Radar on Drug Benefits

Ohio’s decision to use just one PBM to serve its Medicaid population saved $333 million in administrative costs over two years, according to a state analysis. The state created its own single PBM (SPBM) in 2022 after ending its contract with CVS Health’s Caremark and UnitedHealth Group’s Optum Rx. The move to an SPBM garnered net savings of $140 million and paid $700 million to contracted pharmacies in dispensing fees. More than 99% of pharmacies in the state participate in the SPBM, which pays them $9 per prescription instead of the old average of 73 cents. “The SPBM has delivered much needed accountability and price transparency for Ohio taxpayers and Ohio pharmacies, providing assurance that Ohio’s tax dollars are spent appropriately,” according to the analysis. 

Pharmaceutical companies are catching on to “alternative funders” and are further restricting who can access patient assistance programs (PAPs), Bloomberg reported, noting that patients can be caught in the middle and receive eye-popping bills for uncovered medications. Alternative funders are middlemen hired by employers who decide not to cover certain high-cost drugs through their health plans. The alternative funders, including companies such as Payer Matrix, find avenues for patients to obtain subsidized or free drugs, including through drugmaker PAPs created to help uninsured or underinsured patients. Drugmakers such as AbbVie Inc. have moved to bar patients using alternative funders to access their PAP because the companies steer insured patients to charitable care. In 2023, AbbVie sued Payer Matrix, claiming the action is “to stop Payer Matrix’s harmful conduct and protect its program so it can continue to serve its intended purpose — providing free drugs to uninsured and underinsured patients who otherwise could not afford their AbbVie medicine.” 

In a move cheered by health insurers, President Donald Trump’s administration said on April 4 that it decided not to implement the part of a proposed rule that would have significantly expanded Medicare and Medicaid coverage of weight-loss medications. But whether the administration will ever reconsider its stance is anyone’s guess, experts say. 

In its proposed Medicare Advantage and Part D rule for the 2026 contract year, issued in November 2024, former President Joe Biden’s administration sought to reinterpret the Social Security Act’s longstanding, statutory Part D coverage exclusion of drugs “used for anorexia, weight loss, or weight gain.” In doing so, drugs used to treat obesity — like the GLP-1 Wegovy (semaglutide) — would then have to be covered by Medicaid. 

Health insurers have largely resisted mandates to cover drugs for weight loss, notably opposing a now-scuttled rule that would have applied to Medicare Part D and Medicaid. But in North Dakota, the dominant Affordable Care Act exchange insurer ended up supporting the state’s effort to become the first to add GLP-1s that treat obesity to its essential health benefit (EHB) plan. 

“We’re a pretty small health insurer by national standards…we’re a nonprofit mutual. So yeah, the financial risk was daunting,” Dan Conrad, president and CEO of Blue Cross Blue Shield of North Dakota, said during a webinar hosted by Modern Healthcare on March 30.  

President Donald Trump’s administration on April 4 abandoned a proposal from Joe Biden’s administration that would have expanded Medicare and Medicaid beneficiaries’ access to obesity drugs, including the popular but costly GLP-1 medications.

Data from MMIT Analytics shows that fewer than 4% of Medicare enrollees have plans that put  Wegovy (semaglutide) and Zepbound (tirzepatide) — GLP-1s that were approved for weight loss — under the preferred/preferred (prior authorization and/or step therapy) tier and covered/covered (PA/ST) tiers, as of April 2025 (AIS Health is a division of MMIT.) While Medicare Part D plans are barred by statute from covering weight-loss medications, such plans can cover those when they are approved for other indications, like reducing the risk of stroke or heart attack in patients with obesity.

Glucagon-like peptide-1 (GLP-1) receptor agonists, particularly Novo Nordisk’s Wegovy (semaglutide) and Eli Lilly’s Zepbound (tirzepatide), have made a significant difference for patients with obesity, on top of netting blockbuster sales for the two manufacturers. But the enormous market size is proving to be unsustainable for payers, leading the Institute for Clinical and Economic Review (ICER) to suggest additional ways to handle the costs of the drugs.

The U.S. drug-pricing watchdog released a white paper on April 9 meant to examine strategies to ensure affordable access to the medications. The group has previously assessed the cost-effectiveness of the class of drugs and found them mostly overpriced. The July 2022 report found that Wegovy and Novo Nordisk’s Saxenda (liraglutide) did not meet cost-effectiveness benchmarks, while Vivus’s Qsymia (phentermine/topiramate) and Currax Pharmaceuticals’ Contrave (bupropion/naltrexone) were more cost-effective. Wegovy and Qsymia were the more effective of the four, with Qsymia having a wholesale acquisition cost that was a fraction of Wegovy’s. The review preceded the approval of Zepbound, but high costs remain a concern especially for Wegovy and Zepbound.