Most Employer Health Plans Don’t Cover New Blockbuster Weight Loss Drugs, But That’s Going to Change
Feb 28, 2024
·
Consumers are clamoring for weight loss drugs like Novo
Nordisk’s Wegovy and Eli Lilly’s Zepbound despite a monthly cost as high as
$1,000 to $1,500, and using every discount they can source to lower the price.
·
While a majority of corporate health insurance plans offer
GLP-1 drug coverage for diabetes, only about one-quarter extend that to weight
loss, according to a recent survey.
·
But employer interest is rising, and employee benefits
experts say it’s a matter of when, not if, more company insurance plans will
cover the in-demand obesity treatments.
Many U.S. companies are grappling with health insurance coverage
issues for workers when it comes to GLP-1 drugs for weight loss.
Despite the hefty price tag — typically between $1,000 to $1,500 a
month — consumers are clamoring for drugs like Novo Nordisk’s
Wegovy and Eli Lilly’s
Zepbound. This class of drugs, historically used to treat diabetes, has gained
broader appeal, and while some employers are providing coverage, often with
limitations, others are struggling to determine how to cover them without
breaking the bank.
An October survey of
205 companies by the International Foundation of Employee Benefit Plans found
76% of respondents provided GLP-1 drug coverage for diabetes, versus only 27%
that provided coverage for weight loss. But 13% of plan sponsors indicated they
were considering coverage for weight loss.
“Right now, there’s still a lot of questions among employers,”
said Julie Stich, vice president of content at the International Foundation of
Employee Benefit Plans. In addition to high costs, companies don’t have
long-term data on effectiveness and potential side effects to support coverage,
and some are just biding their time until more of this information exists.
Still, many benefits experts say it’s a matter of when, not if,
more employers will cover GLP-1 drugs.
Certainly, prescription volumes of GLP-1 weight loss drugs are
soaring. Novo Nordisk recently became Europe’s largest publicly traded company
due to investor
enthusiasm about the obesity market, and it just made a major
acquisition in a bid to increase manufacturing capacity of GLP-1 treatments due
to demand, buying
drug manufacturer Catalent for $16.5 billion to increase the
supply of Wegovy and diabetes shot Ozempic.
Meanwhile, Eli
Lilly’s recent results were buoyed by the launch of Zepbound,
which won approval from U.S. regulators in early November and raked in $175.8
million in sales for the fourth quarter. Wall Street’s most optimistic
assessment sees a drug that can post more than a billion dollars in sales in
its first year on the market and eventually become the biggest
drug of all time.
Here’s what employers and employees need to know about the
changing landscape for weight-loss drugs and health insurance coverage.
Annual cost is the elephant in room at $18,000 per employee
At least 70% of the top 18 commercial health plans Tufts Medical
Center tracks in its specialty drug database cover GLP-1 drugs for obesity,
with varying limitations. But the largest companies in the U.S. are generally
self-insured, so they’re the ones calling the shots when it comes to coverage —
and for them, cost is a major issue.
States can decide whether to cover weight-loss drugs under
Medicaid, which means coverage can vary, according to a report from KFF. The state of North
Carolina recently made the decision to stop
coverage of obesity drugs for state employees.
Medicare doesn’t cover weight-loss medications, with the exception
of patients with Type 2 diabetes. Notably, 76% of older adults think Medicare
should cover prescription medication for weight management, according to recent findings from the National
Poll on Healthy Aging.
At $1,500 a month, employers could be paying $18,000 a year for
just one employee’s supply of weight-loss drugs, said Greg Stancil, a senior
account executive at Scott Benefit Services. If you’ve got, say, 56 employees
on the drug, that’s over $1 million a year. That’s a cost that “just didn’t
exist in 2022, now they have this potential long-term expense they’re trying to
figure out what to do with,” Stancil said.
“The balancing act is maintaining a robust benefits package so
they can recruit and retain employees, but also managing the cost of that
package to keep costs down for employees and the employer,” Stancil said.
“Every employer would love to cover everything to make everybody happy, but
somebody’s got to pay for it.”
Employers already covering weight-loss drugs say it’s worth
it
Ninety-nine percent of companies already covering GLP-1s say they
plan to continue covering them, according to a survey by Accolade, a personalized
health-care company. Among other things, these employers cite higher employee
satisfaction and wellbeing, increased engagement in other wellbeing programs
and improvement in other health conditions as reasons for covering.
