Kiana Price dropped 35 pounds after she started taking the weight-loss medication Wegovy last year.
The Greenville, North Carolina, mother no longer gets winded climbing stairs. Her knee pain is gone. And, perhaps most importantly to Price, who is prediabetic, her cholesterol and blood sugar levels have dropped, giving her hope she can escape her family history of diabetes.
But Price, who works at East Carolina University, worries all her progress may be short-lived. North Carolina’s health insurance program for state employees is reeling from the cost and widespread use of these prescription drugs. To cut costs, the state has discontinued coverage for the prescription weight-loss medications Wegovy and Saxenda beginning April 1. Price is now paying more than $1,300 out of pocket per month to continue on Wegovy. It’s more than she can afford, which means she’s looking at discontinuing the life-changing medication altogether.
“It’s like a slap in the face,” said Price, who said she’ll finish her remaining Wegovy doses by the end of this month. “I’m just really nervous about all the progress I’ve made and what’s going to happen when I’m not taking it anymore.”
Patients like Price are struggling to afford a blockbuster class of weight-loss medications called GLP-1 (glucagon-like peptide-1) receptor agonists. They were initially used to treat diabetes, but drugmakers have since won approval to market these drugs for weight loss and heart disease. More potential uses – and lucrative pharmaceutical company sales – are on the horizon as researchers study new ways to use these drugs. A late-stage study this month reported that the diabetes and weight loss drug tirzepatide also may help treat sleep apnea for people with obesity.
As the list of medical uses for these drugs grows, more people are asking their doctors for a prescription for meds that can cost more than $10,000 per year. Meanwhile, employers and health insurance plans are attempting to slow runaway spending on these drugs. And insurers have imposed requirements such as prior authorization or step therapy, which mandates that people try less expensive drugs first. In some cases, employers and insurers are denying coverage altogether.
Federal spending on weight-loss drugs surges
Medicare, the federal health program for adults 65 and older, is prohibited by law from covering drugs for the more than 2 in 5 Americans who are obese but otherwise do not have serious risk factors. However, obese patients with diabetes or heart disease may qualify for coverage. The nonprofit health policy organization KFF estimates that 1 in 4 Medicare enrollees who are obese may be eligible for Wegovy to reduce their risk of heart attack or stroke.
A KFF analysis found Medicare spending on three drugs − Novo Nordisk’s Ozempic and Rybelsus and Eli Lilly’s Mounjaro − surged from $57 million in 2018 to $5.7 billion in 2022. That figure did not include rebates or other discounts negotiated by pharmacy benefit managers. Federal spending on these drugs is likely to grow, experts say. If just 1 in 10 eligible adults take Wegovy to prevent heart attack or stroke, KFF estimated it would cost Medicare’s Part D prescription drug coverage nearly $3 billion each year.
The costs have increased so rapidly, even before Medicare plans are allowed to cover these drugs for weight loss, that the trajectory “has raised concerns about the fiscal impact of broad coverage of GLP-1 drugs on Medicare, other health insurers, and patients,” KFF said.
The high list price combined with the number of projected users among state employees was too much to sustain, North Carolina state officials decided. To continue to afford coverage of the drugs for weight loss, the state would have had to raise premiums to nearly $50 per month for about 750,000 employees and their dependents covered by the state health plan.
More than 23,000 people on North Carolina’s health plan were using these prescription drugs for weight loss. The medication cost the state more than $800 per member per month, on average, after rebates. The state treasurer projected the state’s bill for the medication would soar to more than $1 billion over the next six years.
State Treasurer Dale R. Folwell and the state health plan this week formally asked the public for input on how the state can cover the drugs in a fiscally responsible way.
“All we are asking is to be treated fairly and not to be price-gouged by the manufacturers,” Folwell said.
The state will continue to pay for GLP-1 drugs such as Ozempic for diabetes patients. People who take the medication only to lose weight will now have to pay out of pocket.
Novo Nordisk, the Danish drugmaker that sells the weight-loss drug Wegovy, blasted North Carolina’s decision to halt coverage of its weight-loss drugs.
In a statement, Novo Nordisk said the company was “surprised and disappointed” officials overseeing the North Carolina state health plan have rejected “multiple workable options.”
“State health plan officials are abandoning their obligation to employees living with the chronic disease of obesity and denying them coverage for safe and effective treatments,” the drugmaker said. “Denying patients insurance coverage for important and effective FDA-approved treatments is simply irresponsible.”
