Buried in Wegovy Costs, North Carolina Will Stop Paying for Obesity Drugs

Payment was made in June 2021 from the North Carolina State Workers' Compensation Insurance Plan 2,800 people to take weight loss medications.

Last year it paid almost 25,000. Medications like Wegovy cost the North Carolina State Health Plan $100 million seemingly out of nowhere last year to 10 percent of prescription drug spending.

“This is something we never expected,” said Dale Folwell, the state treasurer whose office manages the health plan.

Alarmed by rising costs, the health care plan's board of directors voted Thursday to end all coverage of weight loss medications, including Wegovy, which accounts for the vast majority of spending on obesity medications. The plan will continue to cover versions of the drugs for people with diabetes.

In recent years, appetite suppressant medications have skyrocketed in popularity as they are extremely effective in helping patients lose weight. Research shows that the drugs can pay for themselves or even save money in the long run, by preventing heart attacks and strokes that lead to huge hospital bills.

But for the employers and health plans that cover the bulk of prescription drug costs, the bill for these drugs is overwhelming – and it must be paid now. In the past months, the University of Texas system and the hospital chain Ascension Day have stopped paying for their employees' medications. Those who continue to cover the drugs impose new restrictions intended to reduce costs. For example, the Mayo Clinic now only offers a lifetime benefit of $20,000 for the medicines for its employees.

Medicare, on the other hand, does not cover medications prescribed for weight loss, but it does cover weight loss surgeries.

In North Carolina, Thursday's vote to end coverage appeared to be the first in the nation by a state health plan. The plan uses state funds to pay most prescription drug costs for 740,000 government workers, teachers, retirees and their family members.

The state health plan is in financial distress. Last year, its cash position fell by $250 million. The trustees who voted to end coverage said they had a duty to do the most good for the greatest number of people.

“Our responsibility as fiduciaries is to the state health plan,” said Rusty Duke, a trustee. “This is a small number of people we are talking about in relation to all the members.”

Coverage for the weight loss drugs will end on April 1 unless a last-ditch deal can be reached to reduce costs.

To continue taking the weight loss medications, patients will have to pay out of pocket. The drugs can cost more than $16,000 a year without insurance coverage — a frightening prospect for workers whose average annual salary is high. $56,000. Most patients regain the weight they have lost when they stop taking the medications.

In recent weeks, state health plan officials explored whether they could reduce costs by imposing restrictions on who could get the drugs, but were told they could not do so without $54 million in rebates this year from the drug manufacturers. losing medications.

Jessica Uhrick-Rieger, a 44-year-old state employee, started Wegovy in October 2022. Since then, she has lost 50 pounds and no longer has pre-diabetes. But she won't be able to afford Wegovy's sticker price of $1,349 per month.

“That's more than my mortgage,” she said.

Mr. Folwell, the chairman of the health plan's board of directors, who did not vote Thursday, has spoken out about the plan's unsustainable spending on weight-loss drugs. (Outside his day job, he is running for governor of North Carolina as a Republican on a policy platform that prioritizes substance over style.)

He explains in understandable terms the dilemma the health plan faces: For example, if the plan had covered medications indefinitely this year, the costs would have been enough to cover a A wage increase of 0.5 percent for all state employees. And he did that sharply criticized Novo Nordisk, the manufacturer of Wegovy, for what he calls price gouging. The plan spends approximately $800 per month per patient on Wegovy, while patients are responsible for a monthly copayment of an average of $37.

“I have no doubts about the effectiveness of this,” he said. “I wonder what we are being charged.”

Allison Schneider, a spokeswoman for Novo Nordisk, called the trustees' decision to end coverage “irresponsible,” adding that the company had worked with state health plan officials to address concerns about costs. “We do not support insurers or bureaucrats in injecting their judgment into these medically driven decisions,” she said.

Some in North Carolina see a bitter irony in the fact that Novo Nordisk produces and packages Wegovy in Clayton, N.C. — just a short drive from the government offices where state health plan officials are trying to figure out how to pay for the drug.

The company's critics have drawn attention to the tens of millions of dollars in incentives Novo Nordisk has received from the state and county where its factories are located.

“It just makes things worse,” said Ardis Watkins, executive director of the State Employees Association of North Carolina, a group that lobbies on behalf of state health plan members. “Our economic climate, which has been made so attractive for companies to locate here, is being used to manufacture a drug that is being vastly upgraded.”

Ms. Schneider said Novo Nordisk employs more than 2,500 North Carolinians and has poured more than $5 billion in capital expenditures into the state.

State health plan staff have been closely watching Wegovy spending growth. About a year ago, it became the health plan's most expensive drug, surpassing the plan's long-time top cost item, the successful anti-inflammatory drug Humira.

“Wegovy was suddenly on the run,” said health plan manager Sonya Dunn, who routinely reviews reports showing prescription drug spending reaching new highs.

The North Carolina State Health Plan has been more lax than other employers and insurance programs in coverage of obesity medications. Until recently, patients could get coverage without providing documentation proving they had the body mass index or certain medical conditions approved by the Food and Drug Administration to qualify for the drugs.

Employees with the plan pay monthly premiums ranging from $25 for an individual to $720 for a family. The plan has not increased premiums for members for seven years – a priority, Mr Folwell said, to recruit young workers to join and stay in state government. If coverage of the weight-loss drugs were to continue indefinitely, health plan officials had predicted premiums would rise by $50 a month next year.

Meghan Ray, a state employee who is taking over Wegovy, said she was disappointed by the trustees' vote. She started Wegovy two years ago because of a medical condition that could compromise her vision if she weighs too much. Since then, she has lost 32 pounds and stopped taking blood pressure medications.

Ms. Ray, 41, who spoke at Thursday's board meeting, said she feared she would eventually have to undergo another gastric bypass surgery, which will be costly to the state's health plan, because she does not have the money to pay out of pocket. for Wegovy.

“The state doesn't pay me well enough to be able to afford that,” she said in an interview. “It's more important than me being able to afford gas to go to work or food to feed my family.”

The board narrowly voted, by a 4-3 margin, to end coverage of the drugs.

Wayne Fish, a trustee who voted against ending the coverage, is himself a state official who works in food service in corrections. He said he was concerned about the tradeoffs.

“These are difficult decisions,” he said. “We see the solvency of the plan and so on, but these are also people's lives. I don't know if there's a way to balance this.”