The North Carolina State Health Plan found a large portion of its net pharmacy spending being allocated to obesity GLP-1 medications.
In a notable revelation, the North Carolina State Health Plan found that a small group of 25 prescribers played a significant role in the multimillion-dollar expenditure on popular weight-loss medications for the year. Covering a substantial population of state employees and retirees, the State Health Plan witnessed a considerable portion of its net pharmacy spending was being allocated by a small group to obesity GLP-1 medications.
This instance was particularly pronounced for Wegovy and Saxenda. These medications, accounting for around $102 million of the projected $1 billion net pharmacy spending for 2023, raised concerns about the sustainability of such costs.
Approximately 10% of the State Health Plan’s medication budget, equivalent to 10 cents of every dollar, was allocated to cover the expenses of these weight-loss drugs after accounting for any rebates from pharmaceutical manufacturers, as noted by Sam Watts, the SHP director.
The analysis of State Health Plan data conducted by The News & Observer brought attention to the disproportionate impact of a small group of prescribers on the prescription volumes and associated costs of weight-loss medications.
The breakdown of this impact reveals that these 25 prescribers incurred a projected $13,787,865 in plan costs, excluding rebates.
Photo by Andres Ayrton from Pexels
Considering a 40% rebate provided by Novo Nordisk, the Danish manufacturer of Wegovy and Saxenda, the estimated net cost for the plan from prescriptions by these 25 providers in 2023 exceeded $8 million. This represents about 8% of the total expenditure on weight-loss medications.
Recognizing the unsustainable trajectory of spending on Wegovy and Saxenda, the State Health Plan proposed various strategies to curb costs while ensuring continued access for plan members.
However, these proposals were rejected by CVS Caremark, the company responsible for negotiating drug prices with manufacturers on behalf of the health plan. One significant move made by the State Health Plan board involved imposing a moratorium on new prescriptions of Wegovy for weight loss purposes, effective January 1.
This decision faced repercussions. As a result, the plan was notified by the CVS Caremark regarding its violation of terms and conditions that it offered for discounts. The violation resulted in the loss of discounts for plan members already on these medications.
State Treasurer Dale Folwell, overseeing the plan, emphasized the necessity of investigating best practices used by other states to address this issue. He expressed concern about the manufacturers charging high costs compared to other countries and the substantial number of prescriptions coming through the State Health Plan.
The intricate nature of agreements between pharmacy benefit managers (PBMs) like CVS Caremark and manufacturers becomes evident, with these agreements shrouded in secrecy, even from the State Health Plan. The moratorium on Wegovy prescriptions led to the plan losing its discount for existing plan members, further complicating the cost dynamics.
As the State Health Plan grapples with the challenge of balancing medication accessibility and cost control, the investigation into the high volume of prescriptions and the reasons behind manufacturers’ pricing strategies continues.
An independent analysis from the Institute for Clinical and Economic Review questioned the cost-effectiveness of Wegovy at its current price, raising concerns about the financial viability of such medications.
Despite lobbying efforts suggesting the long-term benefits of these drugs in preventing conditions like Type 2 diabetes and heart disease, the State Health Plan remains committed to exploring sustainable solutions that align with the interests of its beneficiaries and taxpayers.
The upcoming decisions of the health plan’s board are anticipated to provide insights into the path forward in managing weight-loss drug costs effectively.
Sources:
NC State Health Plan wanted to cut spending on obesity drugs. Instead it may pay more
Treasurer Folwell Calls on Novo Nordisk to Lower the Unfair Cost of Weight Loss Drugs
Maker of Wegovy, Ozempic showers money on U.S. obesity doctors
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