Weight Loss Drugs: A Good Idea for Your Health Plan?

When a new therapy is introduced in the healthcare market, self-insured health plans face important questions: “Should we cover this treatment?”, “Will our members benefit from it?”, and “How much will it cost us?”

Demand for weight loss drugs has exploded in recent months due to popularity of new offerings such as Wegovy, Ozempic, and Saxenda, so plans are confronted once again with these questions. The answers are not easy. According to clinical studies, these drugs are effective in aiding weight loss, and weight loss comes with known health benefits. But these drugs come with a hefty price tag.

The Institute for Clinical and Economic Review (ICER) regularly assesses the clinical effectiveness and value of new therapies. Their study released in August 2022 assessed the value of semaglutide (Wegovy, Novo Nordisk) and other therapies for the treatment of obesity. Their bottom line was that many such therapies provide low long-term value relative to their cost. For example, they suggest that a 44-57% discount from the wholesale cost of semaglutide is required to achieve ICER’s health-benefit price benchmark range.

An important consideration for the plan is the potential “take-up rate” among plan members. Due to high rates of obesity, more than 40% of U.S. adults meet the technical qualifications for taking weight-loss drugs. This results in huge market potential, and manufacturers are already reporting explosive growth in sales. If only a small percentage of qualifying plan members are prescribed, that can materially change the cost of funding the plan

It’s also important to understand how these drugs work. They govern a patient’s ability to be hungry, so removing drugs from a weight-loss regimen typically results in weight gain. This creates a risk that patients will need to stay on the medication for as long as losing or maintaining weight is a health or cosmetic goal, making it a potential lifetime medication. This suggests that the number of users in any population is likely to grow indefinitely.

One final consideration: self-insured plans count on drug manufacturer rebates to reduce net plan costs. To date, rebates for weight loss drugs have typically not been competitive when compared to those for other drugs of similar cost.

If you have questions about making changes to your benefit plan, I can help.