Healthy Returns: More U.S. employers are now covering GLP-1s for weight loss

Biotech
Tuesday, June 18th, 2024 3:51 pm EDT

U.S. employers are increasingly covering GLP-1 drugs for weight loss, with about one-third of employer health plans now including these medications, up from 26% last year. GLP-1 drugs, like Novo Nordisk’s Ozempic and Wegovy, have grown in popularity due to their effectiveness in weight loss and diabetes management. As a result, these drugs now account for nearly 9% of employers’ annual medical claims spending, up from approximately 7% in the previous year. The International Foundation of Employee Benefit Plans, which conducted a survey among nearly 300 employer health plans, revealed this trend, noting the significant financial burden these drugs impose on patients when not covered by insurance. Consequently, the rise in coverage is beneficial for both patients and drug manufacturers like Novo Nordisk and Eli Lilly, who aim to expand insurance coverage and accessibility for these treatments.

Despite this progress, many health plans, including the federal Medicare program, typically do not cover weight loss drugs unless prescribed for another health condition. However, diabetes medications like Ozempic and Mounjaro are commonly covered. The survey indicated that 57% of employer health plans cover GLP-1 drugs exclusively for diabetes management, an increase from 49% in 2023, while around 19% of employers are contemplating coverage for weight loss. This shift in coverage reflects growing regulatory approvals, clinical trials, and increasing demand for GLP-1 medications. For instance, Wegovy has recently been approved in the U.S. for reducing the risk of serious heart complications, which may prompt some health plans to reconsider coverage.

GLP-1 drugs, mimicking gut hormones to suppress appetite and regulate blood sugar, have gained substantial popularity in the U.S., contributing to significant weight loss in patients and attracting investor interest. However, their high costs present challenges for health plans. About 85% of employers covering GLP-1s rely on cost-control measures such as specific eligibility criteria and step therapy, which requires patients to try other less expensive treatments first. Meanwhile, some insurers, like Blue Cross Blue Shield of Michigan, are reducing coverage for weight loss medications.

A critical issue remains the supply of GLP-1 treatments. Manufacturers Novo Nordisk and Eli Lilly are struggling to meet the rising demand, adding another layer of complexity to the coverage and accessibility of these medications. The ongoing supply challenges and the potential financial impact on health plans are aspects that will continue to be closely monitored.

In the broader context of healthcare technology, venture capital investment in AI applications within the healthcare sector is surging, with about 25% of healthcare VC funding directed toward AI-based companies. This trend highlights the significant interest in administrative applications of AI, which receive 60% of the funding, addressing major burdens like paperwork that contribute to physician burnout. However, challenges such as accessing quality data and computing power for training AI models, particularly for patient diagnostic tools, remain barriers to widespread adoption. Companies that can partner with clinicians and leverage patient data are better positioned to deploy AI at scale in healthcare.

For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/18/healthy-returns-more-us-employers-covering-glp-1s-for-weight-loss.html