Kelly Swayze couldn’t get insurance coverage for the popular weight-loss drug Wegovy through her Blue Cross Blue Shield health plan.
“I have a couple of friends who started either Wegovy or Ozempic and they’ve had some success and definitely have had some health benefits along with losing weight,” said Swayze, a 34-year-old teacher and mother of two from Trenton. “I was getting new insurance … so I thought, ‘For sure, they’ll cover it.’ But no, they did not. I didn’t even get a reason why.”
The cost of about $1,300 a month via GoodRx made Wegovy a budget-buster for Swayze and for thousands of other Michiganders seeking treatment for obesity who are confronted with sticker shock when they learn their health insurance plans won’t cover the medicine. The high cost of Wegovy and related drugs and the huge numbers of people who might benefit from them also could push our health care system toward a breaking point, doctors and insurers say.
Insurance coverage is variable when it comes to treatment of obesity with drugs like Wegovy, which is in the same class of medications as other injectable drugs that include Ozempic, Mounjaro, Zepbound, Trulicity, Victoza and Saxenda. They treat obesity and diabetes, and contain active ingredients that mimic a hormone called glucagon-like peptide-1 (GLP-1), which affect parts of the brain that regulate appetite, increase the body’s production of insulin, slow digestion and help people feel full longer.
New research suggests these drugs have health effects beyond weight loss and better control over blood-glucose levels. They also may reduce the risk of serious cardiovascular events such as heart attack and stroke, improve regulation of cholesterol, reduce severity of osteoarthritis, and potentially alleviate depression, improve sleep apnea and acid reflux.
Given that more than one-third of Michigan’s population is obese, and 46.9% of adults in the state have diabetes or pre-diabetes, that makes them extremely popular — despite costs that can range from $850 to $1,400 a month, depending on the brand, pharmacy and use of discount coupons.
Weight-loss ‘medications really can be lifesavers’
In addition to obesity, Swayze, also had gestational diabetes during her most recent pregnancy and has a strong family history of diabetes. Her doctor thought Wegovy could help her shed pounds and stay healthier longer.
For those reasons, she said, she thought she would be a “shoo-in” for insurance coverage.
“When you have gestational diabetes, the chances of getting diabetes down the line is much greater,” Swayze said. “Mostly, I just wanted to lose weight to eliminate the risks, the things that lead to having diabetes down the road.”
Dr. Lauren Oshman, program director of the Michigan Collaborative for Type 2 Diabetes and an associate professor of family medicine at the University of Michigan Medical School, said the GLP-1 weight-loss drugs could be a game-changer in treating obesity and reversing the metabolic slide toward diabetes, kidney disease and other associated complications. But with their high cost, physicians and insurers face a difficult calculus when deciding whether to prescribe and cover them.
“We are still understanding and refining from a medical perspective, at this cost, for which patients these medications are the most beneficial,” she said. “Some of my patients who are most severely affected by obesity and its complications are least able to access healthy food items, have time to go to a gym, have a safe place to exercise in their community. These medications really can be lifesavers for them.”
Yet, she acknowledged, “it’s a lot to ask health plans to cover these medicines for every patient, and at this cost, it would significantly raise the cost of health insurance and of health care for everyone.”
When insurance denies coverage, Oshman said she has to look at other options; few patients can afford to pay outright for them.
“I’ve only had one patient in my practice — ever — say, ‘I can purchase this out of pocket. I’ve got 1,000 extra dollars laying around to purchase this medication,’ ” she said.
US price 10 times more than for Western Europe
If every Michigander who is obese or has diabetes sought treatment with a GLP-1 injectable drug at the current prices, it could bankrupt the health care system, said Dr. Charles Bloom, chief medical officer for Health Alliance Plan, also known as HAP, a subsidiary of Henry Ford Health that provides insurance to about 400,000 people in the state.
“If we think that about 50% of our patient population would qualify for GLP-1s … that cost would outweigh all acute care for all of our patient population — that’s hospitals, surgeries, ERs, essentially all of the care they receive. Just this class of drugs alone would cost more than the rest of those services,” Bloom said.
