Health plans facing Ozempic-type drug coverage, AI adoption in 2025

Coverage of obesity drugs in health plans and the rapid adoption of artificial intelligence are two areas of change that health plans will face during the coming year. A panel of Avalere experts delved into that 2025 will bring to the health care industry in a recent webinar.

GLP-1 drugs such as Ozempic and Wegovy have skyrocketed in popularity as more Americans take them to combat obesity. These weight-loss drugs carry a steep price tag and top the list of prescription drugs selected by the Biden administration for newest round of Medicare price negotiations.

About 5.3 million people on Medicare used the drugs between Nov. 1, 2023, and Oct. 1, 2024, according to the Centers for Medicare and Medicaid Services.

Together, the 15 drugs selected accounted for $41 billion, or 14%, of total Medicare Part D spending. When combined with the first 10 drugs already negotiated by Medicare, they account for a third of all Part D spending, according to CMS. Medicare Part D covers prescription drugs that people take themselves, as opposed to those administered in a facility, such as chemotherapy.

“These therapies hold a lot of promise for individuals who need these medications, but we continue to operate in a framework of policies and regulations that provide challenges to access to these medications,” said Michael Lutz, Avalere managing director.

“We continue to see commercial plans and employer sponsored plans pulling back on coverage for these medications, particularly due to the high cost and the high demand for the medications,” he continued.

Lutz added that he doesn’t see that situation changing, “until we start to see some lower cost alternatives emerge, or we see some data-driven short-term clinical outcomes to that show the impact on downstream cost of care that will incentivize the coverage for current enrollees.”

The Biden administration proposed a rule that would allow Medicare to cover these drugs when prescribed for obesity, Lutz said, but the rule is not finalized and it’s uncertain how the incoming Trump administration will approach coverage of the medications.

But health care providers see the value that GLP-1 drugs provide to patients who have medical needs or need help controlling their diabetes risk, he continued. “They know the impact this will have on patients in the long-term on things such joints and heart disease. So they see these drugs as a key resource for their patients.”

High interest in GLP-1 drugs along with their high cost prompted many health plans and employers to restrict access to the medications, said Mark Gooding, Avalere managing director.

“We’ve seen the unintended consequences of eliminating access to individuals at the lower end of the socioeconomic spectrum, who experience higher obesity rates,” he said. “It’s unclear whether the Trump administration will finalize the potential expansion of coverage of these drugs to treat obesity.”

Health plans adopt AI at a ‘very fast’ rate

Lutz said he is “surprised” at how quickly AI is being adopted in the health plan space.

“Typically, plans spend quite a bit of time mapping out their technology ecosystem,” he said. “The budget for it; they go through testing. They make sure there won’t be any negative impacts on the technology infrastructure they have in place. And they certainly want to be sure it won’t lead to any disruptions in care or service for their members. But we’re seeing AI being adopted at a very fast rate for certain functions in the health plan space, particularly for evaluation of prior authorizations.”

But that rapid adoption of AI brings the challenge that regulations aren’t keeping up with AI’s widespread usage, Lutz said.

“For example, plans could invest a lot of time and money implementing tools that they can no longer use once regulations catch up with them,” he said.

Policy priorities and a new administration

Health care wasn’t much of an issue in the 2024 presidential campaign, said Ashley Flint, principal at Avalere.

Under the new administration, health care has mostly been discussed secondary to other administration and congressional priorities such as tax policy and immigration policy, she added.

Eric Levine, associate principal at Avalere, said that for health plans, challenges in the financial and economic environment, cost pressures, public scrutiny from policy makers and uncertainty from the new administration will be difficult to navigate.

“This is not going to be status quo.”

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Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].