Why You'll Still Struggle to Get Wegovy This Year

Publish date: 2024-07-07

If you were hoping that powerhouse weight-loss drugs like Wegovy would be easier to get in 2024, you may be disappointed.

The pressure on health insurers, employers, states, and Medicare to pay for anti-obesity drugs is building. Patients and doctors are urging them to provide coverage, and the health benefits of the treatments are becoming clearer.

But many employers and insurers aren't yielding, keeping the expensive drugs out of reach for those who can't afford their $1,000-a-month price tags. In fact, some companies, worried about the cost of weight loss drugs and its effect on their bottom line, are making it even harder for folks to get ahold of the shots.

"Many just don't have the budget," said Renee Rayburg, a consultant at Pharmaceutical Strategies Group who works with employers on their pharmacy programs.

Most Americans get insurance through work. But just 41% of companies said they cover the new drugs, known as GLP-1 agonists, for obesity, and only 19% of companies said they were considering adding coverage, according to a survey by employee-benefits firm Mercer published in November.

Besides Novo Nordisk's Wegovy, this class of prescription drugs also includes Eli Lilly's weight-loss shot Zepbound and each company's respective diabetes injections, Ozempic and Mounjaro.

Government health programs also aren't rushing to pay for the shots. Coverage across state Medicaid programs is spotty, and few states require their Affordable Care Act marketplace plans to cover the drugs. Medicare is barred by law from covering weight-loss drugs.

Consultants who work with employers on their prescription-drug benefits said they don't expect many employers to start covering the drugs next year. The reason? They can't afford it.

Companies are cracking down on weight-loss drugs

Jose Luis Pelaez/Getty Images

Instead, many employers and insurers are making it tougher for people to access weight-loss shots. In 2023, they cracked down on people without Type 2 diabetes taking Ozempic "off-label" to lose weight.

Now some are paying for weight-loss drugs such as Wegovy for only people with more severe obesity, or those who also participate in a diet and exercise program. Some employers are limiting how long members can take the drugs. Minnesota health system Mayo Clinic told workers that it planned to cap lifetime spending on weight-loss drugs at $20,000 per health-plan member, starting next year.

Other employers, including national hospital chain Ascension, the University of Texas System, and Minneapolis health system Hennepin Healthcare are ending coverage of the drugs altogether.

Don't expect Medicare coverage any time soon

Medicare could play a major role in expanding coverage of weight-loss drugs. The federal program provides health coverage to 66 million seniors and people with disabilities. But expanding coverage would likely require Congress to act. And though there's been heavy lobbying from drugmakers and patient advocacy groups on that front, analysts at Capital Alpha Partners predict Medicare won't cover the drugs even partially until at least 2027.

Passing a bill to expand Medicare coverage would be tough, because the costs are likely to be high and increase seniors' premiums, the analysts said. One analysis by Vanderbilt University researchers estimated that if just 10% of Medicare beneficiaries were treated with Wegovy, the cost to the program would total $26.8 billion a year, or almost a fifth of what Medicare Part D spent on prescription drugs in 2019.

More competition could help improve access

Bill Coyle, global head of biopharma at consulting firm ZS ZS

The prices of weight-loss drugs might drop as competing treatments come to market and drugmakers introduce oral versions that are cheaper to manufacture.

"I think that intense competition over time will likely drive prices south, which would drive access up," said Bill Coyle, global head of biopharma at consulting firm ZS.

Pharma companies say these drugs do more for your health than just weight loss

Meanwhile, pharma companies are busy pumping out more evidence that their drugs improve people's health, beyond weight loss. They're also trying to persuade employers and insurers that those health benefits can save them money by reducing how much they spend on patients' weight-related conditions over time.

They're hoping that all of this data will convince more doctors to prescribe their drugs and more health plans to pay.

Novo Nordisk has a head start. In November, it asked the FDA to approve Wegovy as a drug to reduce the risk of major heart problems, after it found that the obesity drug lowered the risk of heart attacks, strokes, and cardiovascular death by 20% in people with existing heart disease. If Wegovy's label expands, doctors could prescribe it as a heart drug, sidestepping insurers' weight-loss exclusions.

Novo and Eli Lilly are also studying whether their drugs could help people with conditions such as sleep apnea, chronic kidney disease, and musculoskeletal problems.

"Expect much, much more outcome data over the coming quarters and years. That's going to be key," Patrik Jonsson, president of Lilly USA, said at the UBS BioPharma Conference in November.

Could weight-loss drugs change how the US pays for prescriptions?

Americans' hunger for weight-loss drugs, and the shockwaves it's likely to send through the culture and economy, are only just beginning.

The effects are already being felt by plenty of businesses, even beyond healthcare, as Wall Street attempts to figure out how widespread use of GLP-1s will reshape every industry from food to transportation. Walmart has said shoppers are buying less food. Airlines are excited about the potential to save on fuel with lighter passengers.

Jefferies analysts estimated that the US market for obesity drugs could reach more than $100 billion by 2031, as 30 million to 35 million people with obesity seek out GLP-1 therapies. That's only about 15% of people with obesity in the US, the analysts said.

Coyle, of ZS, said obesity drugs, along with other expensive treatments that could be used by large groups of people, such as future breakthrough Alzheimer's therapies, might be the catalyst that changes how the US pays for high-cost prescriptions.

"The way healthcare systems and the pharma/ healthcare system interactions work today, they don't support products with that kind of short-term budget impact and long-term value. Most other things you can absorb. You can absorb a $1 million drug for a few dozen people." He continued, "Something that treats 100 million patients in the U.S does not fit in the context of the healthcare system very effectively."

North Carolina Treasurer Dale Folwell knows this firsthand. He oversees the state employee health plan, which saw costs skyrocket as thousands of workers suddenly started taking weight-loss drugs. The plan expects to spend $112 million on those drugs this year, up from $61 million in 2022.

Folwell called for the plan to stop covering the drugs until Novo Nordisk lowers its prices. The extreme costs threaten the plan's solvency, he said, and there would be no other option than to triple all workers' premiums if the plan keeps coverage the same.

For now, North Carolina has landed on a compromise for state workers. People who are already getting weight-loss drugs will be able to keep taking them. But new prescriptions won't be covered, starting next year.

"We have no question about the efficacy of these drugs," Folwell said. "We have deep concerns about, obviously, the price of the drug."