Weight-Loss Drug Suits Test Health Insurer Coverage Decisions

A series of class actions over the exclusion of coverage for GLP-1 weight loss drugs is testing several legal strategies against how health insurance plans decide which drugs to cover and why.

The cases target health insurance giants CareFirst BlueCross BlueShield, CVS Caremark, the Cigna Group, and Elevance Health Inc., alleging they and their pharmacy benefit managers breached their fiduciary duties under the Employee Retirement Income Security Act by discriminating against people with obesity and illegally denying coverage for Eli Lilly & Co.’s Zepbound, the only drug approved for sleep apnea.

The lawsuits highlight the broadening dilemma that insurers and employers face in deciding whether to cover the blockbuster shots, as their popularity surges and lower cash prices come available to consumers outside of health plans. But pressure for coverage is likely to increase as the list of conditions the drugs are approved for continues to grow and as a newly approved pill is poised to increase demand.

“There’s more policy momentum to scrutinize exactly these kinds of PBM practices on the whole,” said Elizabeth McCuskey, a health law professor at Boston University. “So I think this adds a little fuel to that fire.”

Obesity as a Disability

Two cases pending before the US Court of Appeals for the First Circuit accuse Elevance and Cigna of discrimination for excluding coverage of all obesity drugs, and seek to classify obesity as a disability under Section 1557 of the Affordable Care Act. The plaintiffs are asking the court to award compensation and force the insurers to cover obesity drugs.

The cases were both dismissed at the US District Court for the District of Maine, although one judge—Lance E. Walker in Holland v. Elevance Health, Inc.—agreed the plaintiff’s obesity qualified her as disabled. The US Court of Appeals for the First Circuit in October appeared skeptical of arguments in both Holland and Whittemore v. Cigna Health and Life Insurance Co.

The threshold for disability discrimination is difficult for plaintiffs to clear because it’s a “very fuzzy standard,” McCuskey said. Plaintiffs have to demonstrate that their conditions impaired their daily lives or that the company discriminated against them because it thought the condition impaired them.

“If you’re bringing it as a class action, you’re trying to allege that everybody with a similar overweight condition is regarded as the same kind of disabled, and that’s also difficult,” she said.

‘Prohibited Transaction’ Clause

Three other cases allege CVS and Elevance failed to properly consider the plaintiffs’ requests for exceptions to the exclusion for Eli Lilly’s Zepbound, citing the fact that it is the only medication approved for obstructive sleep apnea.

The plaintiffs accuse the insurers of favoring Novo Nordisk A/S’s weight-loss drug Wegovy over Zepbound because they receive higher rebates from the drugmaker, therefore violating ERISA’s “prohibited transaction” clause.

In Hamburger v. CVS Caremark and Larkin v. Caremark RX, L.L.C., the plaintiffs also alleged CVS and CareFirst violated the plan’s prescription drug rider that says the plan covers medically necessary drugs that treat covered medical conditions like sleep apnea.

The lawsuits build a stronger fiduciary case against the insurers than plaintiffs in a series of drug pricing cases did against employers like Johnson & Johnson, Wells Fargo & Co., and JPMorgan Chase & Co., McCuskey said.

Those cases have struggled to gain ground in part because the harm they allege in overpaying for certain drugs is dwarfed by the overall value of the plan benefit they received, and drawing a line from a drug’s price to premiums and cost-sharing is difficult to prove. The plaintiffs in the J&J case dropped their case earlier this month, after a federal court largely dismissed their complaint twice.

But the sleep apnea cases zeroed in on the fallout from excluding the only drug to treat the condition, and point to specific language the insurers are allegedly violating.

“This is a more specific allegation that points to a more specific piece of ERISA,” McCuskey said.

Still, fiduciary claims against insurers are far from a “slam dunk,” said Julia Zuckerman, vice president and senior consultant at benefits consultancy the Segal Group Inc. Even though highly consolidated insurers and PBMs—which handle prescription drug benefits—wield power over employers, they still argue that employers call the shots.

“It’s not a generally accepted concept that a PBM is a fiduciary,” Zuckerman said. “So I think first you have that leap, because you can’t establish breach of fiduciary duty without a fiduciary being involved.”

Employer Coverage

Employers aren’t overly concerned about the cases at this point because they target insurance companies, Zuckerman said. Suing self-insured employers would be trickier for the plaintiffs, she added, because they have more liberty to exclude conditions they don’t want to cover.

“A plan could just design itself out of that and say, we cover this, this and this—but not this,” she said.

Employers are increasingly considering more creative ways to cover the drugs, she added, that come with additional legal considerations. Attaching requirements to accessing the drugs, such as requiring workers to attend counseling sessions or demonstrating progress in losing weight, could subject employers to anti-discrimination guardrails for wellness programs.

“A wellness program doesn’t have to be identified as a wellness program in order to fall under the scrutiny of those rules,” she said.

Shifting prices are also driving employers to cut back on coverage for the drugs.

An increasing number of employers are choosing to fund “health reimbursement accounts” for workers to buy them directly from the drugmakers at their new, cheaper prices, rather than pay the higher insurance rates as costs add up.

“A lot of employers are really leveraging that,” she said.