'Ozempic Hype Forces Employer Calls on Obesity Coverage' Transcript

September 28, 2023

Note: This transcript has been created with a combination of machine ears and human eyes. There may be small differences between this document and the audio version, which is one of many reasons we encourage you to listen to the episode

Dan Gorenstein: Doctors are calling the new class of obesity drugs unprecedented and revolutionary. And for good reason.

They are helping people lose 10 to 20 percent of their weight on average. The most effective weight loss drugs we’ve ever seen.

Spending on these drugs for weight loss and diabetes, combined hit nearly 7 billion dollars in just the first half of the year.

The bulk of that cost… is falling on companies and employers as half of Americans get their health insurance through work.

Today, how employers improve worker health without busting their budgets.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.

***

DG: The hype around new anti-obesity drugs seemed to explode this spring.

Advertisements: People with diabetes are excited about the potential of once-weekly Ozempic…We just asked…Is Ozempic right for you?

DG: Television, billboard and social media ads for Ozempic rained down.

Advertisements: I worked with my doctor to incorporate Ozempic with diet and exercise…Adults lost on average up to 12 pounds.

DG: Ozempic – which hit the scene back in 2017 to treat type 2 diabetes – has fast become popular for weight loss.

Hollywood celebrities talking it up…

Clip: “Lolo you look thin…Ozempi?? Yup.

DG: Made a cameo at the Oscars

Oscars clip: You look great, everyone looks so great. When I look around this room I can’t help but wonder, is Ozempic right for me?

DG: And prescriptions have skyrocketed.

One analyst projects the global market for this new class will reach $50 billion dollars by 2028.

And – no surprise- over the last year companies have seen their prescription drug spending at the pharmacy soar in tandem.

Jeff Levin-Scherz: The cost of this drug alone is threatening to increase, increase pharmacy budgets, maybe even bust pharmacy budgets.

DG: That’s Jeff Levin-Scherz. He’s a consultant with the firm Willis-Towers-Watson, which now calls itself WTW.

Jeff says the popularity – and cost – of the drugs have caught employers flat footed.

So much so that some – like the University of Texas System and Ascension – decided to cut off coverage altogether.

Other businesses are using various tactics to limit prescriptions.

Guiding workers to diet programs… steering them towards cheaper weight loss drugs to lose weight.

JLS: I think more employers are in the position where they’re realizing that this is a a big potential cost problem but are not yet…unequivocally making, making a decision to remove coverage from these drugs.”

Music

DG: Like so many employers around the country, the cost of these new obesity drugs has put the state of Connecticut in a bind.

The state’s health plan – which covers more than 200,000 public employees, retirees and their dependents – is on track to spend more than 30 million dollars on these drugs a year.

That’s more than triple what Connecticut spent in just 2020.

Josh Wojcik: Oh, my God, this is like, how, how, how crazy could this get?

DG: Josh Wojcik is the policy guy for the state Comptroller’s office, which runs the state’s plan.

Back in April, Josh remembers crunching the numbers, punching his calculator.

JW: I’m walking down to present this to the comptroller, I’m feeling nervous. 

DG: Even though the state’s policy only paid for the drug to treat diabetes, Josh could see in the numbers people were using it for weight loss. And that had the state headed for a brick wall.

Comptroller Sean Scanlon remembers Josh walking in.

Sean Scanlon: I immediately understood what he was saying, which is that, you know, we think we have a real reason to do this for from a couple of different perspectives. Number one, it’s the right thing to do. People want to lose weight. They want to get healthier… And I think it’s not corny to say that your employees productivity is based on how they’re feeling and how they’re doing. And if our employees can be happier and healthier, then I think we can make a big difference in terms of what we are able to get done here as a state.

Music

DG: But, as much as the pair wanted to cover the drug for obesity. Josh and Sean also knew they wanted to – needed to – slow down the spending.

So they hatched a plan and kicked it off in July.

Anybody on the state health plan who wants access to these meds for obesity must work with Intellihealth – a company that specializes in obesity care.

Sean explains that Intellihealth is screening workers with obesity to understand the root cause of their problem.

SS: There’s a million different reasons why somebody is clinically obese. We know that there are ways to treat this to improve your life and your health. And we think that pairing somebody with an obesity specialist is one really good way to do that.

DG: Depending on that workup some employees get a prescription for the new weight loss meds, while others get different, lower cost treatments.

This is one reason Sean is optimistic that the state will be able to curb spending.

SS: Based on all the data I’m seeing this is going to make a difference and will ultimately save the state money.

DG: Here’s the idea:

Music

The state is basically cutting a deal with its workers: in exchange for this coverage, employees are committing to take the drug weekly, show up for follow-up visits.

Consultants who advise employers on their health plans say this kind of drug and lifestyle combo is common.

