U.S. Government Health Plans Dominate Coverage for Weight-Loss Drugs

By Chad Terhune

(Reuters) – U.S. government health plans account for the lion's share of coverage for popular new weight-loss drugs, significantly outpacing reimbursement from private employers and insurers, as per an analysis shared with Reuters.

State Medicaid programs for low-income families are the primary source of coverage, providing access to Novo Nordisk's Wegovy or Eli Lilly's Zepbound for 31.6 million people, according to the AXIACI Obesity Coverage Nexus, a database produced by the Leverage consulting firm.

The database monitors the obesity coverage status of approximately 80% of Americans with health insurance.

Additionally, 14.6 million federal workers and their dependents have coverage, along with 6 million state and local government employees and their families, bringing the total to 52.2 million Americans under government-funded health plans.

In contrast, only 13.7 million have weight-loss drug coverage through commercial health plans, which may be an undercount as many employers do not disclose their health plans publicly.

Leverage, which has no ties to companies selling obesity treatments, estimates an additional 10.7 million people from private employers could be covered based on trends in the database, totaling approximately 24.4 million—still less than half the number covered by government plans.

Kathy Hempstead, a senior policy officer at the Robert Wood Johnson Foundation, remarked, "It is a striking difference between government and private plans, and it shows there are still quite a lot of employers holding out."

"Health insurance premiums are rising for several reasons, making it harder to pass along another cost for weight-loss treatment," Hempstead added.

Both Wegovy and Zepbound have been proven to facilitate a 15% to 20% weight loss and are reshaping care in the U.S., where over 100 million adults are affected by obesity.

However, with list prices exceeding $1,000 per month and potential lifelong usage, these costs have drawn criticism from Congress and the Biden administration. Insurance coverage is crucial for patients who otherwise could not afford these medications.

The variation in coverage might impact the profits of Novo and Lilly, as Medicaid is often eligible for steep discounts on drug prices. Evidence suggests higher obesity rates among Medicaid recipients, which may give drug manufacturers a broader sales potential, noted Brian Bruen, a senior research economist at RTI International.

Misunderstood and Under-treated

Wegovy and Zepbound belong to the GLP-1 receptor agonists class, initially developed for type 2 diabetes. Despite their high demand, these medications aren't always readily available in pharmacies, and insurance hurdles persist.

Some private insurance plans require patients to meet with a dietitian or engage in an extended lifestyle change program before receiving a prescription. Patients are even turning to cheaper alternatives of Zepbound and Wegovy available from online compounding pharmacies.

Novo and Lilly are lobbying for broader insurance coverage, claiming that their medications can save costs for society by alleviating various health issues associated with excess weight, such as heart disease, diabetes, and sleep apnea.

Novo estimates that about half of American adults with obesity have coverage for weight-loss medications. Lilly believes that commercial coverage is likely underrepresented in the data and points to ongoing coverage gaps resulting from widespread misunderstanding and under-treatment of obesity.

The obesity coverage database encompasses roughly 250 million people, or nearly 80% of all insured lives in the U.S., sourced from state and federal insurance filings, employer information, and otherwise publicly available data. However, it lacks information on almost 53 million Americans with private employer coverage and around 13 million associated with local governments.

Fourteen state Medicaid programs cover GLP-1 drugs for obesity, including California, Pennsylvania, and North Carolina, while 17 states provide coverage for their public employees and dependents. Connecticut, Delaware, Kansas, Massachusetts, and Michigan handle both.

Medicaid program costs are shared between the states and the federal government. The federal Medicare program for individuals aged 65 and older covers GLP-1 drugs for type 2 diabetes and cardiovascular issues but not solely for weight loss.

Christine Ferguson, managing partner at Leverage and former executive director of Rhode Island's health insurance marketplace, noted, "It's really a state-by-state decision and there's no pattern yet. Everyone is being very cautious here."