaining companies that receive letters, don't enter into voluntary agreements and then are subjected to punitive measures, that could open up the administration to some liability that may impact the existing agreements. Because then, if you're Pfizer or Lily or whoever and you want to pull out of the agreement, you can then point to these other manufacturers and say, "See, we were in fact coerced, even though it was framed as a voluntary agreement."
If that doesn't happen, then I think these agreements are in a relatively safe spot as far as legal challenges go.
Given the historical exclusion of weight-loss medications from Medicare, what precedent does this deal set for future coverage of anti-obesity or metabolic therapies? Could this signal a permanent policy shift in how the Centers for Medicare and Medicaid Services (CMS) approach obesity as a chronic disease?
Colborn: At the risk of being cliché, the only constant in health policy is change, and that takes time. Change takes time and tends to happen in rounds that feel like a lot of things happening all at once and then nothing happens for a while.
But when it comes to GLP-1s, I think this is a pretty huge shift that is being reviewed and will continue to be reviewed across all levels of government. Congress, the administration, and state governments certainly are grappling with demand for GLP-1s among Medicaid beneficiaries.
If these deals prove successful, then that really could be a catalyst for how CMS approaches other products and other conditions. We're watching other factors, like the demand in the commercial market for GLP-1s. That could contribute to a nationwide shift in treatment for weight loss and for obesity. I'm resistant to predicting what this might mean for precedent, but I think it's an important experiment that certainly could be precedent-setting. It's really going to depend on how implementation bears out and whether it leads to increased access and lower costs.
What do you foresee as the ripple effects of these most favored nation-linked pricing agreements on commercial payers and Pharmacy Benefit Managers (PBMs)? Will this force renegotiations across the private market or drive a new standard for value-based contracting?
Colborn: We have to expect some sort of market reaction. I'm thinking about the announcement from Cigna and Express Scripts a few weeks ago on their change in rebate strategy. We're in the early stages of a period of market realignment or development of new strategies that will continue, maybe in the absence of new laws but also possibly in the face of new laws.
As far as renegotiations go, that's hard to say. I think it certainly could because you now have a very public price benchmark that you as a competitive health plan are trying to beat for your customers. I don't know how successful they'll be. Thinking about Cigna, again, if we're in an upfront discount landscape, then there may not be a lot of room for negotiation to lower that price.
It would likely not be structured as a rebate, and that could change some elements there, but I don't know how successful commercial plans would be in large-scale renegotiations. But there are a lot of moving pieces, so I don't want to be too concrete in one direction or the other. I think it certainly could, but only time will tell.
From a legal and ethical standpoint, how transparent and sustainable are direct White House negotiations with manufacturers? Could such one-off deals complicate the long-term stability or fairness of the US drug-pricing system?
Colborn: I'll start with the question of how transparent they are. These deals are not transparent by design. While unprecedented, it's pretty understandable that we would not be privy to those details because, in this case, the government is operating as a market actor. Insofar as it is a market actor, like any other health plan, you would expect them to keep the terms of their deals somewhat private. While unprecedented, it's very understandable if we're viewing the government as a market actor.
From that standpoint, we probably won't hear about those conversations until they're final and announced. For Lily and Novo, we had been hearing rumblings for a couple of weeks that a deal was in the works and soon to be announced. That's probably all the heads up we'll get in future announcements as well. But each deal that is announced has the potential to influence the market.
One of the things that we're trying to keep an eye out for are pipeline therapies and emerging classes of drugs. I'm thinking about cell and gene therapies in this case. We could see a lot of different products come to market in a very short amount of time with a high cost that the government could have a strong interest in negotiating.
GLP-1s remain in the mix there because we seem to be doing a lot of research into different applications of GLP-1s. There are a couple of Alzheimer-related trials underway there. We're generating real-world evidence on long-term use. If we're in a situation where the White House is negotiating deals, those are all very persuasive things, but they're also work intensive.
I think, to your question about sustainability, that will depend heavily on HHS's interest and willingness to continue to commit resources to this level of engagement that would almost certainly require scaling up staff, and that's not the direction this administration has been moving. They've been looking to slim down the workforce in the administration.
So, it's tough to say whether they'll decide that this is worth prioritizing in a way that requires bulking up their professional staff or if this is just a targeted blitz geared for maximum public appreciation on a very high-profile issue like GLP-1s.
