Payers Recognize the Benefits, but Still See Weight Loss Drugs through a Cost Lens

Jeffrey Casberg, M.S., R.Ph., a senior vice president of clinical pharmacy at IPD Analytics LLC, a drug intelligence firm that advises payers and pharmaceutical companies, talks about how payers are thinking about weight-loss drugs.

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By Denise Myshko | Original Article

Q: How are pharmacy benefit managers (PBMs), insurers and employers thinking about coverage for the GLP-1 drugs for weight loss?

The weight loss class has historically been excluded from coverage because it was considered a lifestyle treatment. But as the medical industry evolves, there is recognition of the benefits achieved from weight loss. For example, the results of the SELECT trial, which was sponsored by Novo Nordisk, show that treatment of obesity with the GLP-1 agonist Wegovy (semaglutide) reduced the incidence of death from cardiovascular causes.

There is some limited coverage of obesity therapies, and an estimated one-quarter to one-third of commercial employer groups are offering them. But without controls on utilization, coverage for therapies such as Wegovy or Zepbound (tirzepatide) could have a large impact on payers and the healthcare system as a whole. IPD Analytics estimates a per-member-per month (PMPM) cost increase of about $15 for a 1-million-member health plan if 10% of eligible adults take GLP-1 therapies for weight loss. If uptake increased to one-third of eligible adults, the cost could increase to $50.

In commercial coverage, weight loss is often carved out of most benefits. Self-insured employers have to opt in and pay extra for coverage. In Medicare Part D, coverage is prohibited, but the law was written in 2003 before the GLP-1 therapies became available. A bill has been introduced several times in Congress to expand coverage in Medicare. An analysis from last year estimated that if 10% of eligible Medicare beneficiaries used Wegovy, the annual cost to Medicare would be $26.8 billion. In Medicaid, coverage of obesity therapies is optional and varies by state.

An additional seven possible weight loss therapies could come to market by 2028, including an oral version of semaglutide. Novo Nordisk currently markets an oral version as Rybelsus for patients with diabetes. Increased competition in obesity treatment could mean lower prices and higher rebates and could drive expanded payer coverage.

Q: PBMs have master formulary lists. How often do plans and employers adjust and customize those lists?

Payers and PBMs usually meet quarterly at what is called a pharmacy and therapeutics (P&T) committee meeting to review newly approved drugs and new management on existing drugs. The formulary lists are updated following those meetings.

Changing coverage for a benefit-excluded coverage area such as weight loss is different and more complex. Weight loss is usually excluded in the plan documents and cannot be changed by the P&T committee. Making a formulary change would require new plan documentation be submitted to the state for commercial plans. For Medicaid, an exclusion change would need to be approved by state legislation and for Medicare by federal legislation.

For 2024, payers and PBMs may consider making changes in the following areas:

• Weight loss: Some payers may make changes. This is a big financial decision for payers, employers, states and Medicare. Change may take many years.

• Rheumatoid arthritis, Crohn’s disease, ulcerative colitis, psoriasis: There could be some changes with Humira biosimilars and the competing tumor necrosis factor, interleukin, and Janus kinase drugs.

• Multiple sclerosis: Many generics are now available, but some payers may become stricter with generic steps.

• Part D: Due to the Medicare redesign and the Inflation Reduction Act, we could see payers managing the Part D benefits more tightly moving forward.