Popular weight loss drugs like Ozempic may spur premium increases

Health insurance companies in several states are pushing for premium rate increases, citing the rising costs associated with drugs used to treat obesity, particularly the popular medications Ozempic and Wegovy.

Insurers in Michigan and Massachusetts are among those seeking approval for premium increases, attributing the surge to the mounting costs of Ozempic and similar drugs used for weight loss.

Health insurance companies in Michigan are seeking increases that would average 7.1% for their 2024 small group policies. In Massachusetts, nearly every insurer in the state revealed they are requesting a premium hike, and some attributed the requests to the rising use and costs of Ozempic, Wegovy, and others. United Health Care Insurance is seeking a 12.1% increase, with Blue Cross Blue Shield of Massachusetts submitting a 4% increase request.

At a June hearing on the Massachusetts submissions, Tyler Hutchison, chief actuary for insurer Health New England, said some analyses have suggested weight-loss drugs could increase pharmacy spending by more than 20 percent over the next few years.

These requests were for the individual and small employer market, and did not include those covered by large employers, Medicare, and Medicaid, but could signal mounting pressure for commercial and government insurance coverage.

The obesity drugs have fueled a 250% increase in costs for employer-sponsored health insurance in the first two months of 2023 combined compared to all of 2022, according to an analysis by Willis Towers Watson. Currently most insurers do not cover the drugs for weight loss, which is mostly an off-label use, but do for diabetes type 2.

Novo Nordisk, which makes the blockbuster weight loss drugs, has hired lobbyists Arnold & Porter to try to convince policymakers to allow Medicare to cover anti-obesity medications. KFF Policy Watch found that the annual cost to Medicare could be between $13.6 billion, to $26.8 billion, if just 10% of beneficiaries use Wegovy. Total annual Part D spending in 2021 was $98 billion.

Diabetes drugs that also seem effective for weight loss, such as Ozempic, have been available for for some time, but a recent explosion of news about the products by social media influencers and celebrities, along with major marketing by the companies that make them, have vastly increased their popularity.

Novo Nordisk spent $180.2 million advertising Ozempic in 2022, according to the research firm Vivvix, making it one of the top drug spenders for the entire year. Perhaps not coincidentally, sales of Ozempic and other weight-loss drugs rose more than 320% since 2018, to $2.1 billion in 2022. The list price for popular drugs is around $1,000 to $1,200 for a month's supply – or $12,000-plus per year. Health insurers generally pay less than list price, but how much less is rarely disclosed.

The decision not to cover Ozempic explicitly for weight control stems from a lack of consensus among medical professionals and regulators regarding its efficacy as a standalone weight management drug. Insurance providers typically require strong scientific evidence and regulatory approval before expanding coverage for new indications.

Some critics have suggested that insurance companies may be capitalizing on the hype and fad surrounding Ozempic to mask other underlying motivations for their rate hike proposals. They suggest that insurers might be attempting to bolster their profit margins or compensate for losses in other areas by capitalizing on the drug's recent media attention.

However, most insurers note it’s not only the rising cost of weight loss drugs that are driving expenses. In 2021, prescription drug spending increased by 7.8% to reach $378 billion, and the Centers for Medicare & Medicaid Services (CMS) projects that prescription drug spending will reach $567 billion by 2030. Since 2014, prescription drug prices have risen by 35%, outpacing price increases for any other medical commodity or service, according to Analysource. As of January 2023, drugmakers have hiked prices for about 985 products and for at least

587 brand name drugs, with price increases averaging 5.48%.

“Drug manufacturers continue to increase drug prices year over year,” said a research paper by the Massachusetts Association of Health Plans. “Notably, Humira, the world’s top-selling drug, whose biosimilar competition is anticipated to be launched later this year, generated

more than $20 billion in sales in 2022, and its price will increase by 8%; Eliquis, a blood thinner, will rise by 6%; Imbruvica, a cancer drug, will go up 6.2%; and Stelara, used to treat plaque psoriasis, psoriatic arthritis, and Crohn’s disease, will go up 4%.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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