This month, North Carolina did something enthusiastically that most states have been reluctant to try: It started covering new obesity medicines like Wegovy for its poorest residents as part of its Medicaid program.
For Kody Kinsley, the state’s health and human services secretary, the choice was easy. Those poor residents are disproportionately affected by obesity and its related diseases. “From a base-line justice perspective,” he said, “why are we even talking about it?”
The reason many people are talking about it is the price tag. Expensive drugs are nothing new in the U.S. health system, but these are an unprecedented type of blockbuster because so many people could benefit: More than a third of American adults meet the clinical definition of obesity. The combination of high prices and high demand is forcing every insurer, public and private, to make tough decisions.
Just this spring, the North Carolina state employees’ health plan dropped coverage of the same class of drugs, citing unsustainable costs, ending coverage for nearly 25,000 people who were taking them.
That means the civil-service administrators who will be helping the state’s poorest residents get access to Wegovy and its siblings have lost their own employer coverage for the very same drugs.
The costs of the drugs, known as GLP-1 agonists, can add up quickly. Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound — the two GLP-1 drugs that have been approved specifically for weight loss — each come with a sticker price over $1,200 a month, and need to be taken long-term for sustained effect. (Ozempic has the same active ingredient as Wegovy, but has been approved for diabetes.)
Medicare, which provides prescription drug coverage for Americans over 65, is barred by law from paying for drugs just for weight loss. But state Medicaid programs like North Carolina’s can choose to cover the drugs for poor residents — or not. Most states don’t.
In the private sector, roughly half of employer plans have decided to cover the medicines, according to a recent survey from the benefits consulting firm Mercer.
This has led to a patchwork of coverage that is unusual for a safe and effective medicine for a major health problem.
The drugs’ high costs also intersect with longstanding skepticism about obesity as a legitimate disease. Frequent reports of celebrities who use GLP-1s to slim down for a role or fit in a party dress have helped fuel some perceptions that they are drugs of vanity.
Yet mounting evidence shows they not only help people lose weight but also reduce the burden of diseases that have long been associated with obesity, including diabetes, high blood pressure, cardiovascular disease, sleep apnea and fatty liver disease. The drugs aren’t for everyone — some people experience side effects like severe nausea that they can’t tolerate, or are uncomfortable giving themselves shots — but medical evidence suggests they can have significant health benefits for many.
In many ways, the very scope of the drugs’ potential has caused insurers to avoid them, rather than embrace them.
“This class of drug is not a quote-unquote problem because of the price per se,” said Benedic N. Ippolito, an economist at the American Enterprise Institute, who recently published a paper on the possible costs of GLP-1 drugs if Medicare embraced them. “The issue is that the size of the demand is just enormous.”
‘Buckle of the Bible Belt’
Obesity is more common in North Carolina than in many parts of the country, with about 45 percent of adults meeting the clinical definition between 2019 and 2021, according to research from NORC. As Mr. Kinsley puts it, the state is in the “buckle of the Bible Belt,” where barbecue and fried food are local favorites. The food truck outside a recent board meeting for the state employees’ health plan served a cheeseburger deluxe and fried catfish nuggets.
Mr. Kinsley was appointed by the state’s Democratic governor, Roy Cooper. Dale Folwell, the elected state treasurer, a Republican, said he was staggered by what he sees as the greed of the drugmakers in setting such a high price, and by the costs to the state.
North Carolina would have had to increase taxpayer funding for the state health plan or double premiums for state workers to cover the bill, Mr. Folwell said. He said he doesn’t understand why Novo Nordisk charged the plan more than four times what it charges for the same drug in its home country, Denmark.
“There’s nothing fair nor just about what’s happening with this price gouging,” he said. “We have never had an expense that jumped up on the table as quickly and as harshly as this one has.”
Novo Nordisk and Eli Lilly, in statements, emphasized the drugs’ value to individual patients and their potential to save costs elsewhere in the health system. The state health plan “is abandoning their obligation to employees living with the chronic disease of obesity,” said Allison Schneider, a spokeswoman for Novo Nordisk.
