It seemed like only a matter of time before someone would close this valve. After months of off-label prescribing of Ozempic, propelled by celebrity hype of the diabetes drug which has gained popularity as a weight-loss treatment, some payers have decided to rein in the practice.
According to a report in The Washington Post last week, some 14 Anthem Blue Cross Blue Shield plans cautioned healthcare providers in several states about prescribing Ozempic to non-diabetic patients. As the “education” letter noted, an inquiry undertaken of those physicians’ claims by the plan’s “Special Investigations Unit” revealed that 60% of patients prescribed Ozempic lacked “sufficient evidence” of diabetes, the product’s Food and Drug Administration-approved use.
Such prescribing could put patients at risk, the insurer warned, threatening the 150 or so prescribers who received the letter that it would refer “suspected inappropriate or fraudulent activity…to the state licensure board, federal and/or state law enforcement.” What’s more, the trend has led to nationwide shortages of the drug for diabetics.
Those warnings portend a future reckoning with regard to new drugs like Ozempic, driven by celebrity and social-media buzz around the medications, which are disrupting the way obesity is treated. The new crop of products, known as GLPs, has proven to be highly safe and effective and is stoking a mad dash by patients to access them and by pharma companies to satisfy the market.
But their high costs – the drugs list for $900 or more per month – put payers in a pickle: should they give the GLPs a warm reception, potentially saving money on downstream medical expenses, or tamp down on what’s shaping up to be a colossal short-term liability?
While carriers are frowning on off-label prescribing now, the spigot could reopen if studies pan out showing that Ozempic and its cousins have cardiovascular and other wider health benefits. Novo Nordisk and Eli Lilly are studying whether use of these drugs decreases comorbidities.
Novo sells semaglutide, the active compound in Ozempic, as another drug approved for obesity, Wegovy. The reason doctors are writing Ozempic ‘scripts for treating obesity is because most health plan benefit designs don’t cover weight loss medications.
David Allen, a spokesperson for America’s Health Insurance Plans, says the trade group has concerns about the cost of GLP-1s and side effects, which can include vomiting and nausea, as well as the likelihood of gaining the weight back when the drugs are discontinued. “The evidence is still evolving related to how these medications may impact complications related to obesity such as heart disease and diabetes,” he said.
The fanfare around GLPs has earned them comparisons to Botox and Viagra – products that became cultural phenomena in their own right. But it may be just as appropriate to liken them to Sovaldi, the $1100-per-pill hepatitis C drug which may have been the first to intensify concerns about society’s ability to pay for a high-priced, mass-market pharmaceutical.
Employers are often the ones making these coverage decisions, not insurers themselves. And fewer than a quarter of employer-sponsored plans cover any drug specifically for losing weight, a study by the International Federation of Employee Benefit Plans showed. Even if they do, many of these plans are trying to restrict access to the drugs and alternatives like Lilly’s Mounjaro (tirzepatide), which has also seen an up-tick in off-label prescribing, according to the WaPo.
Not only must patients meet the specifications on the drug’s label – having a body-mass index of at least 30, or 27 if the patient also has a weight-related health condition such as high blood pressure. In order to get Wegovy approval, some employers also look for enrollment in a weight-loss program or taking other weight-loss drugs first.
Nevertheless, the percentage of companies that cover at least a portion of members’ prescription weight-loss medications is expected to rise. Willis Towers Watson’s 2022 Best Practices Survey, for instance, showed that 35% of employers were targeting obesity and weight management as an important clinical area for their employees. And the typical employer’s drug spending could increase by more than 50% if half of employees who were eligible for Wegovy were to take it, according to a WTW estimate.
Thus far, Novo Nordisk enjoys pole position in the weight-loss market with Wegovy. The company saw a 124% year-on-year increase in the sale of obesity medications during first-quarter 2023. The firm reported the equivalent of $3.5 billion in revenue for Ozempic and Wegovy combined in the first quarter, whereas Lilly collected $568.5 million in first-quarter Mounjaro sales.
Competition is coming, though. Later this year, the FDA is expected to approve Lilly’s tirzepatide for obese adults. Pfizer, Amgen and smaller players like Altimmune are among the other companies that are working on weight-loss therapies similar to Wegovy. According to analysts and pharma companies, the market for GLPs or similar treatments is expected to reach $100 billion by decade’s end.
Total prescriptions for Ozempic and Wegovy have risen by 95% and 514%, respectively, versus a year ago, according to a research note from JPMorgan analysts. Payers are taking a cautious approach for now, but analysts predict that access will continue to expand as payers increasingly view obesity as a driver of medical comorbidities that contribute to rising health care costs.
Medicare Part D, for its part, is blocked from covering these drugs. But KFF researchers estimated that, based on survey data suggesting a 41.5% obesity rate in the over-60 population, treating just 10% of these Medicare beneficiaries with Wegovy could cost $26.8 billion a year, per a recent analysis.
Demand has been so torrid that Novo said in a recent update that it would prioritize supply for existing patients at the expense of providing the medication to new patients. The drugmaker has also hit pause on some key Wegovy promotional efforts.
For Medicare to cover weight-loss meds, federal law would have to change. The Treat and Reduce Obesity Act (TROA), for one, would allow Medicare coverage for FDA-approved anti-obesity drugs and broaden access to behavioral therapy. While the legislation has bipartisan support, it has been wending its way through Congress since 2012 but failed to advance.
Passage of TROA could have tremendous societal benefits. After 20 years, diabetes prevalence could fall by 7.7% with just Medicare covering the new weight-loss drugs, and by as much as 24% if private insurers also offered coverage, a white paper by the USC Schaeffer Center for Public Policy points out.
But passage is a longshot given the current composition of the legislature, experts say. That means Medicare Part D will likely continue to exclude weight-loss drugs from coverage, at least for the time being. And private insurers often take their cue from what Medicare does.
Many payers are also likely to be wary of how widespread the potential patient population could be with off-label use of Ozempic and Mounjaro. Coverage decisions are strictly the purview of health plans themselves. But as they weigh these longer-term issues, the short-term may see more carriers pushing back on off-label prescribing, especially as another way of combating shortages.
Especially at a time when many other controversies are engulfing managed care – like rising medical claims, PBM reform and the forthcoming election – this doesn’t seem like a moment when insurers will have an overabundance of tolerance for a trend that could carry real risk for patients with diabetes.