“There’s no question around the value of clinical outcomes, it’s really how do we pay for it and what is the cost impact — whether that’s for the feds, whether that’s for our purchasers or commercial entities, whether that’s for the state on the Medicaid side, or whether that’s us as individual consumers.”
What’s needed, he said, is pressure on the pharmaceutical companies who manufacture these drugs — Novo Nordisk for Wegovy and Ozempic and Eli Lilly for Mounjaro and Zepbound — to bring down the prices, whether that pressure comes from the federal government or from market forces.
“They are overpriced,” Bloom said.
“If they were priced at $300 to $500, frankly I think the adherence and the adoption would be significantly higher, and we wouldn’t be having this conversation. We’d be talking about better health outcomes, and how do we actually improve the downstream impacts, as opposed to talking about price, which is the root of the problem here.”
The manufacturers of GLP-1 weight-loss and diabetes drugs have set the price for U.S. customers at a rate that is about 10 times higher than what countries in Western Europe pay, said Andrew Witty, CEO of UnitedHeath Group, a health insurance and managed care company.
“The thing we’re most overall focused on GLP-1 space is, honestly, the pricing,” said Witty in an October third-quarter earnings call. “We’re very positive about the potential for another tool in the toolbox to help folks manage their weight. We recognize that has potential benefits. But we’re struggling.
“And frankly, our clients are struggling with the list prices, which have been demanded of these products in the U.S., which are running at about 10 times the level of price which have been paid in Western Europe. So, overall, I’d say that is our focus is to try and find a way to make this a sustainable and affordable space for our clients to support.”
Insurance coverage strategies
Cost is why many health insurance plans have sought ways to limit coverage, especially when it comes to patients who are overweight or obese but who haven’t developed diabetes — yet.
“We’re seeing a couple of different strategies on the part of health insurers for managing that cost,” Oshman said. “Some of that being step therapy requiring a different, less expensive medication first. Some of it is related to prior authorization criteria or identifying a smaller group of patients who might be the most likely to benefit — both with Type 2 diabetes and obesity. The third strategy is excluding the medications entirely.”
Among the commercial insurance plans that Oshman’s practice accepts, most cover the GLP-1 injectable drugs to treat diabetes, but when it comes to treating obesity, that’s when coverage becomes far more spotty.
Among the commercial and employer-based health insurance plans available through HAP and Blue Cross Blue Shield of Michigan, some cover GLP-1 agonist drugs for weight loss along while others completely exclude them.
“There’s that option, although not many employer groups actually exclude these products from coverage,” said Atheer Kaddis, vice president of pharmacy services and chief pharmacy officer at Blue Cross Blue Shield of Michigan and Blue Care Network.
“With diabetes, the GLP-1s are preferred drugs for treating Type 2 diabetes. These are also very effective drugs in reducing addressing obesity and causing weight loss. In 2023, we saw a significant impact of these drugs on our drug cost trends — they basically doubled our drug cost trends for 2023.
“That drug trend increase that we saw in 2023 came out to about a $400 million increase in spend for 2023. And that’s specifically caused by the GLP-1 agonists, and that’s combined for diabetes and for weight loss.”
Insurers want lifestyle changes, not just drugs
And demand is likely to only go up.
“As more and more people are asking about them, we’re having to figure out where what role are they going to play in the future in our health care ecosystem and helping our members get healthy,” said Dr. James Grant, senior vice president and chief medical officer of Blue Cross Blue Shield of Michigan, which provides coverage to about 4.7 million people in the state — nearly half of the Michigan population. Of them, about 3 million also have BCBSM pharmacy benefits.
“We want to keep our members healthy, and we understand obesity has so many risks — everything from hypertension to heart disease to diabetes to problems with your joints. And we want to make sure that we can do everything we can to help our members get healthy and stay healthy and we want to help them with weight reduction.
“The issue is we have to balance one versus the other. These drugs are incredibly, incredibly expensive. We’re very proud that under certain conditions, we do cover the GLP-1s, but … we don’t want to just give someone an incredibly expensive drug hoping they lose weight. We want to make sure they change their lifestyle.”
