Growing use of weight loss drugs heightens cost concerns for insurers, employers 
HomeHome > Blog > Growing use of weight loss drugs heightens cost concerns for insurers, employers 

Growing use of weight loss drugs heightens cost concerns for insurers, employers 

Jun 14, 2024

A new generation of weight-loss drugs that have been coming to market in the last year adds to the rising costs employers pay for medications under their employee health plans.

While the new injectable medications can help people who are obese to lose weight and lessen their risks for related illness such as cardiovascular disease, strokes and diabetes, they do come at a high cost.

Mounjaro, a drug that is expected to secure U.S. Food and Drug Administration approval later this year for weight loss and can also treat diabetes, costs $1,227 per month, according to Ellen Waalkes, senior provider performance specialist at Priority Health.

During a webinar this week hosted by Grand Rapids-based Advantage Benefits Group, Waalkes also noted that approved weight-loss drugs Wegovy and Saxenda cost $1,618 a month.

Keep up with all things West Michigan business. Sign up for our free newsletters today.

“And the long-term clinical outcomes are unknown,” Waalkes said. “What’s really challenging is the weight comes back after stopping the medication. These medications are not a magic bullet.”

Given the costs of the drugs, health insurers want to ensure that they are properly used and prescribed at a time when 35% of Michigan’s population is now obese.

In light of the fast-growing use of weight-loss drugs, Blue Cross Blue Shield of Michigan is using tactics such as prior authorization to “really ensure that these drugs are used in a cost-effective manner, but also in a way that is consistent with current clinical guidance,” said Allison Olmsted, a clinical pharmacist at the state’s largest health insurer.

Beginning Oct. 1, Blue Cross Blue Shield will require members using one of five weight-loss drugs — Contrave, Qsymia, Saxenda, Wegovy and Xenical — to try to modify their lifestyle through exercise and diet. They must try lifestyle change for at least six months before they are approved for a weight-loss drug.

Blue Cross Blue Shield and Blue Care Network members already using a weight-loss drug will have their initial prior authorization approval period shortened from 12 months to four months as of Sept. 1 and have to actively participate in diet, exercise and lifestyle changes to have their authorization renewed. The requirement aims to ensure that doctors are following up and confirming that patients are trying lifestyle modifications, Olmsted said.

The insurer wants members “to be engaged in appropriate diet, exercise or even engaging on a weight-loss program” such as Weight Watchers or Noom under the supervision of their care providers, Olmsted said. If not, they’re likely to regain the weight they lost after going off of the drug, she said.

“We really hope that members will not use these drugs in perpetuity but will instead employ holistic lifestyle modification strategies over their lifetime to promote that health living,” Olmsted said. “Our goal is really to ensure that members are maximizing the use of lifestyle modification, and we really only want them to utilize weight-loss drug therapy as a last resort. We view that weight-loss drugs should really only be used for a short duration of time and that members should really use lifestyle modification alone to maintain a healthy weight once they are able to achieve those weight-loss goals.”

Across the state as of May, Medicaid managed care health plans were paying more than $12 million a month combined for weight-loss drugs prescribed to members, according to Dominick Pallone, executive director of the Michigan Association of Health Plans. That compares to zero at the start of 2022 when the drugs started to come to market, he said.

“We’re seeing 15% (growth) trends monthly just for the anti-obesity drugs,” Pallone told Crain’s Grand Rapids Business. “That’s a dangerous pace.”

Health plans take different approaches in how the cover the weight-loss drugs and which ones they cover, with coverage depending on the type of coverage employers buy.

Olmsted at Blue Cross Blue Shield noted in her presentation that insurers are not required to cover the medications, known clinically as GLP-1 drugs, as an essential benefit under the federal Affordable Care Act, although they are covered if approved by the FDA to treat Type 2 diabetes.

Employers can expect the sharp rise in the use of weight-loss drugs will add about 0.2% to up to 0.8% to the cost of their health premiums as Blue Cross Blue Shield works to “get the use of the utilization level to a more appropriate space going forward,” said Adam Dee, vice president for health plan business.

At Priority Health, “we’re still looking at a lot of options when it comes to the pricing and how we’re going to handle the riders and actually doing a lot of research on where we’re going to land when it comes to our fully funded book of business, especially,” said Eric Whitten, director of underwriting.

More from Crain’s Grand Rapids Business:

New lakeshore business broker builds on career in architecture and engineering industry

MSU Federal Credit Union to acquire Chicago-area community bank

Grand Rapids PE firm acquires Canadian rail maintenance company