As many Americans turn to drugs like Ozempic and Wegovy for their weight loss dreams to come true, employers are cutting off insurance coverage.
Because of its recent demand, drugs belonging to the class of “quick weight loss” is costing as much as $1,350 a month per patient, quickly leaping into the tens of millions of dollars for insurance plan payments. This reportedly caused a massive strain on employer financial plans.
The University of Texas System announced it would end insurance coverage of Novo Nordisk’s Wegovy and Saxendra for its employees and others covered by health plans, effective in September. While employees benefit from the use of these drugs, their continued usage is costing employers a pretty penny as they foot the bill.
According to the Wall Street Journal, drug costs tripled over the past 18 months to about to roughly $5 million a month, causing the university to end these particular drug coverages.
The university’s benefits newsletter stated that continuing to pay for the medicines “is unsustainable due to the current rate of prescription drug expenditures.”
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“Everybody is concerned this treatment is going to add a huge cost burden on health plans,” said Michael Thompson, chief executive of the National Alliance of Healthcare Purchaser Coalitions, which includes groups representing employers. “It’s one of the key issues employers are having to wrestle with today because of the prevalence of these medicines.”
The popularity of weight-loss drugs like Ozempic and Wegovy skyrocketed primarily due to word-of-mouth about their effectiveness. The surge in demand has been so rapid that Novo Nordisk, the pharmaceutical company behind these drugs, has struggled to keep up with production.
As a result, analysts have been raising their sales estimates to reflect the multibillion-dollar potential of these medications. The increased interest in these drugs highlights the growing focus on finding effective solutions for weight management and has led to a significant impact on the market.
At present, Novo Nordisk charges a list price of $1,349 for roughly a month’s supply of each Wegovy and Saxenda. Ozempic costs about $930 a month but is not typically covered by insurance plans without a patient being a Type 2 diabetic.
The University of Texas System health plan said it isn’t seeing any of the expected reduction in costs for other health conditions that weight loss could avert. The newsletter continued: “These savings are not being realized due to the excessive cost the drug manufacturer charges for the weight-loss medication.”
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