Health insurance

Why Won’t Your Company Pay for Weight-Loss Drugs Like Wegovy


  • Americans are clamoring for new weight-loss drugs, but companies aren’t rushing to pay for them.
  • Employers worry the cost of covering injections such as Wegovy could overwhelm their budgets.
  • Drugmakers claim the shots will save money, but employers say there’s no proof of that.

A stalemate has taken hold in the two years since US regulators green-lit Wegovy, a weight-loss drug that’s captured the attention of the masses and ignited a fiery debate over how obesity should be treated.

Millions of people desperate to lose weight want to take Wegovy or its sister drug Ozempic. Many doctors, relieved to have a new tool in their arsenal, want to prescribe them. And drugmakers, drooling over the prospective profits, want to sell them.

But no one wants to pay for them — especially not employers.

These new injectable drugs represent a big leap in treating obesity. They’re also a perfect storm that could spell doom for the budgets of employers, which collectively pay for healthcare for roughly half the US population.

Here’s the math that’s confronting companies. The drugs come with price tags that can be well over $1,000 a month. Multiply that by the vast number of people who have obesity. And don’t forget that the drugs aren’t cures, so people may have to take them for life.

Put it all together, and companies that choose to pay for drugs such as Wegovy for their workers could see their pharmacy costs soar by as much as 20% in a single year, said AJ Loiacono, the CEO of Capital Rx, a company that helps employers manage prescription-drug benefits.

“When you look at the modeling, it does jump off the page,” he said.

A Novo Nordisk manufacturing plant.
Li Ran/Xinhua via Getty Images

The pharmaceutical companies behind the drugs, and the doctors who want to prescribe them, claim that the shots will save money by making people healthier. But employers and their advisors argue there’s no hard proof of that. 

At most, half of US employers help pay for weight-loss drugs for their workers, according to several estimates. While the others are feeling the pressure to expand coverage for the shots, few are likely to budge anytime soon. In fact, as demand for the shots continues to build, some employers are making it even tougher for workers to get their hands on the drugs by adding restrictions.

“These drugs are insanely expensive and desired by a ton of patients, and the patient can never get off them,” James Gelfand, the president and CEO of the ERISA Industry Committee, an advocacy group that represents large employers, said in an email. “The drug companies, providers, and patient groups are insisting that weight loss will improve health and therefore offset these massive costs. That’s not true.”

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Employers aren’t adding weight-loss-drug coverage to their health plans

Many health insurers and employers have long chosen not to cover weight-loss medications, in large part because obesity was seen as a cosmetic issue and not a medical problem.

Older weight-loss medications also didn’t work very well or proved dangerous. The drug combination fen-phen, for example, was once heralded as the cure for the obesity epidemic but was pulled from the market in 1997 after it was linked to heart damage.

The new generation of drugs being used for weight loss are far more powerful and seem safe, though they do have unpleasant and sometimes serious side effects. Known as GLP-1 agonists, the drugs — Wegovy and Ozempic from Novo Nordisk and Eli Lilly’s Mounjaro — mimic a gut hormone known as glucagon-like peptide 1, helping to suppress people’s appetites and slow their digestion. Only Wegovy is approved for weight loss, though doctors often prescribe the diabetes drugs Ozempic and Mounjaro “off label” for that purpose.

Semaglutide is a weekly injection that mimics a hunger-regulating hormone in the body.
Insider

Clinical studies by drugmakers have found that the shots help users lose 15% to 20% of their weight on average. Only bariatric surgery delivers greater weight loss, though not many Americans opt for it. Studies also have found that some of the drugs help lower users’ blood sugar and blood pressure levels.

Workers are turning up the heat on employers to pay for these drugs, but talks between companies and their advisors always come back to the costs. Brent Eberle, the chief pharmacy officer at Navitus, said very few of the employers that worked with his pharmacy-benefit manager paid for weight-loss drugs. So far, the rest aren’t jumping at the chance to start. Navitus’ own number-crunching found that if just 3% of a health plan’s members used a GLP-1 weight-loss drug, the plan’s pharmacy costs could balloon as much as 25% in one year, Eberle said.

“The costs add up very quickly, so that’s why it’s been a difficult decision to add,” he said.

Is the price worth it?

It’s not unusual for companies to pay for expensive medicines. Some treatments for cancer and rheumatoid arthritis can run up five- to six-figure bills. But those drugs tend to be used by a small number of people.

Wegovy is a different animal because it’s expensive, at nearly $14,000 a year, and could be taken by a large swath of the US population. At least 110 million people could qualify for it, according to Novo Nordisk

Drugmakers and some obesity doctors argue that the drugs are worth the cost. They say that employers and insurers ultimately could save money by helping workers avoid heart attacks and joint surgeries, as well as thousands in additional healthcare expenses tied to obesity.

Getty Images

Plenty of research has found that losing weight leads to health benefits, from alleviating obstructive sleep apnea to preventing type 2 diabetes to fewer hospitalizations.

But companies working with employers say there’s no evidence that people who take the GLP-1 drugs will experience the same benefits.

“When it comes to weight loss, we don’t know if these GLP-1s prevent cardiovascular events. We don’t know if they even prevent the progression to diabetes,” said Pat Gleason, the assistant vice president of health outcomes at Prime Therapeutics, a pharmacy-benefit manager owned by Blue Cross Blue Shield plans.

Gleason added that there’s a risk that many patients who started taking a weight-loss drug would stop and regain weight, which he said would be a waste of employers’ money. Some research has found that half of people using a GLP-1 injection to treat type 2 diabetes quit taking it after one year.

When reached for comment, a spokesperson for Novo Nordisk did not respond to questions about whether Wegovy would help health plans save money and how long it would take to see those savings. The spokesperson wrote in an email that insurance coverage was essential to ensuring people have access to anti-obesity medications.

Waiting for data

Proof that Wegovy delivers better health and saves money could make the drug an easier sell.

It may come soon.

In a five-year clinical trial, Novo Nordisk is studying whether the drug reduces the risk of heart problems and strokes, and those results are expected later this year. A separate, small study by researchers at the Mayo Clinic has already found that people taking Wegovy lowered their risk of heart disease by 18%.

Eli Lilly, which is working on getting tirzepatide approved for weight loss, is studying whether the drug can help people with obstructive sleep apnea, heart failure, and chronic kidney disease. A Lilly spokesperson declined to discuss the cost or insurance coverage of tirzepatide for weight loss because the drug isn’t yet approved for that use.

While they wait on more data, some employers are mulling how they might open up access to the shots without going belly up. Many limit off-label use of the diabetes drugs Ozempic and Mounjaro by requiring patients to have a diabetes diagnosis.

Ozempic in a pharmacy
Florian Gaertner/Getty Images

As for Wegovy, consultants and pharmacy-benefit managers said employers might implement stricter requirements than the Food and Drug Administration, paying for the drugs for people who have severe obesity but not those who are overweight, for example. Others may require patients to enroll in a diet-and-exercise program. Some may limit access by requiring workers to pay more for the prescription.

Loiacono, from the pharmacy-benefit manager Capital Rx, said he’s warning employers to move slowly.

“Employer groups have budgets. Municipalities have budgets. Unions have budgets,” Loiacono said. “Everyone has some sort of threshold of cost, and so what they’re trying to do is thread the needle of providing access to the patients that truly need it the most, looking at the benefit for their health, and also looking at the cost.”



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