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    Employers feel the side effects of drugmaker control over Wegovy, Ozempic costs

    By Kelly Hooper,

    2024-04-18
    https://img.particlenews.com/image.php?url=4SUvO1_0sV7EHrz00
    The North Carolina State Health Plan voted in January to end coverage of popular weight-loss drug Wegovy as costs for the treatment were exploding. | Amanda Andrade-Rhoades/AP

    North Carolina’s health insurance plan for state employees recently opted to stop covering popular new weight-loss drugs amid fears that costs could balloon to more than $1 billion over the next six years.

    The 750,000 public employees enrolled in the plan must now pay out of pocket if they want to take Wegovy and a similar drug, Saxenda. And the state, the drugmakers and the company that manages the plan’s pharmacy benefits are all blaming each other.

    What happened in North Carolina is playing out across the U.S. as large employers try to limit the costs of the expensive new generation of weight-loss drugs. And it is exposing how the U.S. drug pricing system, which gives manufacturers a lot of clout, can end up keeping patients from gaining access to highly effective treatments.

    North Carolina initially wanted to save money by limiting prescriptions to patients who first tried lifestyle management programs to lose weight. But the manufacturer and the state’s pharmacy benefit manager, CVS Caremark, said the state would have to pay full list price for the drugs unless it agreed to allow all patients with a prescription to get the drugs without any preliminary hurdles — in which case the state could get rebates amounting to a 40 percent discount.

    That’s when the state plan’s board voted to stop covering the drugs.

    “The contracts between the manufacturers and the [pharmacy benefit managers] are all-or-nothing,” said Sam Watts, the administrator of the North Carolina State Health Plan. “I’ve got to take it or leave it. I have to pay for everybody, even the folks for whom it is not cost effective in order to get it for the folks it would be cost-effective for.”

    Employers and health care economists say drug companies are more than willing to play hardball — even if it means losing some short-term business — to stop employers from imposing restrictions that could, over the long term, crimp sales.


    https://img.particlenews.com/image.php?url=0g0u5c_0sV7EHrz00
    A CVS Pharmacy retailer drug store with a MinuteClinic and Health Hub is in the Harlem neighborhood of New York City on Friday, March 3, 2023. | Ted Shaffrey/AP

    CVS Caremark, which manages prescription benefits for North Carolina’s plan, pointed the finger at the manufacturer. Drugmakers offer rebates to lower the cost of brand-name drugs in exchange for better placement on the insurers’ lists and greater share. CVS said it can’t pass on rebates from drugmakers if the state doesn’t meet certain terms of its contract with the manufacturer, such as including the drugs on the state health plan’s list of covered medications. The benefits manager noted that it passes 100 percent of rebates the drugmaker offers onto the state health plan.

    “CVS Caremark’s sole priority is negotiating the lowest net cost of weight-loss drugs, based on the State Health Plan’s coverage choices, for North Carolina’s teachers and public servants,” CVS Caremark spokesperson Phil Blando said in a statement.

    Blando added that the manufacturer of Wegovy and Saxenda, Novo Nordisk, can “choose to lower the price of these medicines today and offer relief to the State Health Plan.”

    For its part, Novo Nordisk says the state health plan is intervening in private medical decisions. A spokesperson told POLITICO that patients shouldn’t have to “demonstrate broad cost-savings to the entire health care system before they can access medically proven treatment options.”

    “We are surprised and disappointed North Carolina rejected multiple, workable options presented to them since the last board meeting in January,” said Nicole Ferreira, a Novo spokesperson. “Instead, 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.”

    Similar resistance

    North Carolina isn’t unique. More than 40 percent of Americans are obese, according to the Centers for Disease Control and Prevention . Large employers across the country have faced similar resistance from pharmacy benefit managers and drugmakers when implementing lifestyle management programs to cut down on the costs of weight-loss drugs, according to large employer coalitions.

    “What we see in any market where there’s a few organizations dominating it is, often, it is the patient that loses out or in some cases the payer, too; in this case it might be the employer or the state plan,” said Cynthia Cox, vice president at KFF, a health policy think tank. “Employers are having to balance this desire from their employees for this kind of benefit with the really unpredictable and often high costs that can come with offering a blockbuster drug like this.”

    Other large employers across the country have started offering limited coverage of the drugs in the face of high costs. Some, like the state of Connecticut and Labcorp, a laboratory services company , have opted to implement clinical lifestyle programs that offer access to providers and personalized care plans for weight management. Others, like Purdue University, are requiring employees to meet a certain body mass index threshold to qualify for drug coverage.