And it certainly reflects both old school thinking – people must be motivated… and the new school – give people drugs that actually help them with a medical condition…

SS: these drugs should be covered, but we shouldn’t be just covering these drugs without actually requiring people to do what makes the drugs work even better for our investment in them.

Music

DG: Olivia Quagliani is in the first wave of people going through the state of Connecticut’s plan.

The 26-year old high school counselor has struggled with weight all her life.

Olivia Quagliani: I would eat slower and make sure that I wasn’t eating any more than anybody else because I didn’t want them to kind of associate that with, Oh, well, that’s why she’s bigger…she’s eating more than me…something that I knew existed but no one ever talked about.

DG: Olivia felt bombarded with messages: eat right, exercise, do more, be better…be different.

And she tried. Olivia played softball. She skated wing on her high school hockey team. She made the rounds with all the diets and yet she gained weight.

OQ: I kind of just, like, hated myself for it. Um, I was disgusted. And I remember thinking like, how did I let myself, like, look like this?

DG: Growing up everybody said she was in the driver’s seat, and Olivia internalized that.

She figured if she was in control and she was this heavy she was the problem.

OQ: I just felt very, it was definitely isolating,…It was just a lot of like, what is wrong with me?

DG: Her thinking started to change this March. She found a doctor who treated her weight and related health problems like a medical condition and prescribed her Ozempic.

At first Olivia was skeptical.

OQ: I don’t remember a time where I ever lost weight, ever, no matter what I did, you know?…If that actually happens, I’m going to be blown away.

DG: And she was. In just four months Olivia lost 30 pounds …all while maintaining the same lifestyle.

In July, Olivia switched off her parents’ insurance and signed up with the state of Connecticut.

But when she went to refill her prescription she was hit with a bill. $900 a month for Ozempic, unaffordable on her high school counselor’s salary.

OQ: So I start freaking out because I’m like, wait, no, no, no, no, no. Like, no, this is actually working for me. Don’t do this.

DG: Stopping this prescription was out of the question, says Olivia, so she agreed to the terms of the state’s plan and met with the weight loss experts.

A few minutes into her first appointment with the nurse she was nearly in tears.

OQ: I stopped him and I was like, I could cry right now for like, there’s the way that you’re even talking to me…I’m not stuck like this forever…being on a drug…doesn’t make me lazy or, you know, it’s treating a medical condition I’ve had for a very long time.

Music

DG: Olivia says this shift to seeing her weight is a medical problem has been life changing.

She feels hopeful…and motivated…taking the drug, doing her weigh-ins, hitting the gym. And she’s down to her lowest weight she’s been at for a while.

DG: Olivia is the poster child for Connecticut’s program.

And Comptroller Sean Scanlon is optimistic that the other 1,000 employees who have signed up this program so far, will be just as invested as Olivia and have similar success.

SS: I’m using my bully pulpit right now to start a conversation here in Connecticut and frankly, across the country are there better ways to do this while also maintaining access and improving outcomes.

DG: After the break, employers weigh the pros and cons of covering these weight loss drugs…and why the promise that they’ll pay for themselves will almost certainly fall short.

MIDROLL

DG: Welcome back.

Like the state of Connecticut, many employers are trying to balance expanding access to Ozempic, this new weight loss drug without busting their budget.

Tradeoffs Producer Alex Olgin has been talking to employers, consultants and economists about the coverage landscape for a while now.

Alex, thanks for joining me.

Alex Olgin: Glad to be here.

DG: Let’s first get a baseline, Alex. Are lots of employers covering these new expensive obesity medications?

AO: So, Dan, surveys show about 40 percent of large U.S. companies are covering Ozempic and the other popular new drugs for weight loss.

But that coverage really looks pretty different business to business. Some, like the state of Connecticut you just talked about add conditions.

Others make employees try cheaper drugs first like Contrave and Qsymia. And another subset just offers it to only the sickest people.

DG: Based on your interviews, do you have a sense why we are seeing so much variation right now?

AO: Well, just like we heard with Olivia’s story, the country is middle of a shift, that’s now about a decade old, from thinking about obesity as a lack of willpower and lifestyle choices to understanding it as more of a disease.

Historically many companies encouraged workers to lose weight through their wellness programs.

JLS: Let’s do a step challenge…you know, let’s improve the food in our cafeteria or in our vending machines.

AO: That’s Jeff Levin Scherz. 

DG: Oh yeah, Jeff! The business consultant from WTW…who we heard from at the top of the show.

AO: Right. So Jeff has spent the last several years advising the country’s largest employers on their health benefits.

Music

In 2013, Dan, the American Medical Association officially recognized obesity as a chronic disease.

And he says, that’s when attitudes started to go from obesity as a ‘lifestyle problem’ to obesity as ‘medical problem.’

