Friday, May 24

Buried in Wegovy costs, North Carolina will stop paying for obesity drugs

In June 2021, North Carolina’s state employee insurance plan had 2,800 people taking weight-loss drugs.

Last year it paid nearly 25,000. Drugs like Wegovy cost the North Carolina State Health Plan $100 million last year, rising seemingly out of nowhere to account for 10% of its prescription drug spending.

“This is something we never anticipated,” said Dale Folwell, the state treasurer whose office runs the health plan.

Alarmed by spiraling costs, the health plan’s board of directors voted Thursday to end all coverage of weight-loss drugs, including Wegovy, which accounts for the vast majority of its spending on obesity drugs . The plan will continue to cover versions of the drugs for people with diabetes.

In recent years, appetite suppressant drugs have gained popularity because they are remarkably effective at helping patients lose weight. Research suggests the drugs could pay for themselves or even save money in the long run, preventing heart attacks and strokes that lead to large hospital bills.

But for employers and health plans that cover the majority of the cost of prescription drugs, the bill for these drugs is huge and now coming due. In recent months, the University of Texas system and the Ascension hospital chain stopped paying for drugs for their employees. Those who continue to cover drugs are imposing new restrictions aimed at reducing costs. The Mayo Clinic, for example, will now provide its employees with a lifetime benefit of just $20,000 for medications.

Medicare, in contrast, does not cover prescription weight loss medications, but it does cover weight loss surgeries.

In North Carolina, Thursday’s vote to end coverage appears to be the first in the country to implement a state health plan. The plan uses state funds to cover most prescription drug costs for 740,000 public workers, teachers, retirees and their family members.

The state health plan is in financial trouble. Last year, its cash fell by $250 million. Administrators who voted to end coverage said they had a duty to do the greatest good for the most people.

“Our responsibility as trustees is to the state health plan,” said Rusty Duke, a trustee. “We are talking about a limited number of people compared to all the members.”

Coverage of weight loss drugs will end on April 1 unless a last-ditch deal is reached to reduce costs.

To continue taking weight loss medications, patients will have to pay out of pocket. Drugs can cost more than $16,000 a year without insurance coverage — a daunting prospect for workers whose average annual salary is $56,000. Most patients regain the weight they lost if they stop taking the drugs.

In recent weeks, state health plan officials explored whether they could cut costs by imposing restrictions on who could get the drugs, but were told they couldn’t do so without losing $54 million in rebates this year from the drugs’ makers .

Jessica Uhrick-Rieger, a 44-year-old state worker, started taking Wegovy in October 2022. She has since lost 103 pounds and no longer has pre-diabetes. But she won’t be able to afford Wegovy’s sticker price of $1,349 a month.

“This is more than my mortgage,” he said.

Folwell, the health plan’s board chair who did not vote Thursday, has been outspoken about the plan’s unsustainable spending on weight-loss drugs. (Outside of his day job, he is running as a Republican for governor of North Carolina on a political platform that favors substance.)

He talks about the health insurance dilemma in easy-to-understand terms: If this year, for example, medications were covered without limits, the costs would be enough to pay for a 0.5 percent pay raise for all state employees. And he has sharply criticized Novo Nordisk, the maker of Wegovy, for what he calls price gouging. The plan costs approximately $800 per patient per month for Wegovy, while patients are responsible for an average monthly co-payment of $37.

“I’m not questioning the effectiveness of this,” he said. “I wonder what we are being charged.”

Allison Schneider, a spokeswoman for Novo Nordisk, called administrators’ decision to end coverage “irresponsible,” adding that the company has worked with state health plan officials to address cost concerns. “We do not support insurers or bureaucrats inserting their judgment into these medically driven decisions,” she said.

Some in North Carolina see a bitter irony in the fact that Novo Nordisk makes and packages Wegovy in Clayton, North Carolina, a short drive from government offices where state health plan officials are trying to figure out how to pay for the drug.

The company’s critics have called attention to the tens of millions of dollars in incentives Novo Nordisk has received from the state and county where its plants are located.

“It certainly adds insult to injury,” said Ardis Watkins, executive director of the State Employees Association of North Carolina, a group that lobbies on behalf of state health plan members. “Our economic climate, which has been made so attractive for companies to locate here, is being used to produce a drug that is vastly overpriced.”

Ms. Schneider said Novo Nordisk employs more than 2,500 North Carolinians and has poured more than $5 billion in capital spending into the state.

State health plan staff have been closely monitoring Wegovy’s spending growth. About a year ago, it became the health plan’s most expensive drug, surpassing the plan’s longtime top spender, the blockbuster anti-inflammatory drug Humira.

“Wegovy suddenly went wild,” said Sonya Dunn, a health plan manager who regularly reviews reports showing the plan’s prescription drug spending has reached new highs.

North Carolina’s state health plan has been more lax than other employers and insurance programs in how it has covered obesity drugs. Until recently, patients could get coverage without providing documentation of body mass index or certain medical conditions approved by the Food and Drug Administration for drug eligibility.

Employees of the plan pay monthly premiums ranging from $25 for an individual to $720 for a family. The plan did not raise premiums for members for seven years: One priority, Folwell said, is to recruit young workers to enter and stay in state government. If coverage of weight-loss drugs continued without limits, health plan officials predicted that premiums would increase by $50 a month next year.

Meghan Ray, a state employee who hires Wegovy, said she was disappointed by the administrators’ vote. She founded Wegovy two years ago because of a medical condition that could jeopardize her vision if she weighs too much. Since then, she has lost 15 pounds and stopped taking blood pressure medications.

Ms. Ray, 41, who spoke at Thursday’s board meeting, said she feared she would eventually have to undergo another stomach reduction surgery that would be costly to the state health plan because she doesn’t have the money to pay out of his own pocket. for Wegovy.

“The state doesn’t pay me well enough for me to afford it,” he said in an interview. “It’s more important that I can afford gas to get to work, or food to feed my family.”

The board voted narrowly, by a 4-3 margin, to end drug coverage.

Wayne Fish, a trustee who voted against ending the coverage, is himself a state employee and works in food service at correctional facilities. He said he was distressed by the compromises.

“These are difficult decisions,” he said. “We see the solvency of the plan and so on, but these also affect people’s lives. I don’t know if there’s a way to balance that.”