    The goal of lifestyle management programs is often to cut down on the number of employees who are prescribed medications like Ozempic and Wegovy, which come at a price tag of about $1,000 a month per patient. The programs can also help employees maintain long-term lifestyle changes while allowing employers to realize the massive health care savings to be had from reducing obesity.


    https://img.particlenews.com/image.php?url=3hHePg_0sV7EHrz00
    A view of the former North American headquarters of Novo Nordisk, Inc., in Plainsboro, N.J., on April 24, 2008. | Mel Evans/AP

    But drug companies like Novo Nordisk say this is irresponsible. Ferreira said the company “strongly opposes creating new hurdles for patient access to care.” PhRMA, the pharmaceutical industry’s top lobbying group, echoed Novo’s stance on limiting coverage of the drugs.

    “These short-sighted, discriminatory actions overlook how innovative medicines are helping people with the chronic disease of obesity and have the potential to drive significant savings across the health care system and economy,” PhRMA spokesperson Stami Williams said in a statement. “We need solutions that expand access to these groundbreaking medicines instead of allowing insurers and health plans to continue denying coverage for people who need them.”

    Health economists say the situation is characteristic of how drug prices are determined in the U.S. — where manufacturers hold a disproportionate amount of pricing power and pharmacy benefit managers are charged with enforcing that power in negotiations with employers. If employers are going to restrict the volume of drugs sold, they’re not going to get a discount from the manufacturer on the drugs in most cases, said Matthew Fiedler, a senior fellow at Brookings’ Center on Health Policy.

    That can lead employers to increase cost-sharing for employees or drop coverage altogether, which curbs patient access to the drugs. The issue is “particularly acute” for weight-loss drugs because of the number of people who could potentially benefit from the medication, Fiedler said.

    Meanwhile, the high costs could cripple employers, insurers and the government programs that cover the treatments.

    “When you have a system in which a very small number of very, very large and powerful companies can essentially set these kinds of terms, the ultimate loser is the patient,” said James Gelfand, president and CEO of the ERISA Industry Committee, which represents the benefits interests of large employers. “There's going to be thousands and thousands of people who may well have benefited from these drugs, and who may well have been able to access them if the drug company had been more reasonable and if the PBM had struck a better deal.”

    Cost of drugs to employers

    Employers are budgeting for a 5.2 increase in health costs for 2024, partly because of the exploding demand for weight-loss drugs like Ozempic and Wegovy, according to a Mercer survey on employer-sponsored health plans .

    The costs of the drugs are too high for some employers to start covering them — or to maintain full coverage if they already offer them. About 40 percent of employers cover the drugs for the treatment of obesity, often with some limits, according to the Mercer survey. Another 19 percent say they are considering offering some form of coverage. Most plans cover the drugs for diabetes, not weight loss.

    “Self-insured organizations should have the opportunity to adjust their benefit plan design and coverage criteria without having a negative impact on a medication’s price,” said Randa Deaton, the Purchaser Business Group on Health’s vice president of purchaser engagement. “Most organizations want their plan members to have access to weight-management options, however, they also want to ensure that it’s clinically appropriate and accompanied by the medical and lifestyle modification supports to ensure long-term safety and efficacy for the individual.”


    https://img.particlenews.com/image.php?url=0jL5Kk_0sV7EHrz00
    A closeup of a beam scale is seen in New York on April 3, 2018. | Patrick Sison/AP

    Shawn Gremminger, the president and CEO of the National Alliance of Healthcare Purchaser Coalitions, said what’s happening in North Carolina is an example of conversations employers across the country are having with drug manufacturers and PBMs as they look to offer coverage of the weight-loss drugs in a cost-effective way.

    “Anytime you're structuring any sort of benefit, one side is going to try to get as much money as they can, and it's the employers’ job to try to protect themselves and spend as little as they can for access to the thing that they want,” he said.

    But if drug companies don’t lower the prices of the drugs or allow employers to put limits on who can receive coverage for the medication, employers might be forced to scrap all coverage, like North Carolina did, said Gelfand, head of the ERISA Industry Committee.

    “If what happened in North Carolina is the rule and not an exception, and if the drug companies made this decision that ‘we're not going to allow these drugs to be paired with behavioral modification,’ employers are not going to cover these drugs,” he said. “Because the loss of all the rebates makes the price too crazy.”

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