Plans Take Wait-and-See Approach to Vendors Promising Help With Weight Loss Medication Costs

As the use of and interest in GLP-1 medications for weight loss increases, numerous vendors are pitching self-insured health plans on solutions to manage the demand and high costs of the medications. However, benefits experts say employers are approaching these outside companies with caution and are still trying to figure out how to manage the significant expenses associated with GLP-1 drugs.

Chantell Sell Reagan, Pharm.D., WTW’s national pharmacy clinical leader, estimates that about 25 to 30 vendors are marketing solutions to employers to help with FDA-approved weight loss medications such as Novo Nordisk’s Wegovy (semaglutide) and Eli Lilly & Co.’s Zepbound (tirzepatide). Wegovy and Zepbound are also approved to treat type 2 diabetes under the brand names Ozempic and Mounjaro, respectively.

The vendors’ approaches vary from low-cost, add-on options such as food delivery, and nutrition consultations to more expensive services such as telemedicine prescribing of weight loss medications by select providers. They are targeting a U.S. obesity market that J.P. Morgan projects to increase nearly six-fold from $7.6 billion this year to $44 billion in 2030.

It's an open question "whether these vendors will add value to employers or is this just another cost,” Reagan tells AIS Health, a division of MMIT. “I think the jury is still out for many of them.”

Reagan adds that employer-sponsored plans are also analyzing their contracts with PBMs, many of which have their own weight loss management programs. For instance, UnitedHealth Group’s Optum Rx launched its Weight Engage program last year; CVS Health Corp.’s Caremark started a Weight Management program and The Cigna Group’s Evernorth subsidiary, which houses the Express Scripts PBM, launched its EncircleRx program in March.

If plan sponsors strike a deal with a vendor that requires members to only see certain doctors for weight loss prescribing, however, they could see a reduction in or elimination of the rebates they receive from manufacturers in their PBM contracts, Reagan points out.  

“There’s a financial consideration for employers when they’re going through this evaluation,” Reagan says. “It’s a big deal right now. They want to try to implement something that they think can help mitigate some of these costs, but then on the flip side, if their rebates are being impacted, they really have to take that into consideration as well.”

Vendors Pitch Weight Loss Alternatives

Vendors such as Intellihealth Inc. provide access to medical obesity treatments supported by personalized care coordination.  Intellihealth’s Flyte Medical clinical subsidiary employs physicians, nurse practitioners, dietitians and care coordinators who specialize in helping people manage their weight. The providers tailor the treatments to each member and incorporate nutrition, physical therapy, behavior modification and pharmacotherapy, according to Sloan Saunders, Intellihealth’s CEO and co-founder.

Saunders tells AIS Health that Flyte works with individuals, employers and states and is in-network with numerous health plans. Flyte’s largest employer customer is the state of Connecticut, for which it provides medical obesity care to 240,000 state employees and 40,000 retirees.

“GLP-1 medications are one of the many tools available to providers who treat individuals with obesity,” Saunders says. “It’s important to keep in mind that not every person is a good candidate for a GLP-1 medication and there are many barriers to access, including medication cost, inadequate supply, lack of trained providers and — most importantly — weight bias, stigma and discrimination. To set patients up for long-term success, GLP-1 medications must be prescribed following a comprehensive evaluation as part of a personalized treatment plan with tons of education and support.”

Accolade, a company that offers virtual primary care and care management services, has been increasing its focus on weight management, according to James Wantuck, M.D., the company’s chief medical officer. Accolade last year released a survey that found 25% of employers offered coverage of GLP-1 medications, while 43% planned on covering them this year.

Accolade offers employer-based and direct-to-consumer options for its GLP-1 programs, and partners with providers of digital platforms such as Virta Health and Noom.

“We expect GLP-1s to be a major focus for payers, employers and consumers over the years to come,” Wantuck says. “We do not see any slowdown in the growth of these medications and plan to help our clients and partners navigate this complex area of medicine and health benefits in order to ensure we get the most value out of our health care dollars.”

LifeMD, a virtual primary care company, is also expanding into weight management and starting to target the self-insured employer market. The firm offers monthly subscription plans for individuals to pay out-of-pocket and access about 80 doctors and nurse practitioners throughout the U.S. who can prescribe medications and order lab tests.

