State treasurer balks at State Health Plan coverage of weight loss drugs

The increasingly high cost of certain popular weight-loss drugs, such as Wegovy and Saxenda, has prompted state Treasurer Dale Folwell to urge the State Health Plan to end insurance coverage.

The SHP is North Carolina's largest purchaser of medical and pharmaceutical services and is self-funded.

It covers nearly 740,000 teachers, state employees, legislators, retirees and their dependents. The state treasurer's office oversees the plan.

Folwell said in a statement Tuesday his recommendation to the SHP board of trustees is based on how global pharmaceutical manufacturer Novo Nordisk is pricing its weight-loss drugs in the U.S. compared with other countries.

The weight-loss medications are being currently used by more than 23,000 SHP members with a net cost of more than $800 per member per month.

"It defies logic that Novo Nordisk can sell the exact same product in the Netherlands for $296 per month and in the United States for more than $800 per month," Folwell said.

"They should be investigated by the Federal Trade Commission for unfair and deceptive business practices."

Wegovy, which contains the active ingredient semaglutide, is specifically approved for chronic weight management.

Semaglutide imitates a hormone called glucagon-like peptide-1 (GLP-1), which prompts the body to produce more insulin and makes a person feel satiated, according to an Oct. 16 article in Scientific American.

The ingredient has been shown to help people lose an average of about 15% of their weight.

According to the treasurer's office, the SHP spent $52.3 million on these two medications during the first half of 2022, accounting for 2.6% of the manufacturer's entire North American profits on these products.

SHP spending on the two medications is projected to exceed $170 million in 2024, jumping to more than $1 billion over the next six years.

Folwell's recommendation comes as the SHP faces a $4.2 billion budget gap over the next five years.

The Republican sponsored 2023-24 state budget provides $240 million less to the SHP than was requested over the next two years.

Under Folwell's direction, the SHP has attempted to remain financially solvent by capping or reducing its costs as much as possible, and by implementing strategic initiatives that seek to maintain or lower dependent premiums to attract younger members and families.

Novo Nordisk recently reported a 32% increase in global operating profit for the first half of fiscal 2023.

Novo Nordisk said Wegovy sales in North America increased by 344% during that period, while Saxenda increased by 27%. Total North American sales for both products were reported as $2.02 billion.

SHP staff estimates that continuing to cover this class of drugs for weight loss will result in a premium increase of $48.50 per subscriber per month — doubling the premium for individual subscribers.

"We are not questioning the efficacy of the drugs, but we simply can't afford these medications at the manufacturer's current price point," Folwell said.

"It's price gouging. We just want to pay the same price that Novo Nordisk charges its customers in their home region."

According to the Scientific American article, most private insurance companies and federal health programs don't cover weight-loss drugs, and Ozempic, Wegovy and Mounjaro each cost $1,000 or more per month out of pocket.

Medicare has been explicitly forbidden by law from providing coverage for weight-loss treatments since 2003.

The ban was implemented in part because of concerns over the safety of weight-loss drugs at the time, such as the combination of fenfluramine and phentermine, or fen-phen, which was associated with life-threatening hypertension and heart valve issues.

There are other potential side effects with semaglutide medications that include nausea, fatigue, lightheadedness, decreased muscle mass and chronic paralysis of the digestive system.