Weighing the benefits of Ozempic and Wegovy in health plans

Not a week goes by without friends, colleagues and clients asking me about weight-loss drugs. It seems that almost everyone wants a magic pill to lose weight. Let's face it, there is a good reason for the curiosity surrounding this type of medication. 

The U.S. has faced several health challenges in recent years, but one that has remained persistent since the 1970s is the obesity epidemic. The Centers for Disease Control and Prevention (CDC) report that more than 73% of adults in the U.S. are considered overweight or obese — a sobering statistic. There have been countless efforts to curtail this surge in unhealthy weight levels, and though progress has been made, much work remains. 

Weight loss drugs like Wegovy and Saxenda are giving new hope to millions of Americans struggling with obesity, but will health plans cover the hefty costs? Only 22% of U.S. employers cover prescription drugs for weight loss, according to a recent survey from the International Foundation of Employee Benefit Plans. Even in plans that do not cover weight-loss medications, we are seeing a surge in costs and utilization in diabetes drug spend due to potential off-label use for the diabetic drugs Ozempic and the latest drug Mounjaro, both of which are FDA-approved to treat only type 2 diabetes.

Read more: Employees want weight loss drugs Ozempic and Wegovy. Can employers afford them?

While public-sector organizations are leading the way in coverage as compared to the private sector, the recent surge in demand for these medications has more employers weighing the benefits of weight-loss drugs for their health plans. Any analysis must consider several factors, including the potential cost implications, widespread availability of drugs and health inequities. The Federal Office of Personnel Management (OPM) recently issued guidance, saying that health insurance carriers that administer Federal Employee Health Benefits (FEHB) plans for government-funded public sector employees must cover anti-obesity medications from coverage.

Cost and availability may tip the scales. Since the American Diabetes Association recently emphasized higher weight loss goals in its 2023 Standards of Care in Diabetes, the message is clear that this epidemic needs to be addressed. But with a 30-day supply of Wegovy priced at about $1,350 for a retail patient (that's more than $15,000 per year), cost is definitely a concern for both individuals and employers. The other big question is how long a patient will need to be on these newer drugs, which can mean continued high costs for the plan over time.

In the past, many companies were wary of providing coverage since older weight-management medications were generally considered subpar, often resulting in no meaningful weight loss and a long list of side effects. Compared to older weight-loss drugs, the newer ones are showing better outcomes, but a surge in their popularity has led to drug shortages. That's mainly because prescriptions are being given to people who want to lose what they consider "those last 10 pounds," at the expense of diabetic or pre-diabetic candidates.

Read more: What my weight loss journey taught me about how healthcare works

Another emerging factor is that newer, pricier medications may further deepen healthcare disparities. A recent study published in the Journal of the American Heart Association highlights the challenges for Black and Hispanic adults who were eligible for Semaglutide — which is sold under the brand names Ozempic, Wegovy and oral drug Rybelsus — but were unable to afford the medication versus other patient subgroups. 

Plan sponsors should practice due diligence to understand the effectiveness of these drugs and the cost benefits over time. They may want to consider making the investment now to include these drugs in their benefit plans, since the wider availability of generics and increased competition may balance out some of these inequalities in the future.What should organizations consider when weighing coverage, and how can this have a positive impact on their workforce? It's a question asked by many organizations I work with, and it's not just about covering the drugs themselves. 

One of the first things employers should do is implement utilization management, which means evaluating the necessity of weight-loss drugs and medical treatments and services, to ensure best practices for clinical efficacy and safety. It's also important to require a comprehensive weight-management program that encourages behavioral modification, reduced calorie diet and increased physical activity along with the medication to ensure a long-term healthy lifestyle. Some patients may take this medication for extended periods of time, but there are no long-term studies about their effects.

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Along with comprehensive weight management, organizations should implement an accountability check-in with a doctor or nutritionist, ensuring patients are progressing with their medication. Another option would be to set certain parameters, ensuring that coverage is provided to those who need it most. For example, if plans do not cover this benefit today due to affordability, one option is to reserve coverage for individuals who have a BMI of 35 and above — which is defined by the CDC as Class ll and Class III obesity.

Beyond employees, plan sponsors need to assess if the coverage should be extended to spouses and partners, as well as children. If offering tools and knowledge to make healthier lifestyle changes first doesn't work, then a plan for medication use should be combined with medical supervision and continued counseling, which can be especially important for children dealing with obesity. Ensuring the coverage addresses the obesity problem holistically can help prevent it from leading to greater health issues such as cardiovascular disease, hypertension, diabetes and other chronic illnesses. 

With the wider availability of effective weight-loss drugs, competition in the market will produce downward price pressures likely in the form of rebates. Plan sponsors will want to encourage pharmacy benefit managers to be transparent and pass on some of the manufacturer rebate money to them. This will enable organizations to make reasonable decisions about which drugs to cover and how best to mitigate the potential surge in pharmacy benefit plan costs.

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The real savings may come from the long-term benefits of weight loss across the broader population. If drugs like Wegovy prove to help patients keep weight off even when they are no longer taking the drugs, then we could see a decline in diseases related to obesity. It is important to consider all these factors before including weight-loss coverage in an organization's health benefits. Remember, weight-loss management is more than just a prescription — it's about having all the necessary tools, resources and support to make crucial and sustainable lifestyle changes.