Mr. Folwell has become friendly with Senator Bernie Sanders, who has been investigating the drugs’ high prices and issued a report estimating that the broad uptake of the drugs could cost the country hundreds of billions of dollars.
“What you’re seeing is state governments, and the federal government, having to make very difficult choices,” Mr. Sanders said. The drugs could have enormous public health effects, he said, but he applauded Mr. Folwell for standing up to the pharmaceutical industry.
“These are tough guys, and they want to squeeze the American people as strongly as they can,” Mr. Sanders said.
Medicaid has certain price advantages when it comes to drugs. By law, it gets the biggest discounts of any purchaser. And because its costs are split between state and federal governments, the state’s share of the price is much lower in Medicaid than it is for state workers.
North Carolina officials estimate that Medicaid’s total bill for Wegovy in its first year, $16 million, won’t be the biggest for a drug in the program. That honor goes to a drug for eczema, Dupixent by Sanofi, that is estimated to cost $28 million.
The poor get access, bucking a trend
Nationwide, Medicaid’s beneficiaries are rarely first in line for cutting-edge therapies. State budgets can be tight, and Medicaid’s bill must be paid for every year. Fewer doctors tend to accept Medicaid than other kinds of insurance, and its patients often struggle to get complex medical care.
In North Carolina, Medicaid’s embrace of the new obesity drugs bucks this overall trend. Poor residents now have access to a treatment that many of their middle-class neighbors can’t get.
A few days before the change went into effect, Sharen Harrington was visiting her primary care doctor for a severe headache. Ms. Harrington, 47, had to give up her job as a school bus driver because of back pain. She now works as a cashier at a convenience store. She’s had surgery on both knees, and has high blood pressure, which is not always controlled by medicine. She blames her weight for many of her health struggles, but said dieting, exercising and an taking earlier type of weight loss medicine hadn’t much helped.
A few months ago, her doctor wrote her a prescription for Wegovy, and Medicaid rejected it.
“It fluctuates,” she said about her weight. “I lose, I gain. I lose, I gain.”
Her doctor, Colin Ottey, says the policy change will help him treat a lot of patients with ailments related to obesity. His practice, at Advance Community Health in Raleigh, treats many Medicaid patients.
He frequently counsels his patients about diet and exercise. “Try to stay active, my lady,” he told Ms. Harrington cheerfully at her visit. “Moderation,” he told another patient, who was also trying to lose weight, after the patient professed a love for pasta.
He acknowledges that weight loss is not easy, especially for patients with numerous health issues.
“As a provider, it’s been difficult,” he said. “Because you know that the treatment is out there, and you know that the patient you’re taking care of would benefit, but you’re not able to get them the treatment you know would be beneficial to them.”
North Carolina is not the first state to cover GLP-1 drugs in Medicaid, but others have done so more tentatively, often establishing complicated rules and barriers to care.
“States are really concerned about the cost implications,” said Elizabeth Williams, a senior policy analyst at the health research group KFF, which conducts an annual survey of Medicaid programs.
Officials in North Carolina’s Medicaid program said they are enthusiastic, not apprehensive, about the decision, and they’re happy to talk about it publicly. That choice will undoubtedly lead to more uptake, more state cost and a higher risk of a political backlash.
And the very state employees overseeing the Medicaid rollout have lost coverage for obesity medicines themselves.
That loss has been particularly hurtful to Angela Smith, the state’s director of pharmacy. She was first diagnosed with high cholesterol in high school, and has a deep family history of heart disease. A lifetime of running hadn’t prevented her from gaining weight. But GLP-1 medicines helped her lose 70 pounds and improve numerous markers of cardiovascular health.
She said she was gutted when she learned her benefits were being terminated in April.
“I found it unimaginable that they would stop my access,” she said. With a government salary and a child in college, she can’t afford to pay the full price for Wegovy, which she compared to a second mortgage. She said she might have to leave her job to find coverage elsewhere.
“I feel a little bit — a lot — like a pawn,” she said. “Why is my disease not worthy of health care resource dollars?”
But as the state’s pharmacy director, she is delighted that Medicaid patients will get the drug that helped her so much. “I’m excited about it,” she said. “This is so cool.”
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