Commercial Payers Wrestle With Managing Weight Loss Drug Coverage

With the launch of a new website, Eli Lilly and Co. recently became the first pharmaceutical company to offer weight loss medications though a telehealth provider. The platform — LillyDirect — comes less than two months after Lilly’s weight loss drug Zepbound (tirzepatide) gained FDA approval and joined fellow glucagon-like peptide 1 (GLP-1) agonists from Novo Nordisk A/S, Wegovy (semaglutide) and Saxenda (liraglutide), in the burgeoning obesity drug market.

The weight loss medication market is currently dominated by Wegovy, a once-weekly injectable drug. The FDA initially approved semaglutide for Type 2 diabetes under the brand name Ozempic, but the agency expanded the indications to include weight management three years ago. Pharmacy formularies that cover more than half of commercial-plan enrollees categorize Wegovy as “preferred” or “preferred with utilization management restrictions,” — such as prior authorization and/or step therapy — according to MMIT Analytics. (MMIT is the parent company of AIS Health.)

The increasing demand for obesity drugs, along with their hefty price tags, poses a major challenge for plan sponsors. Indeed, health plans have seen a dramatic increase in spending on this category of drugs in recent years, according to consulting firm Segal. Wegovy has become the largest expenditure driver among obesity drugs, accounting for 85% of plans’ spending on weight loss drugs as of August 2023, compared with 22% in 2021 when it gained FDA approval. Alarmed by the potential cost of coverage, some employer-based health plans that previously covered the drugs pulled back coverage and limited off-label prescriptions, STAT reported.

The GLP-1 medications are seen as revolutionary for treating obesity, at a time when one-third of U.S. adults are estimated to have the condition. A KFF analysis of the distribution of adults with a body mass index (BMI) of 30 or higher shows that the Midwest and South have higher obesity rates in their populations, which might lead to higher health insurance spending. Nonetheless, coverage of Wegovy remains limited in some of the states with high obesity rates, such as Louisiana, Mississippi, North Dakota and South Dakota, according to data from MMIT Analytics.

In 2023, 43% of plans covered weight loss medications and another 28% were considering doing so in the near future, according to Pharmaceutical Strategies Group’s 2023 “Trends in Drug Benefit Design Report,” sponsored by Rx Savings Solutions. For those plans that excluded the medications from coverage, 38% considered them “lifestyle drugs” and another 34% considered them too expensive to cover.

Another recent survey from WTW found 38% of employer-sponsored health plans offer coverage for anti-obesity drugs, while another 22% are planning on or considering covering those drugs in 2024 or 2025.

This infographic was reprinted from AIS Health’s biweekly publication Radar on Drug Benefits.