Weight-Loss Drug Rivalry Entices Employers to Mull Plan Coverage

Eli Lilly & Co.'s weight loss drug Zepbound’s approval by the Food and Drug Administration introduces a cheaper option to a growing market, increasing the pressure on employers to give workers access to these in-demand medications through their health plans.

Employer plans are evaluating their options due to the high cost of the drug, even though Eli Lilly plans to sell its medication approved Nov. 8 at about $1,060 a month, 21% less than Novo Nordisk A/S’s blockbuster weight loss drug Wegovy.

“The coverage question is still a little questionable,” because of the drug’s expense, Eileen Pincay, national pharmacy practice leader and vice president of The Segal Group Inc., a benefits consulting firm. However, now that Novo Nordisk has a competitor to Wegovy, “both Lilly and Novo are going to come to the table and are going to try to fight” for market share through better discounts, rebates, or both, Pincay said.

Employers have been in a quandary over whether to cover glucagon-like peptide 1 (GLP-1) weight-loss drugs, which professional services firm Aon PLC has estimated cost $1,394 a month before rebates but have been shown to reduce the risk of heart disease and other chronic conditions.

Health plans’ analyses will only become more complex as drugmakers release new weight loss treatments and medical research provides more insight into these drugs’ longer-term impacts.

Longer-Term Impacts

The recent release of details of a clinical study supporting use of Wegovy to cut heart attacks and deaths in patients with obesity puts more pressure on health plans to cover the drug. Wegovy’s ability to reduce other diseases could prompt more employer coverage apart from weight loss.

The FDA’s approval of Zepbound won’t affect benefit changes for 2024 for plans that aren’t providing weight-loss drug coverage today since most plan decisions have already been made, said Tracy Spencer, national pharmacy practice leader for Aon.

“The bigger conversations are related to coverage—employers really seeking broader information on what the long-term impacts will be with these medications, and how will they be able to potentially reduce future health-care costs and improve future health outcomes for the patient that is being treated for diabetes as well as obesity and cardiovascular health,” Spencer said.

Similar to other manufacturers, Eli Lilly will be offering a savings card that can reduce out-of-pocket costs for the drug, Spencer said. The card is set to expire Dec. 31, 2024, but that date could be subject to change.

Plan sponsors are looking at appropriate utilization factors for coverage of the new weight loss drug, such as diet and exercise as well as behavioral health coaching, Spencer said. Using those criteria, people receiving it may be required to participate in programs to help them improve their diet, for example.

Lifetime Limits on Drugs

Employers determining how their plans will address an increasingly bustling market for weight-loss drugs will have to grapple with whether to cap individual workers’ lifetime spending on these pricey treatments.

Rochester, Minn.-based health-care giant Mayo Clinic has provided a response to this issue by confirming that its Mayo Medical Plan for employees is imposing a lifetime maximum benefit of $20,000 for weight-loss medication prescriptions filled after Jan. 1, 2024.

The lifetime maximum benefit won’t apply to GLP-1 prescriptions for diabetes, the clinic’s communications department said.

“Mayo Clinic continuously and carefully assesses our prescription coverage and annually makes adjustments that balance affordability and coverage, in the best interests of our plan members,” the clinic said.

Mayo’s announcement “probably kicks the can forward” for some companies to decide whether to provide unlimited coverage later, Jeff Levin-Scherz, population health leader for management consulting firm WTW, said. As a high-profile medical provider, other employers may follow in Mayo’s footsteps.

Weight loss drugs aren’t classified as essential health benefits for which lifetime maximum benefit limits are prohibited under the Affordable Care Act, according to Levin-Scherz.

“We might see some employers that try to change their rules so that new people will have to meet stricter criteria to get on the drug, even while they don’t necessarily make any change for people who are already on the drug,” he said.

Cost Nearly Tripling

The 2023 cost for GLP-1 drugs used for obesity treatment is on track to nearly triple, rising 278.5%, compared to spending on those drugs in 2022, according to data from Aon. The average costs for US employers that pay for their employees’ health care will increase 8.5% to more than $15,000 per employee in 2024, with 1% of the increase fueled by GLP-1 drug spending growth, Aon said.

A survey of about 200 employers released Nov. 14 by the International Foundation of Employee Benefit Plans found that 76% provide GLP-1 coverage for diabetes and 27% for weight loss. Some 13% are considering covering them for weight loss in the future.

Employers may feel a bit more compelled to cover weight loss drugs with Zepbound competing on the market against Wegovy, said Duane Wright, senior health care policy analyst with Bloomberg Intelligence. “As the pressure on employers and PBMs ramps up, we’ll see this battle between these two companies to provide the biggest discounts to get market share,” Wright said.

Drugs with higher list prices often offer insurance companies rebates in exchange for better coverage in order to win their business and edge out competing drugs.

“It’s going to be an added expense. It’s just a question of how much of that expense can be relieved compared to what the list price is,” Wright said.

Advocates for obesity treatment argue that employers should cover new drugs as they enter the market.

“The more treatments in this space and the more data that we see on how effective they are, it would make sense that employers would want to cover this,” James Zervios, vice president and chief of staff for the Obesity Action Coalition based in Tampa, Fla., said.

But according to Zervios, those seeking the drugs might be at a disadvantage as employers and insurers “hold obesity care to a higher standard” when evaluating whether costs of treatment are worth covering.

“I just think bias is such a massive hurdle when it comes to looking at these under a kind of an objective lens, if you will,” he said.