CMS says Medicare drug plans can now cover Zepbound for sleep apnea

Medicare's prescription drug program can now pay for Eli Lilly's Zepbound when the medication is prescribed for obstructive sleep apnea, the Centers for Medicare & Medicaid Services confirmed on Jan. 8 ^[1][2].

Zepbound is the brand name for tirzepatide, the same molecule Lilly markets as Mounjaro for type 2 diabetes ^[1][3]. The sleep apnea use was cleared on Dec. 20, when the Food and Drug Administration approved it for adults who have obesity along with moderate-to-severe obstructive sleep apnea, or OSA. It became the first drug approved in the United States for that condition ^[1][2][3].

OSA is a disorder in which breathing repeatedly stops during sleep because the airway narrows or becomes blocked ^[1][3]. Lilly estimates that 20 million people have those forms of the disease ^[1][3], and Reuters reported that sleep apnea affects roughly 1 billion people worldwide ^[2]. Treatments commonly recommended for it include CPAP machines, surgery and weight loss ^[2].

How the coverage rule works

Medicare's drug benefit, Part D, does not pay for obesity medicines when the purpose is weight loss. It can pay when a prescription serves a different, medically accepted purpose that the FDA has approved ^[1][3].

Asked about Zepbound, a CMS spokesperson told CNBC that the agency's existing Part D and Medicaid coverage rules apply to the drug now that the FDA has acted ^[1][3]. Plans may also use prior authorization — an insurer's advance approval — to confirm the prescription is for sleep apnea rather than weight loss on its own, the spokesperson said ^[1][3].

Permission is not the same as a guarantee. Reuters noted that insurers can still choose not to cover Zepbound ^[2]. Commercial insurers and employers had held back partly because of cost, which Reuters described as more than $1,000 a month ^[2]; CNBC put the figure at roughly $1,000 per month before insurance ^[1][3].

There is a precedent. Part D plans are likewise allowed to cover Novo Nordisk's Wegovy for its approved use of lowering cardiovascular risk ^[1][3]. The diabetes versions of both drugs — Ozempic and Mounjaro — are already covered by Medicare and most insurance plans ^[1][3].

Rules for Medicaid differ by state and by diagnosis. A state Medicaid program must cover Zepbound if it is prescribed for OSA and Lilly has signed a Medicaid drug rebate agreement, the CMS spokesperson said. If the prescription is for weight loss, states are not required to cover it ^[1][3]. Under those rebate agreements, manufacturers give states discounts in exchange for coverage of their drugs ^[1][3].

Lilly called Medicare coverage of Zepbound for the condition "good news" in a statement ^[1][3].

Why it matters for patients

Medicare enrolls about 65 million people, including those 65 and older and some people with disabilities ^[2]. For a Medicare patient who has obesity plus moderate-to-severe OSA, a Zepbound prescription could now be paid for by a Part D plan, where before the guidance it would not have been, because the stated purpose is the sleep condition ^[1][3].

Coverage is not automatic. Individual plans decide whether to include the drug, and CMS said plans may require prior authorization first ^[1][3]. Which plans will cover it, and what patients would pay out of pocket, has not been disclosed ^[1][3]. Medicaid coverage depends on the state and on the diagnosis written on the prescription ^[1][3]. Nothing in the guidance changes Medicare coverage when Zepbound or Wegovy is prescribed for weight loss alone ^[1][3].

What happens next

In November, the Biden administration proposed a rule that would let Medicare and Medicaid cover weight loss drugs for patients with obesity. CNBC reported the proposal would cost taxpayers as much as $35 billion over 10 years ^[1][3], and Reuters reported it would take effect in 2026 if the incoming Trump administration supports it ^[2]. Whether that happens is unclear ^[1][3].

Lilly and Novo Nordisk are also testing their weight loss medicines for fatty liver disease, chronic kidney disease, sleep apnea and other conditions ^[1][3]. Medicare coverage for any of those uses would require late-stage trial results and then a separate FDA approval ^[1][3].