Colorado plans to limit coverage of weight-loss drugs like Wegovy for state employees to save $17M

Colorado plans to start limiting insurance coverage of prescription weight-loss drugs for its roughly 40,000 state employees, a cost-cutting measure in a difficult budget year that officials say will save nearly $17 million annually.

The state employees' health insurance plan began covering the cost of Glucagon-like peptide-1 medications, known as GLP-1 drugs, in September 2022. Those include injectable medications like Wegovy and Ozempic.

Thousands of state employees are prescribed the drugs, according to Colorado WINS, the state employees union.

Under the change, the state would cover the cost of GLP-1 medications only for the treatment of Type 2 diabetes, cardiovascular disease and obstructive sleep apnea. Those who take the drugs to combat obesity and stave off diabetes and other health conditions would have to pay for the medications out of their own pocket at a cost of more than $1,000 a month.

The change would take effect July 1.

The Colorado Department of Personnel & Administration says the cost of providing the GLP-1 benefit has grown exponentially. From July 2023 through December 2023, the cost was $1.5 million. That jumped to $4 million in the six months that followed, and then to $7 million from July through December 2024.

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"The number of GLP-1 prescriptions covered by the state of Colorado has caused costs to double every six months," said Doug Platt, a spokesman for the administration. "In a difficult budget environment, tough decisions must be made by the legislature to deliver a balanced budget and protect critical funding for the issues Coloradans care about most."

GLP-1 medications decrease the appetite of people who take them and slow their digestion. However those who stop taking the drugs often see the benefits reverse.

Since 2017, Ozempic and Rybelsus have been approved for diabetes treatment. In June 2021, Wegovy was approved for weight loss. All three drugs have become wildly popular and are produced by the pharmaceutical company Novo Nordisk.

Hilary Glasgow, executive director of Colorado WINS, said data provided to her by the state shows 3,422 state employees were on Wegovy last year, while about 2,000 were on Ozempic. Another 1,100 state employees were on Zepbound, another injectible GLP-1 made by Lilly. (Mounjaro is the version of Zepbound used to treat people who already have diabetes.)

DPA said the total number of state employees who have a GLP-1 prescription for obesity only was 854 as of July 2024. The average state-cost per prescription was just under $1,300.

Lawmakers are looking to trim nearly $1 billion in spending in the next fiscal year to combat rising Medicaid costs, the end of federal pandemic aid and a state Taxpayer's Bill of Rights cap that isn't growing as much because inflation has slowed. The legislature's Joint Budget Committee has asked state agencies in Gov. Jared Polis' administration to cut their spending wherever possible.

At least one state lawmaker says the DPA should look to cut its budget elsewhere.

"I've personally begged the governor's office to not implement this policy switch," said state Sen. Dafna Michaelson Jenet, a Commerce City Democrat who uses her insurance coverage as a state employee to get GLP-1 medications to treat obesity.

Michaelson Jenet says she was prediabetic before she started receiving GLP-1 treatment. The medication, for which she has a $30 per month copay, has helped her lose 50 pounds. She says her health has stabilized as a result.

If the state employees' health insurance plan stops covering GLP-1s, Michaelson Jenet says she will have to pay about $1,400 per month to continue her treatment.

"We are going to be thrown back into a health state that is dangerous and expensive to care for," she said of herself and other state employees who stand to lose the benefit. "It's just so maddening that we have this medicine that solves a problem and we're saying it's not an important enough problem to solve. I am healthy and this is going to throw me right back into diabetes."

Michaelson Jenet introduced a bill last year that would have required private health insurance companies and Medicaid to cover GLP-1s. Nonpartisan legislative analysts estimated that the measure would have cost the state $86 million in its first year and at least $200 million in subsequent years. The Colorado Division of Insurance said it would add a few dollars a month to the cost of private health insurance per person, costing consumers a collective amount of tens of millions of dollars per year.

The 2024 legislation failed in the House Appropriations Committee.

Michaelson Jenet said those added costs may sound like a lot, but they doesn't take into consideration the savings from preventing people from becoming diabetic and suffering other health issues from being obese.

She has introduced a similar bill this year, but it faces steep odds given the legislature's budget crunch.

"I'm pessimistic about it," she said of her 2025 measure. "However, with the DPA cutting the medication for state employees, I believe legislators are going to begin hearing en masse from their community that the state is making them sicker."

Glasgow said Colorado WINS didn't learn about the state's plans to change who can get GLP-1 treatment until a few days ago.

"We just found this information out recently," she said. "I assume that if the doctors are prescribing this for people that they are supposed to be on it and they will be upset if the state stops covering it. The members I've been talking to are upset about it."

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Glasgow said the Polis administration has agreed to talk through a solution.

DPA says a final decision on the policy change will be made through the legislature's budgeting process.

Colorado is not the first state to grapple with the cost of covering GLP-1 medications.

The state employee health insurance plans in West Virginia and North Carolina, two places with high obesity rates, covered the drugs before reversing course because of the financial burden.

Illinois began covering the cost of GLP-1 treatment for state employees in July at an estimated first-year cost of $210 million.