North Carolina ends coverage of new weight loss drugs for 750,000 state employees
With concerns that costs could reach more than $1 billion over the next 6 years, North Carolina opted to stop coverage for the pricey new GLP-1s, saying the contracts between the drugmakers and the PBMs “are all-or-nothing.”
Demand for new-generation weight-loss drugs is sky high – and so is the monthly cost. North Carolina’s health insurance plan for state employees recently decided to stop covering GLP-1 drugs because of concerns that costs could reach more than $1 billion over the next six years.
The 750,000 public employees enrolled in the plan now must pay out of pocket if they want to take Wegovy or similar drugs. What happened in North Carolina is playing out across the nation as large employers try to limit the costs of the expensive medications.
North Carolina initially wanted to save money by limiting prescriptions to patients who first tried lifestyle management programs to lose weight. However, the manufacturer and the state’s pharmacy benefit manager, CVS Caremark, said the state would have to pay full list price for the drugs unless it agreed to allow all patients with a prescription to get them without any preliminary hurdles, in which case the state could receive rebates amounting to a 40% discount.
“The contracts between the manufacturers and the PBMs are all-or-nothing,” said Sam Watts, administrator of the North Carolina State Health Plan. “I’ve got to take it or leave it. I have to pay for everybody, even the folks for whom it is not cost effective, in order to get it for the folks it would be cost-effective for.”
Employers and health-care economists say drug companies are more than willing to play hardball, even if it means losing some short-term business to stop employers from imposing restrictions that could hurt sales in the long run. CVS Caremark, in turn, said it can’t pass on rebates from drugmakers if the state doesn’t meet certain terms of its contract with the manufacturer, such as including the drugs on its list of covered medications.
“CVS Caremark’s sole priority is negotiating the lowest net cost of weight-loss drugs, based on the State Health Plan’s coverage choices, for North Carolina’s teachers and public servants,” spokesperson Phil Blando said.
For its part, Novo Nordisk, the maker of Wegovy, said the state health plan is intervening in private medical decisions. A spokesperson told Politico that patients shouldn’t have to “demonstrate broad cost savings to the entire health-care system before they can access medically proven treatment options.”
“We are surprised and disappointed North Carolina rejected multiple workable options presented to them since the last board meeting in January,” spokesperson Nicole Ferreira said. “Instead, State Health Plan officials are abandoning their obligation to employees living with the chronic disease of obesity and denying them coverage for safe and effective treatments.”
Related: Should employer plans cover GLP-1s for weight loss?
Large employers across the country have faced similar resistance from PBMs and drugmakers when implementing lifestyle management programs to cut down on the costs of weight-loss drugs, according to large employer coalitions.