North Carolina workers ‘can’t afford their premiums to double’
State employees and their families face a difficult situation if they can’t shoulder the cost of the drugs, said a union representing state employees.
“The teachers, the police officers, correctional officers, they can’t afford (for) their premiums to double,” said Ardis Watkins, executive director of the State Employees Association of North Carolina. Watkins said that’s “essentially” what would happen if North Carolina continued to cover the medications, she said.
Raleigh resident Tralene Williams exercises daily and runs half marathons. But she credits Wegovy with reducing her cravings, speeding her metabolism and helping her shed more than 30 pounds.
“It’s a miracle drug,” said Williams, who works for the technological arm of the North Carolina Department of Health and Human Services.
Unable to afford the more than $1,300 it will cost to refill her Wegovy prescriptions, she worries what will happen when she runs out of medication. She’s taking the drug every other week instead of the weekly shot her doctor prescribed.
“I’m just worried about gaining my weight” back, Williams said, who added that she does not believe other weight-loss options offered by the state are as effective as the medication she’s currently taking.
‘Employers don’t really have a choice’
Employers who provide health insurance for working-age Americans and their families also are struggling with the cost of these medications.
A survey by the benefits consultant Mercer cited the sharp increase in the use of GLP-1 drugs showing that it correlated with an 8.4% increase in employer prescription drug spending last year.
While employers largely cover GLP-1 drugs for diabetes, companies have been slower to cover these medications for weight loss. Mercer’s survey said 41% of employers with large staffs covered these drugs for obesity; an additional 19% of large companies were considering such coverage.
Some employers are beginning to implement programs that require workers to try other weight-loss strategies before qualifying for GLP-1 drugs. Others are imposing strict limits for patients to qualify for these drugs such as minimum body mass index thresholds that would allow coverage only for people who are severely obese.
“If money wasn’t an issue here, then certainly every employer would cover these drugs,” said James Gelfand, president and CEO of the ERISA Industry Committee, which represents companies that provide employee benefits.
“There are aspects of these drugs that are miraculous, but at the same time, the price is so egregious and the U.S. is being treated so badly, so much worse than the rest of the world. Employers don’t really have a choice. They can’t just let it be open season.”
Drugmakers often launch drugs at higher prices when they have the exclusive right to sell medications before generic companies offer competing versions. Drugmakers say they price drugs to recoup years of research and development costs. They often also must pay lucrative rebates to drug pricing middlemen to get access to customers.
But the prices for these weight-loss drugs are too high, according to some. A study from Yale University found that weight-loss medications that retail for more than $1,300 a month cost just $22 to make. Sen. Bernie Sanders blasted the Danish drugmaker Novo Nordisk this week for charging U.S. residents far more for the diabetes drug Ozempic and the weight-loss drug Wegovy than the company charges for the same medications in other nations.
In a letter Wednesday to Novo Nordisk’s top executive, Sanders questioned why the company charges Americans far more for Wegovy, noting the same drug can be purchased for $140 in Germany and $92 in the United Kingdom.
“The scientists at Novo Nordisk deserve great credit for developing these drugs that have the potential to be a game changer for millions of Americans struggling with type 2 diabetes and obesity,” Sanders said. “As important as these drugs are, they will not do any good for the millions of patients who cannot afford them.”
Sanders added that if Novo Nordisk’s prices for these drugs are not substantially reduced, “They have the potential to bankrupt Medicare, Medicaid and our entire health care system.”
“The United States Congress and the federal government cannot allow that to happen,” Sanders said.
In the meantime, prices are extremely high for out-of-pocket purchases. Employers can’t wait for price discounts and drugmakers have little incentive to offer price concessions as demand soars. The top-selling injectable drug semaglutide, sold as Wegovy and Ozempic, is also facing a shortage, according to the Food and Drug Administration.
For now, employers and insurers are adopting stricter tools such as prior authorization to ensure patients use the drugs appropriately, said Eileen Pincay, a national pharmacy practice leader at Segal, a benefits consultant.
Pincay said employers don’t want to pay for weight-loss medication if their employees are seeking it for lifestyle purposes such as quick weight loss. That’s why insurance plans require patients to meet strict criteria, and many employers pair this with services such as teaching proper nutrition and exercise.
“Employers know a lot of members may be using it for off-label use – maybe they want to lose 20 pounds before they go to a wedding,” said Pincay.
Ken Alltucker is on X at @kalltucker, contact him by email at [email protected].
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