DG: Got it. Ok

AO: And look, we’ve seen this before. When bariatric surgery first hit the scene – that’s the procedure where doctors make your stomach smaller – employers were skittish. But today, Dan, about half of them cover it.

Music

DG: Fair enough. So Alex, I’m guessing another reason employers are taking such different routes – being so cautious – is because these medications are super expensive!

AO: Absolutely! And as these drugs get more and more popular…employers are spending a ton.

The state of North Carolina – which covers almost 750,000 state employees – spent 120 million dollars in six months on them. State officials there told me they’re in the middle of reviewing whether they can keep paying for these drugs.

And lots of employers are in this same boat – watching their spending spike because of this.

Mike Thompson is president of the employer group the National Alliance of Healthcare Purchaser Coalitions. He says me lots of businesses are elbow deep into figuring out their next moves.

Mike Thompson: The early adopters are already stepping to the plate and I think within two years it could be half of of employers. It won’t take that long to move because everybody’s going to be looking at everybody else.

AO: Given all this decision-making going on, Dan, I wanted to get a handle on how businesses are staring down their dilemma. They want to offer something, but not sure they can afford it.

I know when I’m facing a tough choice, I make a pros and cons list.

DG: Of course you do! And I bet it involves binders.

AO: Of course it does. There are color coded tabs and everything. 

DG: Ok, cool, Alex. Let’s start with the pros.

AO: There are three big ones.

First: the drugs work really well. They’ve helped people lose between 10 and 20 percent of their weight.

And studies are showing the drugs also are making people healthier in general.

A big five year trial by drugmaker Novo Nordisk found these drugs can lower the risk of heart attacks and strokes in some people.

DG: That’s sounds like a huge pro. And healthier workers – you’d think – would miss less work ?

AO: That seems to be the case. . And that brings us our second pro. Research shows that people with obesity miss 3 more days of work a year. That lost productivity adds up to a few hundred dollars a year per employee.

Now, these aren’t huge numbers – but it’s better than the alternative…so it falls on the ‘pro’ side of the ledger.

DG: Yea sure, pro with a lower case p. Ok, Alex, so that’s two ’ What’s the last one?

AO: So one way companies attract talent is through the benefits they offer, right?

Mike Thompson at the employer coalition says some companies view this obesity drug coverage as part of a generous health insurance package.

MT: I do think that employees do have a higher level of expectations, particularly coming out of the pandemic, about working for an employer that is leaning into their needs and their and their expectations. And this certainly is a good indicator that you’re doing so, when you’re when you are being progressive in an area like this.

DG: Great, that’s the upside for companies, Alex. Let me review, the drugs help people be healthier. It may improve productivity and it can help employers attract workers.

Crack open that second binder of yours, buddy. What scares employers about offering this coverage. We know money is at the top of the list.

AO: Obviously.

Music

These drugs range between 9 and 15 thousand dollars per employee every single year. And remember people will be on these for the rest of their lives.

To illustrate just how expensive this is I want to do some back of the envelope math, here Dan.

Music

In a company of 100 employees. Let’s say 40 would be obese, since 40 percent of Americans are. Assuming all 40 of those employees took the drug at 10,000 a pop – you’re looking at $400,000 each year – just on this one medication.

DG: And part of what I think you’re are saying, here, Alex, is that these are new health care costs… employers have to get that $400,000 from somewhere, namely their profits.

AO: Yea exactly. But it’s likely the company will chip in only some of those extra dollars. And everybody else in the office, not just the people taking the drugs will likely have to chip in with higher monthly premiums.

Our friend Jeff Levin-Scherz from WTW says a lot of companies are walking this tightrope.

JLS: Employers are in this terrible situation because they want to offer this… medication…But on the other hand, they also want to be sure that their health insurance isn’t so expensive, that a lot of employees drop out of it.

AO: Both WTW and Mercer are expecting health care costs to jump more than six percent next year. With employers expected to eat a large chunk of that.

And Dan they literally both say, that increase is due in part to these drugs.

DG: Ok, so that’s the first con, and it’s huge. This is a super expensive drug and employers and employees will all be on the hook to cover it.

But, Alex, what about whether these weight loss drugs will save money. It’s easy to think, ‘if people who are obese get healthier they will have fewer health care needs and that going to end up saving the company money.’

AO: Yeah, and that’s actually my second ‘con,’ and it’s a bit sneaky.

You’re right, there’s a lot of talk in business HR circles right now that these drugs could lower health spending. And there’s something to that. Some people would likely have fewer health problems, which could mean fewer visits to the hospital or emergency room.

But health benefits experts like Jeff say there’s only a tiny sliver of cases where companies may see these lower medical costs.

JLS: There might be an individual person who won’t have a heart attack and a $100,000 hospitalization next month. But that’s going to be very few people. And you’ll have to treat a lot of people to get that.