LifeMD has more than 50,000 people subscribed to its weight management program. The company says its weight management revenue increased by 66% from the fourth quarter of 2023 to the first quarter of 2024.

“We’re always going to look at ourselves as a primary care business, and we’ll continue to grow in other areas and more specializations and other chronic conditions,” Jessica Friedeman, LifeMD’s chief marketing officer, tells AIS Health. “But I will say that [weight loss] is our fastest growing area of focus and specialization and demand.”

Next month, LifeMD plans to start accepting insurance for its primary care and weight management programs for the first time. Justin Schreiber, LifeMD’s CEO, said on its May 8 first-quarter earnings call that the company had “several payer contracts in place.” He added that LifeMD also intends to strike deals with Medicare Advantage plans later this year or early next year.

Although CMS prohibits Medicare plans from covering Wegovy and other medications for obesity, insurers can cover the drugs for diabetes. In March, the FDA approved Wegovy to reduce the risk of heart attacks and stroke in overweight or obese individuals. Thanks to a CMS guidance released shortly thereafter, Medicare Part D plans may now cover weight-loss drugs if they’ve been approved for another medical use., 

“We believe insurance, and in particular government insurance plans, represent a huge untapped market for LifeMD,” Schreiber told analysts on the conference call.

Plans Implement Step Therapy

Dan Mendelson, CEO of Morgan Health, J.P. Morgan’s health care investing arm, says GLP-1s account for a “substantial” amount of employers’ drug spend, and he predicts the costs are only going to increase as more people gain access to them. As such, he says, plan sponsors are inundated with companies looking to help them manage weight loss medications.

Morgan Health is a minority investor in Personify Health, a company formed last year through the merger of Virgin Pulse, a digital wellness company, and HealthComp, a third-party administrator that offers benefits programs for small and mid-sized self-insured employers. Mendelson notes Personify’s GLP-1 solution is part of a suite of offerings it pitches to clients. Personify works with about 250 employers on a range of services, according to Mendelson, which he says makes it easier to pitch a GLP-1 product than it would be for a startup company that does not have those pre-existing relationships. However, Mendelson claims employer-sponsored plans are scrutinizing their spending on weight management vendors. 

“Given the size and the growth [of GLP-1s], you’ve had this proliferation of companies that are coming in to help employers manage the cost,” Mendelson says. “It’s not uncommon that when there’s a large and growing problem that there are a whole range of vendors who will come and say they could help you fix it. Benefit managers are approaching all of these vendors with an appropriate level of skepticism because we just don’t have a baseline of experience here and we don’t know what’s going to work and what’s not going to work.”

Adam Siskind, managing principal of consulting firm ZS’s health plan and provider division, says that self-insured plans are implementing various strategies to manage GLP-1, including step therapy and prior authorization. Some plans are also grouping their members based on the indication they’re using the medications for — weight loss, diabetes or cardiovascular disease — and using different strategies for each cohort.

“You can think about these different groups of patients in different ways, and you’re able to control costs in a much more proactive way,” Siskind says. “Not every payer is thinking about it this way, but they should.”

A KFF poll released on May 10 found that 12% of adults indicated they had taken a GLP-1, including 6% who said they were currently taking the medication. In addition, 43% of adults who have been told by a doctor they have diabetes have taken a GLP-1, compared with 25% who have been told they have heart disease and 22% who have been told they are overweight or obese in the past five years.

The results suggested people are having trouble paying for the medications even with help from their employers. For instance, among the insured adults who have taken a GLP-1, 53% said the cost was difficult to afford.

A KFF analysis from August 2023 noted the list prices for a full year’s course of a GLP-1 were $11,232 for Ozempic, $12,276 for Mounjaro and $16,188 for Wegovy. While payers often pay a fraction of that amount due to the prevalence of rebates from manufacturers, the projected significant increase in the number of people taking GLP-1s over the next few years presents a challenge for payers but also an opportunity to improve their employees’ health, according to Siskind.

“[GLP-1s] will have a huge impact on costs,” Siskind says. “They will also have a huge benefit….That’s another angle that payers need to be looking at proactively: What is the cost savings of reducing the population of obese patients in their membership?”

This article was reprinted from AIS Health’s subscription publication Radar on Drug Benefits.