The healthcare industry is embroiled in a fierce debate over if — and how — GLP-1s should be covered for weight loss. Unclear long-term efficacy, combined with an exorbitant price tag, is restraining insurance coverage for the medication, resulting in monumental demand for a therapy very few can access or afford.
A medication that’s unaffordable for all but a select group is not a new scenario in healthcare. But the highest priced drugs typically treat the rarest conditions, and GLP-1s are unique in the vast number of people they could help, experts say.
More than 40% of Americans are obese, according to the most recent data from the Centers for Disease Control and Prevention. That percentage is expected to reach 50% by 2030.
Physicians and researchers say GLP-1s have real potential to move the needle on obesity and downstream health conditions caused by excess weight.
That potential, paired with the cost of the drug, is leaving employers stuck between a rock and a hard place. Employers want to provide access to therapies that could benefit their workforce, but don’t want to bankrupt themselves 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 demand created a shortage of semaglutide GLP-1 medications despite only one therapy, Novo Nordisk’s Wegovy, being approved by the Food and Drug Administration for weight loss.
Patients lose 15% of their body weight on average taking GLP-1s. Along with the weight loss, research suggests that GLP-1s may lower the risk of conditions related to obesity, such as cardiovascular disease and heart attack, Type 2 diabetes and strokes.
”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, according to KFF. Other drugs that are being used off-label for weight loss include Novo Nordisk’s Ozempic and Rybelsus, which both have a list price of $936.
Meanwhile, Eli Lilly’s Mounjaro, which has a different active ingredient but works similarly to semaglutide drugs, costs $1,023. Mounjaro is currently being reviewed by the FDA for weight loss, and a decision is expected this year.
In a Tuesday panel on GLP-1s, Andreas Mang, senior managing director at Blackstone, said his portfolio of companies have seen their 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.
In addition, the drugs are only effective as long as people take them, which also makes the price tag difficult to stomach, experts said — especially as employers stare down the barrel of the highest healthcare cost hikes in a decade.
Some research has show that the majority of people who start GLP-1s stop taking them within a year. Once the medications are paused, patients can regain some if not all of the lost weight.
“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 down the line, said Blackstone’s Mang.
Weight management
The explosion of appetite-suppressing drugs has given rise to new business lines for chronic care management companies and telehealth providers hoping to ride the coattails of the GLP-1 craze.
Omada, for example, launched a specialized program this spring for members taking GLP-1s designed to support behavior and lifestyle change in conjunction with the medication. The company, which also offers management programs for diabetes and musculoskeletal conditions, is not prescribing the medications itself, 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 wraparound services to spur behavior and lifestyle changes. Companies like Omada point to the FDA’s label of GLP-1s for weight management, which includes explicit language that the medications should be used with diet and exercise.
Along with advising lifestyle management, 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 in concert with Twin Health found 72% of members on the program that came on with 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.
‘Never seen anything like this’
GLP-1s are “remarkably safer” than other weight loss drugs, said Duffy, but the medications have other worrying 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 United Kingdom 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 a patient-centric point of view, but instead pair the paternalism that can underpin medicine with 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 in tandem with personalized coaching earlier this year.
The debate about GLP-1 coverage could be ameliorated if cheaper versions come to market. But experts are split on whether more medications approved for weight loss means cheaper options.
Currently, drugmakers are trialing 74 drugs for obesity and weight loss, according to a Stat tracker. Novo Nordisk is testing six new medications, while Eli Lilly is testing seven. Together, the two drugmakers dominate the market for GLP-1s.
“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. They’re basically selling everything that they can make at the price that it is currently.”
Novo Nordisk alone brought in 41.7 billion kroner from Ozempic in the first half of 2023, up from 26.4 billion 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 polluting national economic data, according to the New York Times.
GLP-1s may be fueling economic growth for Denmark, but experts say the medications’ price tag is a cause for concern in the U.S. However, more employers say they’re open to covering the drugs despite their cost.
The percentage of employers that cover GLP-1s could almost double to 43% in 2024, according to the Accolade survey.
Despite the expected increase, HR respondents to the survey did cite concerns about the cost of the drugs. With little knowledge on whether a cheaper alternative will be available soon, employers are faced with a difficult decision — to cover or not to cover — that pits the health and wellbeing of their employees against the health of their bottom line.
“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.”
