Weathering the GLP-1 Storm

David Lassen, who has decades of experience managing drug costs, has never seen anything like it. Neither has another pharmacy benefit veteran, Renee Rayburg, R.Ph.

“I don’t think we’ve ever seen something like this in terms of the impact on overall pharmacy spend and trend in my 30 years,” David Lassen, chief clinical officer for Prime Therapeutics, the Minnesota-based pharmacy benefit manager, says.

David Lassen

Rayburg, vice president of specialty clinical consulting at Pharmaceutical Strategies Group, a consulting firm, says the interest in off-label use of Ozempic (semaglutide) was unprecedented as were all the headlines and cultural references to the drug. “I have been a pharmacist for 35 years, and I have never seen that type of response from patients,” Rayburg says, with a somewhat rueful laugh escaping. “I laugh because I think everyone, whether you are in healthcare or not, knows the word Ozempic.”

For their manufacturers, this demand for the weight loss medications, off- and on-label, has produced a surge of sales revenue. Ozempic and Wegovy, the version of semaglutide approved for weight loss, brought sales revenue of $4.8 billion to Novo Nordisk, the Danish drugmaker, in the third quarter of 2023 alone, and the semaglutide pair accounted for half the company’s revenue during the first nine months of the year.

Renee Rayburg, R.Ph.

Meanwhile, Eli Lilly’s coffers bulged with $2.9 billion in revenue from Mounjaro (tirzepatide), a drug that is similar to semaglutide, during the first nine months of 2023. Like Ozempic, Mounjaro was approved as a diabetes drug that was used off-label for weight loss. The FDA approved tirzepatide for weight loss in November 2023, and Lilly is now marketing tirzepatide for weight loss purposes as Zepbound.

Of course, the flip side to all this revenue for drugmakers is mushrooming drug spend for health insurers and self-insured employers. Payers have responded in various ways. Some employers have taken a blunt approach and simply axed coverage of weight loss drugs. The University of Texas, for example, announced last summer that its employee and retiree health plans were going to stop covering weight loss medications in September. Ascension, a large hospital system headquartered in St. Louis, made a similar decision to stop coverage of weight loss drugs. Others have taken a more nuanced approach.

Predictably, some dishonest people saw an opportunity in the weight loss gold rush. “When you have something of this magnitude, there’s going to be fraud and abuse,” says Lassen.Prime Therapeutics’ special investigation unit worked to identify cases when patients were falsely identified as having diabetes in order to receive Ozempic. Lassen says the fraud was often associated with patients receiving care through telehealth, although he cautioned that he didn’t want to generalize all telehealth options. The company terminated some contracts and cooperated with some criminal investigations.

“Sadly, we started out the year [2023] with full trust,” Lassen says. “As we moved through the year, we were forced to put in validation steps because we could not trust without verifying the information we were receiving and getting for requests for coverage was true and accurate.” It wasn’t just prescribers, Lassen notes. “We had individuals working with their prescribers to seek coverage so they would flag in the system and make it look like they [had diabetes when] they didn’t.”

Lassen says that as Prime Therapeutics was working to ferret out fraud, it was taking steps to reduce waste in the form of time- and bandwidth-consuming prior authorizations. According to Lassen, in June 2023, Prime Therapeutics implemented a system that tapped into a database of diagnosis codes that allowed a claim to be processed at the point of sale “rather than having to force that member and provider down the path of a prior authorization.”

“In fact,” Lassen continues, “we reduced our prior authorizations overnight by 20%, and millions of dollars of waste were taken out of system by automating and reducing friction at the point of sale because this is such a high-volume situation.”

Rayburg says that early on, many payers didn’t recognize that so many prescriptions for Ozempic were being written off-label for weight loss. Patients were urging physicians to write the prescription and then hoping the insurance company’s guard would be down so that the Ozempic claim would go through.

Figuring it out

The surge of weight loss prescriptions storm may have forced payers to respond on the fly in 2023. Now they are adjusting to the reality of the popularity of the drugs and sorting out how to cover them.