“HR benefit leaders recognize this is something employees want
because a lot of people do want to lose weight,” said James Wantuck, associate
chief medical officer at Accolade.
BMI, obesity and questions in plan design
There are obvious benefits to losing weight and associated health
benefits, but there are other health-care and cost concerns employers have to
factor in.
What might the utilization be within the company? Who should be
covered? Should there be limitations such as someone who has an obesity
diagnosis, or BMI over a certain limit?
A majority of companies (79%) that cover these drugs do require
insured members to jump over some hurdles before coverage is approved,
according to the survey by the International Foundation of Employee Benefits
Plans. This includes requiring prior authorization; using step therapy (32%),
which requires the use of other lower cost medications first; and specific
eligibility requirements (16%). The survey also found that companies allowed to
select multiple cost-controls, if applicable, also use annual and lifetime
maximums. Fourteen percent of respondents who cover these drugs said they had
no cost-control mechanisms in place.
Potential long-term costs to employers is an issue, and an
especially hard calculation since no one really knows how long people will need
to stay on the drugs for long-term effectiveness, while going off the drugs is associated
with gaining weight back.
Employers are “really struggling to determine the cost versus
benefit,” Stich said.
Even though GLP-1 drugs are high-priced, they currently represent
only 6.9% of annual claims, according to data from the International Foundation
of Employee Benefit Plans.
How consumers can try to save in the meantime
Consumers whose companies don’t cover the drugs are in a tough
position. Many will be forced to pay out of pocket, or lose out, said Brian
O’Connell, an analyst who covers the insurance marketplace for
InsuranceQuotes.com. “It really depends on your bank account. If you’re making
$45,000 a year, have a mortgage and a child in college, there are limited
options,” O’Connell said.
First, employees should find out from their employer what the
benefits actually are, Wantuck said. In some cases, these drugs may be covered,
but restrictions or requirements may apply, such as a BMI threshold to qualify,
or the employee may have to participate in an exercise or dietary program.
Consumers with commercial insurance may be able to get assistance
through the manufacturer if they are eligible for savings programs. The
websites for Wegovy and Zepbound do lay out terms for
discount manufacturer programs that may apply. For example, with Wegovy
you must have a prescription and can’t be enrolled in a plan where the drug is
covered. Consumers should read the restrictions carefully.
Novo Nordisk says approximately 50 million adult Americans have
coverage for anti-obesity medicines — 40 million through commercial insurance
and 10 million through Medicaid — and approximately 80% of U.S.
Wegovy patients with commercial coverage pay $25/month or less. For commercially
insured patients who do not have insurance coverage, or pay cash for their
prescriptions (but are not government beneficiaries), Novo Nordisk and Eli
Lilly cite potentially significant savings off the full retail price: as much
as $500, according to Novo Nordisk, and up to 50%, according to Eli Lilly,
though monthly and annual caps on discounts apply.
“For consumers, it never hurts to look for manufacturer coupons or
discounts and apply for them,” wrote Krutika Amin, associate director at health
care policy, research and news organization KFF, in an email. “The answer may
be no in certain cases but in other situations patients could stand to save
several hundred dollars.”
Amin added that as more manufacturers enter the GLP-1 market,
manufacturers may be offering competing discounts to try to get patients to
pick their drug. “The market is still new but as demand stabilizes and there is
more competition in the GLP-1 market, manufacturers may change prices to stay
competitive. So even if the answer was no last time, it might be worth keeping
an eye out,” she wrote.
Looking overseas, which some U.S. consumers do when it comes to
high-priced drugs, is less likely to help out in this case, at least right now.
While recent KFF research indicates that even
with coupons and discounts, prices in the U.S. are higher than in other large,
wealthy countries, Amin said that as countries have faced shortages for people
using these drugs for diabetes it may not be possible to get these drugs
abroad.
Meanwhile, benefits consultants expect the coverage problem will
eventually resolve itself, given the need and long-term benefits these drugs
may be able to provide.
“It’s a matter of time before most companies will be covering
these drugs in some fashion,” Wantuck said. “There’s a lot of evidence that
they help people lose weight and prevent really serious illnesses like stroke
and heart attack. It’s going to be harder and harder not to cover these drugs
because the benefits seem to be so great.”
Source: CNBC