Cigna Strikes Deals With Lilly, Novo for Obesity Coverage (2)

Cigna Group has struck deals with obesity drug makers Eli Lilly & Co. and Novo Nordisk A/S that aim to widen coverage by limiting how much employer-sponsored health plans have to pay for the medicines.

The agreements by the company’s pharmacy benefits manager are part of a pitch to employers alarmed by spiking costs for popular new weight-loss treatments including Novo’s Wegovy and Lilly’s Zepbound. Cigna says its program will limit spending increases for the class of drugs, known as GLP-1s, to a maximum of 15% annually. The company called it the first such financial guarantee on the market.

The approach could widen access to medications in high demand, while giving companies concerned about GLP-1 treatments’ high cost some assurance that paying for them won’t bust their health budgets.

Cigna shares rose as much as 2.4% at 9:56 a.m. in New York. The company is hosting an investor conference today in New York.

Adam Kautzner, president of Cigna’s Express Scripts pharmacy benefit manager unit, said it’s rare for drugs to generate enormous popular demand as the weight-loss medicines have. It’s left employers asking “What can we do?” he said in an interview.

He added that some clients are seeing spending on the drugs increase by 40% to 50% annually.

Lilly and Novo declined to comment on the details of the agreements with Cigna.

Express Scripts provides prescription benefits to 120 million people on commercial or government health plans.

GLP-1s treat both diabetes and obesity. While most large health plans cover medications for diabetes such as Novo’s Ozempic and Lilly’s Mounjaro, employers have balked at paying for weight-loss drugs. About 50% of commercially insured patients have access to weight-loss drugs through employers who opted to cover anti-obesity medications in 2023, according to estimates from Goldman Sachs.

Employers pay a separate monthly fee for Cigna’s program, called EncircleRx, which is aimed at patients with diabetes, obesity and cardiovascular disease. The program includes support for patients on the drugs, which are supposed to be accompanied by lifestyle changes such as increased exercise. Cigna is working with Omada Health Inc.on services to help patients with behavior changes.

‘Unique Agreements’

Cigna declined to share details about its contracts with the drugmakers. Kautzner described them as “unique agreements” with Lilly and Novo that enabled Express Scripts to offer clients financial guarantees. Express Scripts is the “entity that assumes the risk” around the guarantees, he said.

The weight-loss drugs have list prices that range from $1,060 for Zepbound to $1,349 for Wegovy for a four-week supply. The list price doesn’t include rebates or other arrangements that lower net costs, which pharmacy benefit managers sometimes retain a portion of. Cigna executives have previously said the growing use of GLP-1s boosts earnings.

Other insurers have called on makers of obesity drugs to cut the prices, but there’s been little sign that manufacturers are willing to do that. Brian Thompson, chief executive officer of UnitedHealth Group Inc.’s insurance subsidiary, said in October the company aimed to sign agreements with manufacturers based on “outcomes and adherence levels” but hadn’t reached such deals at the time.

Eric Palmer, chief executive officer of Cigna’s Evernorth division, alluded to an “outcome-based set of economics” in the EncircleRx program during January remarks at the JPMorgan Healthcare Conference.

Some states, like North Carolina, have recently stopped covering weight-loss drugs for state employees, citing ballooning costs.

On Thursday, Cigna also raised its target for long-term average annual adjusted earnings per share growth to 10%-14% from 10%-13%. The company affirmed its 2024 guidance of at least $28.25 in adjusted earnings per share.

(Updates with share move in fourth paragraph.)

--With assistance from Madison Muller.

To contact the reporter on this story:
John Tozzi in New York at jtozzi2@bloomberg.net

To contact the editors responsible for this story:
Jonathan Roeder at jroeder@bloomberg.net

Karen Leigh, John Lauerman

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