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A selection of injector pens for the Saxenda weight loss drug are shown in this photo illustration in Chicago, Illinois, U.S., March 31, 2023.
Jim Vondruska | Reuters
Novo Nordisk‘s obesity drug Wegovy slashed the risk of serious heart problems by 20% in a large clinical trial – a landmark finding that could put more pressure on insurers to cover the blockbuster medication and similar weight loss treatments.
The data sent weight loss-related stocks soaring on Tuesday: Shares of Novo Nordisk and its main rival Eli Lilly surged more than 15%. Weight Watchers International, which owns a telemedicine firm that prescribed obesity drugs, jumped as much as 24%.
But the data may only be the beginning. There is likely a long way to go before the U.S. sees increased insurance coverage for obesity drugs.
While the trial results demonstrate that obesity drugs may have significant health benefits beyond shedding unwanted pounds, organizations representing U.S. insurers emphasized that the data is still preliminary. They also said concerns remain about the high costs involved with covering those medications, which are nearly $1,350 per month for a single patient.
While the initial results “offer potentially encouraging news…it’s impossible to evaluate the efficacy and long-term effectiveness of a prescription drug based solely on a drug manufacturer’s press release,” said David Allen, a spokesperson for America’s Health Insurance Plans, a trade association of health insurance companies that cover hundreds of millions of American.
“Health insurance providers will continue to analyze new evidence as it becomes available,” he added.
Ceci Connolly, CEO of the Alliance of Community Health Plans, acknowledged the promise of the data but said “outrageous prices should give everyone pause.” The organization represents regional, community-based health plans that cover more than 18 million Americans across the U.S.
Drugs like Wegovy and Novo Nordisk’s diabetes drug Ozempic have skyrocketed in popularity in the U.S. – and drawn increasing investor interest – for helping people achieve dramatic weight loss over time. Those treatments are known as GLP-1s, a class of drugs that mimic a hormone produced in the gut to suppress a person’s appetite.
Eli Lilly and Pfizer are working to roll out their own GLP-1s in a bid to capitalize on a weight loss drug market that some analysts project could be worth up to $200 billion by 2030. Nearly 40% of U.S. adults are obese.
But insurance coverage for these drugs is a mixed bag: the federal government’s Medicare program, most state Medicaid programs and some commercial insurance plans don’t cover the treatments. Some of the nation’s largest insurers, such as CVS Health‘s Aetna, do.
Meanwhile, more health insurers are pulling back on coverage: A July survey by Found, a company that providers obesity care services to 200,000 people, showed that 69% of its patient population does not have insurance coverage for GLP-1 drugs to treat diabetes or weight loss. The results represent a 50% decline in coverage since December 2022.
Challenging old views of obesity drugs
The new data from Novo Nordisk challenges a long-standing narrative driving the hesitancy among insurers about covering obesity drugs: that Wegovy and similar treatments are merely lifestyle products that offer a cosmetic, not medical benefit.
“There’s now a long-term, large clinical trial that proves that there’s a big cardiovascular health benefit for patients saying on these drugs,” Jared Holz, Mizuho healthcare sector analyst, told CNBC.
“It’s just going to open up the market to a bigger patient population over time,” he added.
Debra Tyler’s daughter takes her new medication at home in Killingworth, Conn. She was on successful medication for obesity, however her family insurance dropped coverage on the drug, leaving the Tylers with difficult financial decisions.
Joe Buglewicz | The Washington Post | Getty Images
The study, which began almost five years ago, followed more than 17,600 adults with established cardiovascular disease who were overweight or suffered from obesity. It excluded people with a prior history of diabetes.
A weekly injection of Wegovy achieved the trial’s primary objective of reducing the risk of cardiovascular events, such as heart attacks, strokes and heart condition-related deaths, by 20% compared with a placebo.
The new Wegovy data mirrors some of the reduced morbidity and mortality observed in people who undergo bariatric surgery, which involves making changes to the digestive system to help a patient lose weight, according to Dr. Eduardo Grunvald, medical director of UCSD Health’s Center for Advanced Weight Management.
Around 45% of U.S. employers cover that weight loss procedure, while only 22% cover obesity drugs, according to a 2022 survey released by the International Foundation of Employee Benefit Plans.
Grunvald added that the data challenges the “outdated” idea that obesity is “purely a lifestyle problem or one of weak character and lack of willpower, and hence treatment should not be covered.”
High cost to coverage
Then there’s the high cost of the treatments, at more than $1,000 per patient, per month.
The University of Texas System decided to ratchet down its coverage of those drugs dramatically, noting in July that the cost of covering the drugs under two of its plans is more than $5 million per month, up from around $1.5 million per month 18 months ago, when demand for obesity treatments was lower.
The university is one of the largest employers in Texas, with more than 116,000 employees across the state. Its plans will no longer cover Wegovy starting on Sept. 1.
UTS did not immediately respond to a request for comment on whether it will reconsider coverage in light of the Novo Nordisk’s new data.
“Given that so many Americans would potentially qualify for these treatments, and the cost is so high, widespread coverage could pose a threat to [an insurance] company’s profitability,” UCSD’s Gunvald said.
He noted, however, that new drugs entering the obesity market could drive competition and potentially lower prices. Eli Lilly’s diabetes drug Mounjaro could get approved for weight management within the next year, but other drugmakers are still years away from rolling out their own medications.
But obesity is a chronic disease, meaning it doesn’t simply go away when a patient loses weight. So patients must take drugs like Wegovy continuously to keep the pounds off and maintain other health benefits, which would further strain insurers’ budgets.
“It’s very difficult to justify that expense because the insurance would never recoup that,” said Dr. Ethan Lazarus, an obesity medicine physician and past president of the Obesity Medicine Association. That group is the largest organization of physicians, nurse practitioners and other healthcare providers dedicated to treating obesity.
“I find it unlikely that we’re going to prove the cost-effectiveness of these medications at a price of $12,000 a year,” he said.
The cost barrier may be even higher in the public sector: A recent article in the New England Journal of Medicine warned that if just 10% of obese Medicare beneficiaries were to take Wegovy, it would cost the program $27 billion a year.
The federal program had 65 million enrollees as of March and currently doesn’t cover the treatments at all.
A provision of a 2003 law established that Medicare Part D plans can’t cover drugs used for weight loss, but the program does cover obesity screening, behavioral counseling and bariatric surgery.
Lazarus noted that a group of bipartisan lawmakers have already introduced legislation that would eliminate the provision, but said its fate in Congress is far from certain.
Need for more data
Lazarus said there may also be a need for more data demonstrating the heart health benefits of obesity drugs before more insurers decide to cover them.
“I think we need two or three more of these,” he said. “It becomes more compelling if we see it as an effect for the class of drugs versus an effect for one company’s drug.”
Eli Lilly is conducting its own study on whether its diabetes drug Mounjaro prevents heart attacks, strokes and other cardiovascular conditions. It’s unclear when the company will release data.
But experts and analysts are already confident that Mounjaro could have similar – if not better – heart health benefits as Wegovy.
Wells Fargo analyst Mohit Bansal noted that Wegovy causes around a 17% weight reduction in patients, while Mounjaro causes roughly 22%.
“By that logic, it does seem it could have better cardiovascular benefit,” he told CNBC.
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