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What carriers are doing to combat the increased use of weight loss drugs

By: Benefits by Design | Tuesday September 24, 2024

Updated : Monday September 23, 2024

a hand with a needle in it wearing a red sweater

New weight loss drugs are gaining more popularity recently, particularly Ozempic and Wegovy. While these drugs offer promising results for those individuals who are struggling with weight management, they also present new challenges for plan sponsors and insurance carriers.

Ozempic is not specifically approved for weight management, but rather, for type 2 diabetes. Its off-label usage has surged over the last few years, putting pressure on insurers to adapt. At the same time, Wegovy has been approved for weight loss, however, not all employers are interested in covering it.

Did you know that semaglutide was the top traditional drug by overall spend for private drug plans in both 2021 and 2022. It also generated the highest drug spend per claimant in 2022? Semaglutide is the active ingredient in Ozempic, Wegovy. This blog explores the evolution of weight loss drugs, and the steps insurers are taking to address their growing usage.

Evolution of new weight loss drugs

There are many different types of weight loss drugs. Two of the most popular are Ozempic and Wegovy, although Ozempic is not specifically prescribed for weight loss.

Ozempic

Ozempic is known for the treatment of type 2 diabetes in adults. It was FDA approved in 2017 for that use. The drug helps by regulating and improving blood sugar in adults by lowering hemoglobin A1C which can reduce the risk of major cardiovascular events such as stroke or heart attack.

Although it was created strictly for the use of diabetes recently people have discovered another benefit of this drug. The substantial effects it has on weight loss has led to the high demand for this drug today. Ozempic works for weight loss because it delays gastric emptying. Which will suppresses your appetite or makes you feel full, leading to weight loss. The current form of Ozempic needs to be injected since the molecules are large. They can not be absorbed affectively through your gut.

Wegovy

Wegovy, like Ozempic, belongs to the GLP-1 family which was initially designed to control blood sugar. When people discovered it also led to weight loss, Wegovy was created for the use of weight management. This drug was approved by the FDA and Canadian government in 2021. Wegovy works the same as Ozempic by regulating appetite and reducing calorie intake. The medication is also given as an injection like Ozempic.

However, the weekly maintenance dose of 2.4mg is much higher. In order to reach that point, patients start at 0.25 milligrams of semaglutide. Then they gradually increase over 16 weeks to get to the maintenance amount. When taking this medicine, patients should also be consuming decreased-calorie meals and keeping active to assist with the weight loss.

Wegovy has been approved for patients with a BMI of 25 or over. A BMI of 25 to 29 is considered overweight, while a BMI of 30 and over is considered obese. It can also be prescribed to children 12 years and older. Did you know that over 30% of Canadian children are considered overweight or obese?

Canadians have previously not had access to this drug, but it officially hit the Canadian shelves in May 2024. Because this drug was approved for both people who are considered obese and overweight, there are some concerns that the regulations could leave room for interpretation. With that, insurers and plan sponsors worry this could result in over-prescribing.

Rethinking Obesity and Its Impacts on Canadians and Their Benefits Plan

How are insurers responding

Many employers are excited to be able to provide weight loss drug coverage for their employees as part of a fulsome weight loss management program. However, some would like to wait to see more long-term results before they decide. Or they want more protocols in place to protect their employee benefits plan.

Without prior authorization protocols in place for Ozempic, insurers were unable to confirm the reason for use. This meant that patients and plan members were able to use it as a weight loss drug instead of for type 2 diabetes. Off-label use of drugs can cause unanticipated side-effects. Doctors are also not able to monitor their patients properly, and patients buying them from other patients are at even higher risk.

To ensure the proper use of both Ozempic and Wegovy many insurance carriers are adopting ways to help mitigate the risk to plan sponsors.

Excluding weight loss drugs under plans with a drug formulary

A drug formulary is a list of prescription drugs that are included for coverage under a benefits plan. They can be both generic and brand name drugs. Since the insurers are the ones creating this list, they can choose not to cover weight loss drugs by leaving them off their list. This means the cost of the weight loss drug will not be paid by any plans using the drug formulary, which keeps the plan sustainable.

Adding weight loss drugs under a separate drug category which can be added or removed on its own

Employers who do want to offer weight loss drug coverage may want to ensure there is a maximum their employees can spend, so their drug plan can remain sustainable.

Insurers can include or exclude weight loss drugs as a separate category. Employers can then decide if they want their plan to cover these drugs or not. Your advisor should clearly explain all the options and which weight loss drugs would be covered.

This set up will also help keep the plan flexible. This means changes can be made without affecting the rest of the coverage on the plan.

Applying annual or life-time drug maximums for weight loss drugs

When a company does not have a drug plan maximum, there is nothing to stop how much is being spent on prescription drugs.

A life-time drug maximum represents the total cumulative amount an insurer will reimburse to a plan member over their lifetime. An annual drug maximum sets a cap on the maximum coverage per employee within a single policy year. Drug maximums can be applied to specific drugs, or to prescription drugs overall.

The insurers set limits on how much they will pay for weight loss drugs either annually or over a plan member’s lifetime. Once that limit has been reached the employee will no longer be reimbursed. Insurers may offer different maximum options, with higher premiums for higher maximums.

In this way, employers can keep their benefits plan sustainable, while still offering the coverage.

Applying prior authorization or special authorization processes to groups which do not have a drug plan maximum

Many drugs do not require prior authorization. However, drugs which are cosmetic, or used to treat chronic or medical conditions usually do. By requiring a prior authorization process, a plan members’ doctor will have to provide information to the insurance company explaining why the drug is needed.

This will help insurers ensure the drug is necessary and being used correctly before they agree to pay for it. In turn, this keeps off-label claims from becoming part of the claims experience.

Conclusion

The surge in the use of weight loss drugs has created a large need for insurance carriers to reassess their policies and help plan sponsors navigate the risk. By implementing these measures, insurers can better manage the potential risks and costs of their widespread use.