WASHINGTON, March 21 (Reuters) - Heart patients insured

under the U.S. Medicare program would be covered for Novo

Nordisk's weight-loss drug Wegovy as long as it is

prescribed to reduce their risk of heart attacks and strokes,

the agency overseeing the program said on Thursday.

Medicare prescription drug plans administered by private

insurers, known as Part D, currently cannot cover obesity drugs.

Under the new guidance, however, such drugs would be paid for if

they receive U.S. approval for a secondary use that Medicare

does cover, the U.S. Centers for Medicare and Medicaid

Services(CMS) said.

Based on positive results from a large clinical trial, the

FDA approved Wegovy earlier this month for lowering the risk of

stroke and heart attack in overweight or obese adults who do not

have diabetes.

"CMS has issued guidance to Medicare Part D plans stating

that anti-obesity medications that receive FDA approval for an

additional medically accepted indication can be considered a

Part D drug for that specific use," a CMS spokesperson said in

an emailed statement.

Analysts have forecast the market for weight-loss drugs

could reach at least $100 billion a year by the end of the

decade, with production of Wegovy and Eli Lilly's ( LLY )

Zepbound and Mounjaro unable to keep up with astonishing demand.

A Novo spokesperson said the company was encouraged to see

the guidance, but more work was needed because Medicare still

does not cover obesity drugs for chronic weight management.

The CMS guidance on Wegovy was reported earlier by the

Wall Street Journal.

Medicare's coverage of Wegovy opens the drug up to

government price negotiations under President Joe Biden's

Inflation Reduction Act. CMS has said the prices it negotiates

will apply to drugs that share the same active ingredient rather

than specific brands.

Novo Nordisk last year told analysts it expected Medicare to

negotiate the price it will pay for diabetes drug Ozempic, which

has the same active ingredient as Wegovy, semaglutide, and

publish new prices for the drugs in 2027. It said it expected

Wegovy to be affected by the negotiations.

Medicare is barred from covering certain drugs including

those used to treat anorexia, weight loss, and weight gain,

under the Social Security Act. CMS said in its guidance that

weight loss drugs still cannot be covered when used solely to

treat obesity.

"A drug that receives FDA approval for chronic weight

management alone would not be considered a Part D drug," the CMS

spokesperson said. "If this same drug also receives FDA approval

to treat diabetes or reduce the risk of major adverse

cardiovascular events in adults with established cardiovascular

disease and either obesity or overweight, then it would be

considered a Part D drug for those specific uses only," the

spokesperson said.

About 65 million people are enrolled in Medicare, the U.S.

government health insurance program for people aged 65 and older

or who are disabled.

State Medicaid programs for low income people and families

would be required to cover Wegovy when used to prevent heart

disease for people with obesity, the CMS spokesperson added.