Attitudes and approaches are mixed. Accolade, a virtual health company, published the results of a survey of 500 human resources managers involved in benefits decisions late last year that showed that less than one-third (30%) of employers cover weight loss drugs and less than that (25%) covered the glucagon-like peptide 1 (GLP-1) class that includes Ozempic and Wegovy.

(Mounjaro and Zepbound are lumped into theGLP-1 class, although they have an additional mechanism of action, activation of the glucose-dependent insulinotropic polypeptide receptor.) But the survey results also showed that 43% of employers that weren’t covering the GLP-1 drugs in 2023 were considering coverage this year. The reluctant majority (57%) picked cost, lack of research and lack of public payer as reasons for holding back.

Rayburg says it is important to distinguish between deciding to cover GLP-1 drugs as a treatment for diabetes and deciding to cover them for weight loss. She noted that the FDA approved the first GLP-1, exenatide, marketed as Byetta, back in 2005, and coverage of the GLP-1s for diabetes hasn’t been controversial.

“In the beginning, there was not a lot of push to limit these drugs, because why would you ever limit diabetes drugs that are beneficial and working? But as expenses go up, you look at the cost, you look at the utilization,” she says.

“All of a sudden,” Rayburg continues, “your costs are kind of getting out of control and you are wondering, ‘Is this all related to diabetes?’ And when you start to look into it, you are finding that there is probably just as many people getting it off-label for weight loss as there are for diabetes.”

Even as GLP-1s’ profile as weight-loss drugs has grown, many payers view coverage for diabetes as a priority, according to Rayburg. “There’s a finite number of healthcare dollars. We say that all the time, right? So if you’ve got limited dollars to spend, you definitely would put your money toward your patients with diabetes first and then figure out the second part [weight loss].”

The manufacturers are offering rebates on the GLP-1 drugs that offset some of the costs associated with the flood of prescriptions. But Rayburg says her company worked with one client who tightened up coverage and wound up saving five times more through decreased use than they would have realized through rebates.

One variable in the math of covering the drugs for weight loss is proportion of those with overweight or obesity. Some national statistics suggest that 40% of Americans have obesity, which is defined as a body mass index (BMI) of 30 or more, and almost 10% have severe obesity (a BMI of 40 or more). Rayburg says her company usually has access to data that it can analyze to tell a health plan or self-insured employer how many of its members have obesity. “If you have a tremendous number of people who have obesity, we may make a recommendation to start small and maybe cover those who would benefit the most,” she says.

Rayburg says research has shown that weight loss of 5% or more yields an array of health benefits and that the GLP-1s have been shown to produce weight loss of 15% or more. “The unknown is how long that takes,” she says. As a result, the payer who foots the bill for the GLP-1 may not be the same payer who reaps the benefits of improved health from weight loss and presumably lower use of medical services.

Lassen also sees considerable uncertainty about the supposed payback from the weight loss from GLP-1s. Last year, Prime Therapeutics published data showing that only 1 in 4 patients who started taking a GLP-1 or weight loss was taking the drug a year later. Research results reported in JAMA in December 2023 underscored that patients may need to stay on these weight loss medications to keep the lost weight off. Louis Aronne, M.D., an obesity specialist at NewYork-Presbyterian Hospital in New York, and colleagues reported that after 36 weeks, participants in an open-label study of tirzepatide experienced an average weight reduction of just over 20%.

However, those who were switched to a placebo experienced a 14% weight regain during a yearlong follow-up period whereas those who were assigned to continued treatment with the drug experienced an additional 5.5% in weight reduction. Executives at payer organizations are wondering if a large percentage of their members are going to be taking a GLP-1 indefinitely, saddling their organizations with a year-in, year-out cost with major question marks about offsetting savings from reductions in obesity-related illness.

Lassen also notes that trials that led to FDA approval of the GLP-1 drugs for weight loss enrolled participants in lifestyle medication programs and that their adherence was monitored. Lassen said for him and his colleagues at Prime Therapeutics, all this stirs up apprehension about what will happen with GLP-1 drugs outside the cosseted circumstances of industry-sponsored clinical trials.

