The Centers for Medicare & Medicaid Services (CMS) has announced that it will now cover Eli Lilly's Zepbound for the treatment of sleep apnea.

• The Centers for Medicare & Medicaid Services have confirmed to CNBC that Medicare drug plans can now cover Eli Lilly's blockbuster obesity drug Zepbound for obstructive sleep apnea.
• The rewritten sentence is: "Zepbound is not currently covered by Medicare and many other insurance plans for weight loss specifically, but this opens the door for broader coverage and access."
• Obesity drugs can be covered by Medicare Part D plans if they are used for a medically accepted purpose approved by the Food and Drug Administration.

On Wednesday, CNBC confirmed that Medicare drug plans can now cover Zepbound, a blockbuster obesity drug used for obstructive sleep apnea.

Despite not being covered by Medicare and many other insurance plans for weight loss, the demand for Zepbound injection has increased significantly over the past year, despite its high price of approximately $1,000 before insurance.

According to a CNBC report, a representative from the Centers for Medicare & Medicaid Services stated that Medicare Part D and Medicaid coverage rules apply to Zepbound, which was recently approved for the treatment of the most common sleep-related breathing disorder.

According to the CMS spokesperson, Medicare Part D plans can only cover obesity drugs if they are used for a medically accepted purpose approved by the Food and Drug Administration. The spokesperson also mentioned that Part D plans may use prior authorization to ensure that these drugs are being used for their intended purpose.

On Dec. 20, the FDA approved Zepbound for patients with obesity and severe forms of obstructive sleep apnea, making it the first drug treatment for the estimated 20 million people with those conditions, according to Eli Lilly.

Medicare Part D plans are permitted to cover Wegovy for its other approved use of reducing cardiovascular risks, just like how Ozempic and Mounjaro, the diabetes equivalents of Wegovy and Zepbound, are covered by Medicare and most insurance plans.

Both Novo Nordisk and Eli Lilly are investigating their weight loss medications as potential treatments for fatty liver disease, chronic kidney disease, and sleep apnea, among other conditions. In order to be covered, these drugs would need to demonstrate efficacy in late-stage clinical trials and then be submitted for FDA approval for these specific uses.

According to the spokesperson, Medicaid coverage for Zepbound and other obesity medications varies depending on the condition they are prescribed for and whether the manufacturer has agreed to a Medicaid drug rebate agreement.

Under an agreement with the secretary of Health and Human Services, drug manufacturers agree to provide rebates to states in exchange for Medicaid coverage of their drugs. The states then share the rebates with the federal government.

If Zepbound is prescribed for OSA and Eli Lilly has signed the Medicaid drug rebate agreement, the state Medicaid program must cover it, the spokesperson stated.

If Zepbound is prescribed for weight loss, Medicaid programs are not obligated to cover it.

In November, the Biden administration proposed a rule that would enable Medicare and Medicaid to cover weight loss drugs for obese patients. This rule would provide millions of individuals with weekly injectables, but it would also result in a significant financial burden for taxpayers, amounting to approximately $35 billion over the next ten years.

It is unclear if President-elect Donald Trump's administration will pursue the rule.