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The injectable weight loss drug Wegovy at the New City Halstead Pharmacy in Chicago on April 24, 2024.
Scott Olson |
Good morning! A survey found that more and more U.S. employers are covering the cost of a much-discussed class of weight-loss drugs called GLP-1.
About one-third of employer health plans in the United States reported that they cover GLP-1 drugs, such as Novo Nordisk's Ozempic and Wegovy for both diabetes and weight loss, up 26% from last year.
The share of GLP-1 weight-loss drugs in total annual employer spending on medical benefits also increased, accounting for nearly 9% in 2024, up from about 7% the year before.
This is according to a survey published on Thursday by the nonprofit organization International Foundation of Employee Benefit Plans, which has more than 33,000 companies and public institutions as members. The survey was conducted in May among nearly 300 employer health insurance plans in the United States.
The increase in coverage is a win for patients who, without insurance and other discounts, often struggle to afford the high monthly cost of $1,000 for these drugs. It is also good news for the manufacturers of these treatments, Novo Nordisk and Eli Lillywho are committed to improving insurance coverage for medicines and patient access overall.
Of particular note, most employee health plans and other insurers do not cover weight-loss drugs, including GLP-1 drugs such as Novo Nordisk's Wegovy and Eli Lilly's Zepbound. Nor does the federal Medicare program cover weight-loss treatments unless they are approved and prescribed for another condition.
GLP-1 diabetes drugs, such as Eli Lilly's Ozempic and Mounjaro, are often covered by plans.
Both weight-loss and diabetes treatment drugs are gaining popularity in the U.S.—and attracting increasing interest from investors—because they help people lose dramatic amounts of weight over time. They work by mimicking one or more hormones produced in the gut to suppress a person's appetite and regulate their blood sugar.
About 57 percent of employer-sponsored health plans said they only cover diabetes medications, up from 49 percent in 2023, the survey found.
But a significant proportion – about 19% – said they were considering whether to cover the costs of weight loss.
“The new survey data show that over the past six months, GLP-1 coverage for both weight loss and diabetes has increased,” said Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans, in a press release.
Stich said new regulatory approvals and clinical trials, as well as increasing demand for GLP-1 drugs in the U.S., have contributed to broader coverage.
For example, Novo Nordisk's Wegovy is now approved in the USA because it drastically reduces the risk of serious heart complications.
Insurance industry experts previously told CNBC that the approval would not automatically lead to widespread coverage of the weight-loss drug by health insurers. At the very least, some insurers would take note of Wegovy's new use and consider covering the treatment the next time they update their drug lists, these experts said.
Novo Nordisk and Eli Lilly are also conducting a number of studies of their GLP-1 drugs in a variety of patients, including those with chronic kidney disease, sleep apnea and a certain type of fatty liver disease.
However, there is no doubt that these drugs can place a burden on any health insurance company’s budget.
According to the survey, around 85 percent of employers who comply with GLP-1 obligations rely “heavily” on requirements aimed at controlling costs.
These include certain eligibility requirements, such as requiring employees to have a certain BMI (body mass index) to be covered, and “step therapy,” which requires insureds to try other, less expensive medications or weight loss products before using a GLP-1.
Other insurance companies are now eliminating coverage for weight-loss drugs. Blue Cross Blue Shield of Michigan, the state's largest insurance company, announced that it will begin eliminating coverage for several weight-loss drugs next year.
But there is a bigger problem, even as employer coverage improves: Novo Nordisk and Eli Lilly are struggling to produce enough drugs to meet demand. That is another aspect of the GLP-1 story that we will continue to monitor.
Feel free to send tips, suggestions, story ideas and data to Annika at annikakim.constantino@nbcuni.com.
Latest technology in healthcare
Around 25% of venture capital investments in healthcare go to companies that use AI, a report says
Hands, tablet and doctor with body hologram, overlay and DNA research for medical innovation on app. Medical professional, nurse and mobile touchscreen for tapping on anatomy studies or 3D holographic UX in clinic
Jacob Wackerhausen | Istock |
Healthcare companies exploring new uses for artificial intelligence are having great success with venture capitalists.
One in four healthcare investment dollars goes to companies that use artificial intelligence, and business activity in artificial intelligence for healthcare has grown twice as fast as AI business activity in the overall technology industry, according to a recent report from Silicon Valley Bank, now a division of First Citizens Bank.
According to the report, venture capitalists invested $7.2 billion in AI in healthcare last year, and this year the number is expected to reach $11.1 billion.
About 60 percent of the funding is for administrative AI applications in healthcare, the report says. Office work such as paperwork is a major burden on the healthcare sector and contributes to physician burnout and staff shortages.
More than 90% of physicians report feeling burned out on a regular basis, and 64% of those doctors said overwhelming administrative workloads are a primary reason, according to a survey conducted by Athenahealth in February. Doctors spend an average of 15 hours per week outside of their normal work hours completing administrative tasks, the survey found.
In other words, administrative burden is a major problem for the healthcare sector. Venture capitalists are particularly interested in it because this sector is generally subject to less regulatory scrutiny than clinical decision support or patient-centered solutions, the SVB report says.
While healthcare AI companies are expected to raise more funding this year than last year, SVB says access to high-quality data and sufficient computing power to train models could be barriers to adoption.
This is especially true for AI-powered patient diagnostic tools, which account for 52% of total investment in clinical solutions, according to the report. There is currently a “significant gap” in access to the computing power and data required to train a model that can accurately diagnose a patient.
“Companies that can access data, partner with doctors and hospitals to leverage patient data, and collaborate with large technology companies are better equipped to deploy AI at scale,” the report said.
Feel free to send tips, suggestions, story ideas and data to Ashley at ashley.capoot@nbcuni.com.
