New weight-loss drugs may be too costly to cover

New GLP-1 weight-loss drugs, such as Novo Nordisk's Wegovy, have surged in popularity in recent months. But their high costs — which can reach over $1,000 a month — have made getting coverage for the drugs difficult.

Currently, Medicare does not cover weight-loss medications, and only 22% of employers offer coverage for these drugs, according to data from the International Foundation of Employee Benefit Plans. Among insurers who do cover weight-loss drugs, many are setting up strict prior authorization requirements before patients can get the drugs.  

The expense has also pushed employers to either cut coverage or raise plan costs for all employees to help offset the increased costs.

For example, the University of Michigan, which covers about 120,000 people, increased the copays in its health plan from $20 to $45 after spending almost $9 million for 1,076 members on the weight-loss drugs from July 2022 and June 2023. Copays will further increase to $75 on Jan. 1, 2024.

Separately, the University of Texas system, which has more than 116,000 workers, stopped covering weight-loss drugs in September after seeing costs rise from $1.5 million a month to $5 million over an 18-month period that ended in May.

According to the university system's benefits guidebook, continuing to cover the drugs would add $73 million a year to prescription plan costs and cause the system to raise premiums by 2.5% to 3% for all plan members.

In North Carolina, the state health plan, which covers 750,000 employees, will no longer cover high-cost weight-loss drugs for new members starting Jan. 1, 2024. According to the state's treasurer Dale Folwell, spending on these drugs would have exceeded $170 million in 2024 and could further increase to over $1 billion over a six-year period.

"We have a fiduciary responsibility not to bankrupt our plan based on the usage of one drug," said Folwell.

Connecticut offers a potential roadmap for coverage

As states and employers grapple with the high costs of these weight-loss drugs, a new program being tested in Connecticut may provide a roadmap to providing coverage for these drugs while mitigating costs.

In July, Connecticut introduced a new clinical lifestyle management program called Flyte for state health plan members who want to take drugs such as Ozempic or Wegovy for weight loss. The program offers online tools for weight management, and participants can meet with providers to receive personalized care plans.

Providers who are part of Flyte can prescribe GLP-1 drugs, which the state health plan would then cover, or recommend a different course of treatment for patients.

"I never considered getting rid of the drugs, but I also knew that the status quo was not going to work and we had to look at other options," said Connecticut Comptroller Sean Scanlon, who runs the state health plan, which covers 265,000 employees. This year, before the introduction of Flyte, the health plan was on course to spend $30 million on weight loss drugs.

So far, the Flyte program, which is administered through a company called Intellihealth, is showing early signs of success. As of Nov. 3, around 1,501 members of the state health plan have signed up for the program. Although doctors have written prescriptions for GLP-1 prescriptions for around 80% of these patients, the number of new prescriptions is plateauing. Previously, the plan had seen a 50% yearly growth in new prescriptions for these drugs.

According to Intellihealth CEO Sloan Saunders, the company uses a comprehensive approach to obesity where providers consider different treatment plans, including lower-cost therapies, before prescribing expensive weight-loss drugs.

"Just prescribing someone Wegovy and sending them on their way really doesn't get great outcomes," Saunders said.

Connecticut currently pays around $110 a month for each participant in the program, and based on the current number of patients participating, the annual cost would be roughly $2 million. The state plans to evaluate results over a 10-month period and will collect feedback from employees before it decides whether to commit to a more long-term contract with Intellihealth.

Other states and employers are already expressing interest in implementing programs like Connecticut's to help them control the costs of these weight-loss drugs. "We don't have a monopoly on good ideas in this world," Folwell said. "So we're interested in anything that we can learn from other states [that] are also under siege because of this price-gouging."

However, Jeff Levin-Scherz, population health leader at insurance consulting firm WTW, noted that many companies are still in the early stages of assessing their coverage policies, and that it's still unclear whether programs like Flyte will be effective at improving clinical costs and outcomes in the long-term.

"How much this strategy will take off will depend to some extent at what impact it has on cost, what impact it has on clinical outcomes and what impact it has on member satisfaction," Levin-Scherz said. (Hooper, Politico, 11/15)

Advisory Board's weight-related resources

According to CDC data, more than 70% of U.S. adults ages 20 and older are either overweight or obese. Obesity is also  prevalent  among children, with rates growing between 17.7% and 21.5% over the last decade.

As obesity rates continue to rise, so will healthcare costs. Currently, obesity costs the U.S. healthcare system $173 billion every year.  

To help address the growing weight-related issues in healthcare, Advisory Board offers several resources on different topics, including:

­GLP-1 drugs

Interest in new weight-loss drugs, including Novo Nordisk's Wegovy and Eli Lilly's recently approved Zepbound, has surged this year, leading to record sales — as well as supply shortages as manufacturers struggle to keep up with demand.

Advisory Board's Chloe Bakst and Rachael Peroutky  recently shared their insights on how GLP-1 shortages might impact healthcare and what leaders can do in the meantime.

Radio Advisory's Rachel Woods has also covered GLP-1 drugs on the podcast, discussing the  potential future of these drugs  and how they could help — or hurt —  health systems' finances.

Other useful resources include the expert insights  "5 catalysts that will impact the future of weight management drugs,"  and  "What the headlines get wrong about weight management medications."

Bariatric surgery

Last year, the American Society for Metabolic and Bariatric Surgery and the International Federation for the Surgery of Obesity and Metabolic Disorders  updated guidelines for weight-loss surgery, expanding eligibility for more people.

Under the new guidelines, anyone with a BMI over 35, regardless of whether they have any health problems, is eligible for weight loss surgery. People with a BMI over 30, which is the official definition of obesity, are also eligible if they have not been able to achieve substantial or long-term weight loss.

This expert insight outlines  three barriers to bariatric surgery and how to overcome them. For patients considering bariatric surgery, this resource offers  three factors they should keep in mind  while they decide.

Healthcare's approach to obesity

Recently, healthcare organizations have  made an effort  to move away from using BMI to determine obesity and assess health. In June, the American Medical Association voted to adopt a new policy that moves away from using BMI alone when assessing whether a patient is at a healthy weight.

Some physicians are also looking beyond BMI and people's weight as they assess their health and recommend treatments. Rather than focusing on weight loss as a way to treat health issues, some providers are now taking a "weight-neutral" approach that avoids intentional weight loss.

In a recent Radio Advisory  episode, Rachel Woods and Advisory Board experts Darby Sullivan and Chloe Bakst discussed healthcare's current approach to obesity and whether it is helping or harming patients.

Similarly, this  expert insight covers three missteps in our current approach to obesity and outlines five potential ways providers can address these issues. 

The number of high-cost drugs is increasing, presenting new challenges across the healthcare industry. Our experts discuss the anxieties, misconceptions, and potential solutions to ensure innovative treatments are accessible to patients in need.