“Our chief concern with these drugs right now is how do we best manage the waste, because there’s a real potential if people in real-world practice are not staying on these medications, then they are not going to do anything but promote cost and temporary weight loss,” he says. “If we just simply cover the medication and say, ‘Have at it,’ what is the likelihood of having success with that?Slim to none.”

Lassen is making a case for a new product that he says Prime Therapeutics will unveil sometime in the early part of 2024 that includes assistance from healthcare professionals, coaching and other features. In advance of the official announcement, Lassen was reluctant about sharing too many details, such as the organizations or companies that Prime Therapeutics is partnering with. But he says the program will not be organized as a step program that requires lifestyle modification before receiving a GLP-1 drug prescription.

“We’re not looking at this as another barrier to care, a step through lifestyle medication before you get the golden egg. That’s not the right approach,” Lassen says. “The right approach is if you’re going to cover the benefit, then let’s make it as successful as possible and let’s also help mitigate the friction and confusion that is out there.”

“We’re excited because doing this is more than just a weight loss program and a lifestyle modification program. It’s a cardiometabolic program,” Lassen continues. “Our objective is to offer something different and unique that our customers can offer to their members to engage and get care.”

Lack of Medicare coverage

Time will tell whether Prime Therapeutics’ potential customers will see it that way or as bells and whistles. But the plain fact is that many employers have steered clear of covering weight loss drugs. Lassen says that only 22% of the 30 million lives in its current book of business have a benefit design that covers weight loss (the proportion is slightly higher among self-insured employers). The demand for GLP-1s may cut both ways: Employers may be even more wary of covering weight loss drugs because of the cost, but they may be more willing to cover them because of the evidence of their efficacy and the potential of weight loss benefits may have for attracting and retaining valued employees.

The 65-million beneficiary gorilla of benefit coverage in the U.S. is Medicare. When Medicare Part D was created in 2003, drugs for weight loss and some other conditions, such as hair loss, were explicitly excluded. Legislation that would overturn that ban was first introduced in Congress in 2012and has been reintroduced in subsequent years with a growing number of sponsors but has not moved forward.

The lack of Medicare coverage affects not only Medicare beneficiaries but also, indirectly, people covered by employer plans and Medicaid because other payers tend to take their coverage cues from Medicare. James Wantuck, M.D., associate chief medical officer for Accolade, says the lack of coverage for weight loss extends beyond drugs to physician visits. “If you [have obesity], you can’t go your doctor and talk to them about how to lose weight and have it paid for by your insurance. That seems counterproductive with the crisis we’re in,” he says. Rayburg says lobbyists are actively working to get the Medicare rules changed.

Another piece in the coverage puzzle may be additional indications for the GLP-1 drugs. If the FDA decides that the GLP-1 drugs can be prescribed on-label for, say, reducing cardiovascular disease risk factors, Medicare might cover the GLP-1s for that reason.Regardless, Rayburg says, cost will be a factor. “At the end of the day, in order for CMS to agree to cover these drugs, they’re going to have to figure out how they’re going to afford it. So will they put price pressure on the manufacturers? I am not sure.”

Coverage by Medicaid is a state-by-state choice. Weight loss drugs are not among the drugs that states must cover under the Medicaid Drug Rebate Program. Even so, Medicaid spending on GLP-1 drugs has increased. KFF, formerly known as the Kaiser Family Foundation, published a report in September 2023 that showed Medicaid spending, in aggregate and before any rebate calculations, on GLP-1s had increased from $547 million in 2021 to $1.2 billion in 2022.

Still, the GLP-1 drugs account for a tiny if growing fraction of Medicaid spending on drugs. In 2022, they accounted for just 1.3% of Medicaid drug spending. Patient advocates and others are pushing for more generous coverage. Rayburg says that some states have been sued for not covering the GLP-1 drugs, with the plaintiffs arguing that the drugs must be covered because obesity is a disability.