The healthcare industry is embroiled in a fierce debate over how GLP-1 drugs should be covered for weight loss. Unclear long-term effects, combined with high price tags, are for now limiting insurance coverage for the medicines, despite the treatments’ surging popularity.
An expensive therapy that’s unaffordable for many is not a new scenario in healthcare. But often the highest priced drugs treat rarer conditions. GLP-1s present a larger problem, given the large number of people they could help, experts say.
Doctors and researchers say GLP-1s have real potential to change how obesity is treated and to address the many downstream health conditions caused by excess weight.
That potential is putting employers in a difficult position. Employers want to provide access to therapies that could benefit their employees, but don’t want to have their costs balloon in the process, experts said this week at the HLTH conference in Las Vegas.
“Why is it creating so much tension in the marketplace? Certainly the prevalence, certainly because the effectiveness of these drugs are super high, and certainly because the prevalence times the cost is busting budgets,” said Wei-Li Shao, president of chronic condition management company Omada Health, during a Tuesday panel on GLP-1s.
Low coverage, high cost
GLP-1s, short for glucagon-like peptide 1 agonists, have been approved for diabetes since 2005. But early drugs weren’t as potent as newer entrants like Novo Nordisk’s Ozempic, for diabetes, and Wegovy, for weight loss. Demand for these drugs soared last year, as their weight loss effects became more widely known among physicians and the public.
The widespread interest led to shortages of both Ozempic and Wegovy, as well as Eli Lilly’s Mounjaro, which has a different active ingredient but works similarly.
”There’s a lot of nice tail associated with the drug, and what we’re trying to do is move upstream and start treating obesity before it turns into diabetes and these other conditions,” said Cheryl Pegus, managing director of Morgan Health, JP Morgan’s health venture fund, in an interview.
Yet only 25% of employers cover GLP-1s today, according to a recent survey by care delivery and navigation company Accolade. That’s in large part because the drugs are so expensive, putting them out of reach for most employers, experts said.
In the U.S., Wegovy has a list price of $1,349 for a month’s supply, while Ozempic costs $936 at its wholesale acquisition cost. Mounjaro, meanwhile, costs $1,023. It’s currently under FDA review for weight loss, with a decision expected this year.
At the Tuesday panel, Andreas Mang, senior managing director at Blackstone, said his portfolio of companies have seen spending on the drugs increase 600% over the past four years.
“When you have something growing that quickly, companies are going to be put under a tremendous amount of pressure, and the economic reality is they have to make decisions,” said Mang, who helps portfolio companies manage benefit costs.
The drugs are also only effective as long as people take them, adding to rising chronic case costs, experts said — especially as employers face the highest healthcare cost hikes in a decade.
“That is the worst ROI [for employers]. Because that’s then a colossal waste of money, isn’t it, if they regain all the weight,” Omada’s Shao said.
Especially for companies in areas like hospitality, which can have a turnover rate of 150% to 200% each year, it doesn’t make sense to cover GLP-1s if they’re not going to see the clinical or financial benefit, said Blackstone’s Mang.
The explosion of appetite-suppressing drugs has given rise to new business lines for chronic care management companies and telehealth providers.
Omada, for example, launched a specialized program this spring for members taking GLP-1s that is designed to support behavior and lifestyle changes. The company, which also offers management programs for diabetes and musculoskeletal conditions, is not prescribing the medicines themselves, given how saturated the market has become, Omada CEO Sean Duffy told Healthcare Dive.
“We’re all chips in on it. It’s not a silver bullet — these are not curative medicines — but it’s a great tool in the toolkit,” Duffy said.
Proponents of weight management programs say it’s important to pair the drugs with other health services. Companies like Omada point to the FDA’s labeling of GLP-1s for weight management, which includes explicit language that the medications should be used with diet and exercise.
Blackstone tells its portfolio companies to put utilization guardrails in place, like prior authorization requirements tying access to GLP-1s to indicators like A1C levels or body mass index, according to Mang.
A Blackstone weight management program with Twin Health found 72% of members on the program taking GLP-1s went off the drugs after three months. Despite that, those members were still losing weight, and their markers for insulin resistance were better than when they were on GLP-1s, Mang said.
”Proper diet, exercise and nutrition counseling actually get at the root cause better than the drug can. I think there’s answers out there that aren’t $17,000-a-year answers, and I would argue are better answers for the problem than just taking a medication,” Mang said.
Weighing side effects
GLP-1s are “remarkably safer” than other weight loss drugs, said Duffy, but the therapies do have side effects that have employers — and patients — wondering if they’re worth it.
Common side effects include nausea, vomiting and diarrhea. There have been some cases of patients reporting suicidal thoughts, sparking investigations in the U.K. and European Union. The drugs could also raise patients’ risk of severe stomach problems, according to one study.
Melynda Barnes, chief medical officer at telehealth provider Ro, said during the Tuesday panel that concerns over GLP-1 side effects and cost aren’t coming from patients’ point of view, but rather from stigma against obesity.
“We don’t withhold chemotherapy because patients get nausea,” Barnes said. “I am not advocating that everybody writes a prescription so anyone who has obesity can get GLP-1s. I am saying it should be a conversation between a physician and a patient, and not necessarily a conversation in a boardroom about whether or not this medication should be covered.”
Ro started dispensing GLP-1s via telemedicine together with personalized coaching earlier this year.
“Never seen anything like this”
The debate about GLP-1 coverage could be eased if cheaper versions come to market. But experts aren’t sure whether more drugs approved for weight loss will mean cheaper options.
Drugmakers are studying at least 74 drugs for obesity and weight loss, according to a tracker from Stat. Novo Nordisk is testing six new medicines, while Eli Lilly is testing seven. Together, the two drugmakers dominate the current GLP-1 market.
“I think we’re going to see downward pressure on [GLP-1s] in the medium term” as a result of competitors, Vin Gupta, chief medical officer for Amazon Pharmacy, told Healthcare Dive.
But “that’s many many years down the line, if at all,” Duffy said. There will be new entrants, but “I don’t think that they’ll be priced more effectively.”
“There’s such supply constraints right now that the price point is not inhibiting the growth of these business lines for these manufacturers,” he added. “They’re basically selling everything that they can make at the price that it is currently.”
Novo Nordisk earned 41.7 billion kroner, or about $5.9 billion, from Ozempic sales in the first half of 2023, up from 26.4 billion kroner in the first half of last year. Wegovy brought in 12.1 billion kroner for the drugmaker, up from 2.6 billion.
The U.S. isn’t the only nation wrestling with the economic effects of GLP-1s. Denmark’s economists are thinking about creating an adjusted economic measure for their GDP because Novo Nordisk’s success is affecting national economic data, according to The New York Times.
Still, more employers say they’re weighing covering the drugs despite the cost. The percentage of employers that cover GLP-1s could almost double to 43% in 2024, according to the Accolade survey.
“I’ve never seen anything like this in my career,” said Mang. “It can’t be ignored, the cost side of the equation ... If this were to continue, companies are going to be put out of business. They literally won’t be able to do anything but pay for GLP-1s.”