That means many Blue Cross Blue Shield of Michigan plans require prior authorization and members who are approved for coverage must be enrolled in a lifestyle-modification program to improve their eating habits and increase exercise.
“Patients that are approved to receive GLP-1s for weight loss are being prescribed those agents in accordance to FDA-approved labeling, which means that they have to have a body mass index of 30 or greater or a body mass index of 27 or greater if they have a weight-related disease like cardiovascular disease,” Kaddis said.
“These drugs are not a silver bullet. Just because you start on a GLP-1 agonist, it doesn’t mean that, long term, you’ll be able to lose weight and maintain that weight loss. So it’s important that patients also have lifestyle-modification diet programs that are monitored by their physician.”
Priority Health, a subsidiary of Corewell Health and the state’s second-largest insurance plan covering 1.3 million Michiganders, declined an interview with the Free Press about its coverage of GLP-1 drugs.
Instead, it issued the following statement: “Priority Health covers GLP-1 drugs for members who need the medication to help manage their diabetes. Currently, coverage of these medications for weight loss is limited and depends on the plan type and medical necessity of members. … We recognize the potential benefits of GLP-1s for weight loss, however we must also consider the questions that remain about long-term safety, efficacy and affordability.”
Drugs’ popularity pushes them to FDA shortage list
Even though Swayze couldn’t get coverage of Wegovy, she wasn’t willing to give up on treatment. A friend owns a medical spa that uses a compounding pharmacy to make a similar version of the drug at a lower price.
“Through this private entity, I’m able to get it for much cheaper,” said Swayze, who now gets preloaded syringes containing semaglutide, the active ingredient in Wegovy, at a cost of about $300 a month. It’s not the name brand, but it’s far more affordable, she said, and she doesn’t have to struggle to find a pharmacy with a supply of the high-demand Wegovy.
The drugs are so popular in the U.S., the FDA includes Wegovy and Ozempic on its drug shortage list. Novo Nordisk announced plans in late 2023 to invest $6.1 billion to boost production to meet booming demand for the drugs. Eli Lilly also aims to boost production with a new $2.5 billion manufacturing site in Germany.
In the meantime, however, shortages have left many people without access.
“I have a friend who called around for an hour and a half trying to find a pharmacy that had her dosage,” Swayze said. “I know a lot of people, even if they were approved for insurance coverage, they weren’t able to find the drug at a pharmacy. So I just decided at that point, I’m not going to appeal it. I’m just going to move forward and get it elsewhere because I don’t think I’d even be able to find it.”
When name-brand drugs are in short supply, the FDA allows compounding pharmacies to make a similar version of the name-brand drug as long as they follow requirements under the Federal Food, Drug, and Cosmetic Act.
Still, the agency has issued warnings that it doesn’t review compounded versions of the drug for safety, effectiveness or quality and that some compounding pharmacies are using semaglutide sodium or semaglutide acetate, which are not the same as the active ingredient in Wegovy and Ozempic.
Medicare and Medicaid coverage is limited
Medicare plans don’t cover GLP-1 medications for the treatment of obesity at all. That’s because a federal law passed in 2003 prohibits Medicare coverage of any weight-loss drug.
Public opinion, however, shows most older adults believe Medicare should cover them.
A newly published University of Michigan National Poll on Healthy Aging found 83% of people ages 50-80 said health insurance should cover prescription medications that have been FDA-approved for weight management. Only 30%, however, said they would be willing to pay more for their Medicare premiums to cover those drugs.
Most state Medicaid plans also deny coverage of GLP-1 drugs to treat obesity, but Michigan is an outlier.
Michigan’s Medicaid program is among 16 states nationally that offer coverage of at least one GLP-1 medication for the treatment of obesity, according to a Kaiser Family Foundation analysis published in September.
Meghan Groen, director of Michigan’s Medicaid programs, said it had been covering the GLP-1 drugs for the treatment of diabetes for several years. When the FDA authorized the use of Wegovy for weight loss, it led to a conversation about extending coverage to members with obesity.
