U.S. Employers Turn to Virtual Providers to Manage Rising Costs of Weight-Loss Drug
Facing escalating expenses linked to obesity drugs such as Novo Nordisk’s Wegovy, U.S. employers are adopting virtual healthcare providers like Teladoc to implement weight-loss management programs. The move comes as a response to the surging costs of medications like Wegovy and Eli Lilly’s Zepbound, each with list prices exceeding $1,000 a month. These programs may necessitate diet and exercise as prerequisites for obtaining access to the drugs, becoming the primary covered option for employees.
Benefits consultants suggest that such programs could help companies contain costs by limiting employees to small networks of more affordable providers or by introducing lifestyle change mandates that delay prescriptions. There is a growing acknowledgment that lifestyle changes, including diet and exercise, can lead to long-term improvements in patient health.
Teladoc executive Ananth Balasubramanian noted a shift in mindset among employers and health plans, stating, “Many (employers) were skeptical about the cost of these drugs at the beginning of the year, but that mindset has shifted. Employers and health plans are now increasingly more willing to cover them, with the right programs in place.”
According to a survey by the Business Group on Health, over a quarter of 152 employers indicated they would utilize virtual providers to oversee obesity drug prescriptions in the coming year. Major companies, including Boeing, Hilton, and Fortune Brands, have either signed up for or expanded deals with virtual healthcare providers.
Truist analyst Jailendra Singh forecasts a potential market of $700 million for virtual obesity drug management in 2024, with long-term growth reaching up to $9 billion. This projection assumes providers charge around $30 per member per month and $50 for physician appointments.
In August, healthcare benefits consultant Aon outlined strategies for managing the use of GLP-1 drugs, including “step therapy” and narrow networks or “centers of excellence.” These methods involve implementing lifestyle changes through telehealth programs or pharmacy benefit managers before patients are prescribed drugs like Wegovy and Zepbound.
Wegovy and Zepbound are part of the GLP-1 class of drugs developed for type 2 diabetes, known for reducing food cravings and slowing stomach emptying. Clinical trials have shown they can lead to an average weight reduction of 15% and 20%, respectively.
While these programs aim to enhance patient health through lifestyle changes, concerns have been raised about telehealth providers potentially replacing in-person care and disrupting continuity of care. American Medical Association President Jesse Ehrenfeld emphasized that telehealth should complement, not replace, in-person provider networks.
The adoption of step therapy, requiring completion of a diet and exercise program before medication use, is a prevalent service sought by employers. Blue Cross Blue Shield of Michigan plans to offer Teladoc’s weight management program, involving six months of diet and exercise, before patients can access low cost Wegovy or Zepbound. Other companies are exploring the establishment of “centers of excellence” for weight loss, limiting who can prescribe these drugs.
Despite potential roadblocks, analysts suggest that the market for GLP-1 obesity drugs will be supply-driven in the coming year, and obstacles like these are unlikely to significantly impact sales for Novo Nordisk and Eli Lilly. The U.S. approvals for Wegovy and Zepbound emphasize their use in conjunction with diet and exercise changes, aligning with the approach taken by these weight-loss management programs.
By incorporating weight loss programs, employers aim to manage drug costs effectively or potentially avoid covering them entirely, reflecting a strategic response to the rising expenses associated with obesity drugs.
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