The popularity of expensive new weight-loss drugs like Wegovy and Ozempic is spurring employer health plans to consider prior authorization and other means to limit their uptake, according to people who work with the plans.
“Some employers are either requiring prior authorization or are considering kind of a step therapy approach,” Julie Stich, vice president of content for the International Foundation of Employee Benefit Plans, said in an interview. Prior authorization requires approval from a health plan before the prescription is filled, and less costly treatments may be ordered first under step therapy.
Health insurance plans have come under fire for requiring prior authorization for coverage, but the need to control high costs for drugs that are shown to be effective in helping plan participants lose weight is leading back to the time-worn approaches.
Costs are as high as $1,300 a month for drugs such as Wegovy and Ozempic, both made by
The IFEBP recently released surveys finding that 22% of the 470 employers surveyed cover prescription drugs for weight loss, and 25% of employers report that obesity has the largest impact on overall health-care costs. The organization has more than 31,000 multiemployer, corporate, and public sector members representing more than 25 million beneficiaries.
Large employers are more likely to offer the benefit than small employers, Stich said. Forty-five percent of plans with 500 or more employees offered it, but only 18% of smaller companies did, she said.
Employees are asking for the drugs, but their cost is a “challenge” for employers, Stich said. They’re also trying to gauge whether the drugs need to be taken over long periods of time to maintain weight loss, she said.
At the same time, employers are considering “the future well-being of employees,” Stich said.
In the US, the rate of obesity—defined as a body mass index of at least 30—rose to 41.9% in the 2017-March 2020 period, leading to conditions such as heart disease, stroke, Type 2 diabetes, and some types of cancer, according to the Centers for Disease Control and Prevention. The CDC estimates the medical cost of obesity at nearly $173 billion annually in 2019 dollars.
A Gradual Response
When Wegovy came onto the market, employers didn’t change their drug formularies, which govern how prescriptions will be covered by their health plans, “because initially there were relatively few people on those drugs in 2021 into 2022,” Jeff Levin-Scherz, population health leader at human resources consulting firm WTW, said in an interview.
However, about 30% of people covered by employer-sponsored health insurance are probably eligible for the medications, he said.
At roughly $3,000 per person annually for weight loss drugs compared with total costs of about $21,000 per year for family coverage, “nobody budgeted for it and it’s very hard to keep health insurance affordable when you’re covering this,” he said.
Future competition could help reduce costs.
Medicare doesn’t cover prescription drugs for weight loss, although Medicare’s Part D drug program often covers Ozempic for diabetes. FDA Commissioner Robert Califf said recently that drug regulators are in talks with the Centers for Medicare & Medicaid Services, which oversees Medicare, about “what to do about obesity drugs.”
Employers “theoretically have got greater freedom of action of what they can cover and not cover,” Hubbard said. Employers may take the lead in some cases in “proving out how obesity treatment might be scaled up from where it is today to something that’s effective clinically for the patients but also cost-effective for payers,” he said.
“The discussion here is really not just about use of the medications but the other sort of tools in the toolbox for dealing with obesity,” such as virtual care delivered through telehealth, nutrition counseling, physical activity services offered through wellness programs, as well as bariatric surgery, Hubbard said.
Value-Based Payments
NEHI called for a value-based care approach to covering weight loss drugs in a recent report.
Adopting such an approach could involve paying health-care providers for improvements in patient outcomes, Hubbard said. Value-based payment models are being used in other areas of medicine, but they’re not in use yet in treating obesity, he said.
“This is new territory for everybody,” Hubbard said. “Obesity has not really been seen as a medically treatable condition” prior to the advent of the new drugs.
Wegovy generally leads to about 15% weight loss, Levin-Scherz said, a significant improvement compared with previous weight loss drugs. The new drugs “dramatically diminish appetite, and people really do lose weight, and lose weight pretty rapidly,” he said.
One method employers could use to control costs would be requiring prior authorization for the use of Ozempic to make sure the patient has diabetes and isn’t using the drug for weight loss, Levin-Scherz said.
Employers also could require proof that a patient’s body mass index is in the obese range, or mandate patients to use the services of nutritionists before approving any weight loss drugs, he said.
Virtual Care
Virtual care can play an important role in treating obesity, Florencia Halperin, chief medical officer of Boston-based online medical weight loss clinic Form Health, said in an interview.
Obesity care is a “scarce resource,” she said. There are only a few thousand obesity medicine certified clinicians in the country, she said. In addition to geographic obstacles in getting to an obesity treatment center, there are long wait times at the centers, she said.
Form Health provides certified medical doctors and teams that include registered dietitians that meet with patients virtually a couple of times a month, she said. Weight loss is tracked through digital scales and apps, she said.
In a recent webinar sponsored by NEHI, Angela Fitch, president of the Obesity Medicine Association, called for making obesity “a standard benefit on all commercial payers.”
It’s now “up to the employer to choose to pay more money for that coverage,” and individual employers are unlikely to shoulder the expense because employees may only work for them for limited periods of time, she said.
“We’re paying for it now at the back end in heart attacks, strokes, and all sorts of other medical problems that are developing for patients versus paying at the front end and seeing the fruits of our labor,” Fitch said.
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