AO: Not only are there just a few people who fall into that category, but in many instances Jeff says the heart disease and diabetes that would be avoided will happen years down the road. By then there’s a good chance workers will have moved on or maybe even be retired.

So the reason this is a ‘con’ is because while there could be savings it’s more of an illusion than a reality.

DG: Got it. Being able to approximate the savings if any seems to be super important for employers wrestling with this decision.

AO: Well this is also part of the transition from lifestyle to disease, that I talked about earlier. I mean employers aren’t hoping that coverage for cancer treatments or broken bones will save money.

The people I talked to for this story, Dan, kept telling me companies rarely get savings when they pay for health care or a prescription drug.

There are just two examples people told me about: Childhood vaccines or birth control – both relatively cheap and both avoid really big downstream costs.

DG: Only a few months into parenthood and you’re already feeling the strain on your wallet.

AO: Oh yes. Kids are cute, but I got to tell you they are so expensive.

DG: Back to the story Alex Olgin please.

AO: Ok, back to obesity coverage, I have one final con for you.

There are lots of people who are clinically obese, like I said a few minutes ago, 40 percent of adults in the U.S.

And these drugs were approved for everyone from folks carrying an extra 20-30lbs…to people who are severely obese with serious medical problems.

And if employers want to offer this, without breaking the bank, one of the toughest decisions facing them is drawing the line on who is eligible.

DG: They don’t want to pick winners and losers.

AO: That’s right. And one final thing before I put these heavy binders away, Dan.

There are new, and arguably better obesity drugs are in the pipeline. And that increased competition could drive down prices.

DG: I’m sensing a but.

AO: Yeah. ‘But’ we could see the opposite. Which happened with multiple sclerosis drugs. Manufacturers raised the prices on old drugs when new more expensive ones came out.

DG: You really get a sense why lots of employers feel stuck on this right now.

AO: Yea it’s a really difficult decision- they’re really going back and forth about what to do.

DG: That makes me think about Connecticut. They’ve actually made a decision. State Comptroller Sean Scanlon knows how expensive this drug is and he knows that the drugs actually help people.

And at least as far as Sean is concerned, he feels a moral imperative to offer a really good treatment if it exists.

Sean Scanlon: I’m not afraid to be wrong, not afraid to try something that doesn’t work, and I’m not afraid to own it…. that’s how I approach public policy.

DG: Sean thinks about people, like Olivia Quagliani, who are meeting with obesity experts regularly, …and taking this new drug.

AO: Based on my interviews Dan, that’s what employers around the country are considering a marker of success… at least for now.

DG: Right that’s what it looks like in this moment, yea, as we transition from seeing obesity as a will power or lifestyle problem to really a disease.

Alex Olgin, thanks for your great reporting on this.

AO: You’re welcome, Dan.

DG: I’m Dan Gorenstein. This is Tradeoffs. 

 Tradeoffs’ coverage of health care costs is supported, in part, by Arnold Ventures and West Health.

Want more Tradeoffs? Sign up for our weekly newsletter!

Episode Resources

Selected Reporting and Research on Obesity Medications:

Alarmed by popularity of Ozempic and Wegovy, insurers wage multi-front battle (Elaine Chen, STAT, o8/03/2023)

Employers Cut Off Access to Weight-Loss Drugs for Workers (Peter Loftus, Wall Street Journal, 08/02/2023)

Payer strategies for GLP-1 medications for weight loss (AJ Ally, et al; Milliman, 08/2023)

 What Could New Anti-Obesity Drugs Mean for Medicare?  Tricia Neuman and Juliette Cubanski, KFF, 05/18/2023)

A systematic review of the economic value proposition for commercially available nonsurgical weight-loss interventions (Eric A Finkelstein, Parth A. Chodavadia, Kiersten Strombotne, Obesity, 05/23/2023)

Direct medical costs of obesity in the United States and the most populous states (John Cawley et al; Journal of Managed Care and Specialty Pharmacy, 03/2021)

Episode Credits

Guests:

Jeff Levin-Scherz, MD, Population Health Leader at WTW

Sean Scanlon, Connecticut Comptroller

Michael Thompson, President of the National Alliance of Healthcare Purchaser Coalitions.  

Olivia Quagliani, Connecticut employee

Josh Wojcik, Assistant Comptroller of the State of Connecticut

The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode from Blue Dot Sessions and Epidemic Sound.

This episode was reported by Alex Olgin, edited by Dan Gorenstein and Cate Cahan, and mixed by Andrew Parrella and Cedric Wilson.

Additional thanks to: Adam Biener, Eric Finkelstein, Frank Lester, John Miller, Sloan Saunders, Bruce Sherman and Elissa Zylbershlag, the Tradeoffs Advisory Board and our stellar staff!