“We’re committed to giving Medicaid recipients access to the medications they need to stay healthy,” she said. “And when we really look at what that takes, diabetes and obesity greatly increase the risk of heart disease, which is the leading cause of death in this country.”
Starting Feb. 1, 2022, Michigan Medicaid began covering GLP-1 weight-loss drugs when a doctor deemed them medically necessary, said Bob Wheaton, a spokesperson for MDHHS.
Only people with diabetes or who are clinically obese can get coverage of the drugs under Medicaid, and prior authorization is required. In all, 633,438 Michiganders on Medicaid have diabetes or are obese and could qualify for these GLP-1 drugs, Wheaton said.
The cost would be difficult to manage within the state budget if not for a combination of federal Medicaid matching funds and drug manufacturer rebates, which cut the price of the drugs by about 50%, Wheaton said.
“Due to an increasing number of prior authorization requests for medications not on Medicaid’s list of covered drugs that were deemed medical necessities, MDHHS sought and received approval from the Centers for Medicare & Medicaid Services that allowed for federally matching fund dollars to extend coverage of anti-obesity drug products as pharmacy benefit.”
Even with those discounts, the state’s Medicaid program still spent $390 million on GLP-1 drugs to treat obesity and diabetes in 2023, Wheaton said.
Here’s how the costs broke down from Jan. 1, 2022 to Sept. 30, 2023, when 58,440 Michigan Medicaid recipients were prescribed injectable GLP-1 diabetes drugs:
- Trulicity was the most commonly prescribed, used to treat 38,144 people with diabetes in that time frame at a cost of $268.9 million.
- Victoza was the next most commonly prescribed GLP-1 injectable for diabetes. Prescriptions for both the two-pack and three-pack options combined were used to treat 12,961 Michiganders with Medicaid plans at a cost of $66.5 million.
- Ozempic was provided to 6,977 Michigan Medicaid recipients in 2022 and the first three quarters of 2023 at a cost of $35.3 million.
Another 25,915 Michigan Medicaid recipients were treated for obesity with GLP-1 injectable drugs from Jan. 1, 2022, to Sept. 30, 2023, Wheaton said:
- Wegovy was the most commonly prescribed for obesity management. It was distributed at least once to 14,992 Michigan Medicaid recipients at a cost of about $72.2 million, but that’s prior to manufacturer rebates, which, on average, offset drug costs by more than 50%.
- Saxenda was the second-most commonly prescribed for obesity management. It was distributed at least once to 10,923 Medicaid patients at a cost of about $50 million. But that total also is prior to manufacturer rebates, which on average offset drug costs by more than 50%.
Groen said it’s hard to predict what demand will be in the future for these drugs within the Michigan Medicaid program, and what it might cost in 2025 and beyond, but the state has no plans to discontinue or limit coverage because of cost.
“We did see coverage really quadruple in the first year and then again in the first two quarters of the second year,” she said. “In the last quarter (of 2023), we really have seen the utilization go down. And so the we do see that trend, and I don’t think anyone knows exactly what that looks like, as we … move into the future.
“We’re committed to covering these medications, and making sure that our beneficiaries have access to them. And so we will continue to work on that and what that looks like.”
How the treatment is going
Swayze’s treatment began about six weeks ago. She hasn’t had many of the side effects that some people have reported when they use the GLP-1 drugs, such as nausea, vomiting, constipation, diarrhea or headaches.
“I feel great,” she said. “I am noticing changes in my body. The scale hasn’t moved a ton, but I feel very different. And I eat so much less and I don’t feel so yucky.
“For me, it’s been great. I know a lot of people have some side effects from it, like nausea or constipation. I’ve been pretty lucky and haven’t had many of those side effects.”
If the supply of name-brand Wegovy ramps up and the FDA no longer permits compounding pharmacies to make the less-expensive alternatives, Swayze said she doesn’t know what she’ll do.
She might try to appeal her health plan’s denial of coverage or try to maintain her weight loss and her health without it.
“I just wish that it would be covered,” she said.
Contact Kristen Shamus: [email protected]. Subscribe to the Free Press.
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