Wegovy: Weight loss drug's popularity has employers rethinking

Shawnte struggled with her weight for years before she was prescribed Novo Nordisk’s diabetes drug Ozempic for weight loss in 2020, helping the former music industry professional from New York lose more than 50 pounds over two years.

But last year, the 46-year-old, who asked to be identified only by her first name to protect her privacy, was told her health insurance would not cover her weight loss treatment. She said she was directed to take cheaper weight-loss medications, which aren’t as effective.

The health insurance plan, which Shawnte’s husband received through his job at media company Warner Bros, said she wasn’t eligible for Ozempic because she didn’t have diabetes.

A new and more expensive version of the drug specifically for weight loss, called Wegovy, had been approved in 2021 by U.S. health regulators. But the employer only agreed to foot the bill for Wegovy after Shawnte’s husband complained to his human resources department and a representative pushed to cover it.

“If I had just sat back and taken their no as an answer, I wouldn’t have been as successful with my weight-loss plan,” she said, adding that she is still using the drug.

Warner Bros Discovery did not respond to a request for comment.

Shawnte’s experience is becoming more common among the tens of millions of Americans who get health insurance through large employers, defined as companies with more than 5,000 workers, according to two health care consultants and seven doctors interviewed by Reuters.

While many of these companies have been covering weight-loss drugs, Wegovy’s high price and the huge increase in people taking it has them reconsidering when and how to reimburse use of such treatments to prevent a steep spike in health insurance costs, three healthcare industry experts say.

Up to two-thirds of companies, most of them large employers, have been covering drugs for obesity for at least three years, according to healthcare benefits consultants Aon, Mercer, part of Marsh & McLennan, and Willis Towers Watson, which advise employers on benefits.

Until late last year when Wegovy prescriptions began to rise, weight-loss coverage represented a marginal expense for employers because the available branded drugs were ineffective and little used, or readily substituted by cheaper generics, the healthcare consultants said.

Employers also were supportive of treatments that could help reduce the risk of diseases that are exacerbated by excess weight including heart conditions and diabetes.

The arrival to market of Wegovy in 2021 and in 2022 Mounjaro, a similar diabetes treatment from Eli Lilly that is being prescribed off-label but is not yet approved for weight loss, have changed that dynamic.

Both have been shown in clinical trials to help people lose around 15% of their body weight. But they cost more than $1,000 per month, according to the drug company websites, and patients may need to use them indefinitely to keep the weight off.

Use of Wegovy for weight loss has risen to around 135,000 new prescriptions per week in May from 45,000 in the last week of January, according to Barclays Research, and is widely expected to increase further.

That has fueled a 250% increase in costs for employer-sponsored health insurance in the first two months of 2023 combined compared to all of 2022, according to Willis Towers Watson consultant Dr. Jeff Levin-Scherz. Even if only half of eligible employees use such drugs, he said, the costs to employers of insuring all of those covered by their health plans could rise by 50%.

“It’ll be very hard to keep healthcare affordable if that’s the case,” Levin-Scherz said.

“We might see some employers saying, we covered this but now we’re not covering it all, and others saying we will continue to cover them because we think it’s really important, but we will put these restrictions on it so it will be harder for people to get.”

Eli Lilly declined to comment on employers’ coverage policies. Novo Nordisk said Wegovy should be more broadly covered like medicines for other chronic diseases.

Employers that cover weight-loss drugs have required medical practices to document patients’ need for Wegovy since it was approved. Increasingly, they are introducing additional eligibility requirements, said Aon consultant Michael Manolakis.

Some employers ask patients to try cheaper weight-loss drugs or go through structured diet and exercise programs first, while others limit access to Wegovy if patients don’t show 4% weight loss in three months, according to doctors.

“As long as there aren’t generic or cheaper versions (of these drugs), I think this (situation) is what we can continue to expect,” said Duke University medical professor Dr. William Yancy.

Manolakis said companies were basing their coverage policies in part on how long employees typically stayed in their roles. In cases where the average time in a position is six to 12 months, employers are less likely to invest in weight-loss drugs whose benefits are seen over the long term, he said.

Employers have also stopped covering off-label use of Ozempic and Mounjaro for weight loss, similar to what happened to Shawnte, the health care consultants and doctors said.

Smaller companies are less likely to cover weight-loss drugs, two healthcare plan consultants said.

The federal Medicare healthcare program for Americans aged 65 and older cannot cover weight loss treatments by law. However it is obligated to allow for off-label use of drugs in general, which has allowed some coverage of Ozempic for weight loss, according to healthcare industry analysts.

Only 16 states – the most populous being California, Pennsylvania and Michigan – cover Wegovy and other obesity drugs under their Medicaid plans for low-income patients.