How to Manage Pharmacy Benefit Spend in a GLP-1 World

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Highlights

Bridget Mulvenna, VP of Business Development, shares her insights on controlling GLP-1-related costs based on her 30+ years of experience in the pharmacy industry.
Prior authorization may help with managing GLP-1 spend, especially if they are covered for weight loss.
Discouraging the use of GLP-1s for cosmetic weight loss helps limit unexpected costs.
Implementing coinsurance when GLP-1s are covered for weight loss may help offset plan sponsor costs and aid adherence.

I’m hard-pressed to find a more agonizing quandary for health plan sponsors than the decision to cover glucagon-like peptide-1 (GLP-1) agonists for weight loss for their plan members (and their dependents). I will never forget sitting at the table with a group of physicians, nurses, and finance and human resources leaders in early 2023 to tackle that decision in my previous role as Director of Pharmacy Programs at a large employer; the tension in the room was palpable.

The decision to cover GLP-1s with approved weight loss indications requires careful consideration by plan fiduciaries and will be “personal” for each plan. I won’t delve into the details of the options available in this article, but briefly: Wegovy (semaglutide) and Zepbound (tirzepatide) are approved by the Food and Drug Administration (FDA) for weight loss, and Mounjaro (tirzepatide) and Ozempic (semaglutide) are approved for helping with type 2 diabetes.

Regardless of the option, GLP-1s are relatively expensive, and their approval for weight loss – and cardiovascular risk, more recently for Wegovy - represents an entirely new class of spend, which means the cost of covering them is incremental to whatever a plan’s spend is or was. Additionally, it's concerning to see data showing that GLP-1s may be purchased through illegal online pharmacies and recent news highlighting employers’ and health plans’ attempts to implement measures to avoid waste or unnecessary use of GLP-1s being met with the removal discounts and potential loss of any savings that would otherwise be realized by the plans.

Determining the Cost of Covering GLP-1s

The list of questions debated at the meeting mentioned above included:

Could we afford to allow the continued growth of GLP-1 use for diabetes and add the incalculable cost of covering them for weight loss?
How many of our employees were waiting for the announcement that we would cover for weight loss?
If we chose not to cover GLP-1s, would employees leave the company? If so, how many?
Would we struggle to recruit new employees if we chose not to cover GLP-1s?
What other hidden costs might we be missing?

Clearly, taking action was necessary. Left uncontrolled, the rise in the utilization of GLP-1s would be unsustainable for weight loss, as it was already problematic for diabetes.

Why GLP-1s Deserve Time and Extra Attention

I never worried whether members with marginally high cholesterol should be on a statin in my prior role. Statins are relatively inexpensive, and patients may see them as “free” because the Affordable Care Act (ACA) mandates that the co-pay on most strengths is $0, further driving their widespread utilization. At that time, the top two medications were azithromycin and atorvastatin, and I never once complained about our total spend on them.

Conversely, when I started to see GLP-1 use rise, it caught my attention immediately and forced a deeper dive into the data. The earliest indicator I observed was double-digit year-over-year percentage growth in spending across the entire antidiabetic therapeutic class, which is known to be a high-cost therapeutic category for most pharmacy plans. In early 2022, I recall seeing another shift in utilization from GLP-1s with less weight loss benefit (Victoza, Soliqua, Trulicity, etc.) to Ozempic and Mounjaro, creating a consolidation in usage that – along with other factors – likely led to minor rebate improvement but increased initial costs. Shifts in the utilization of statins do not beg questions about whether their use is for a different indication. I had to ask, “Is the GLP-1 use to manage Type II Diabetes and lower A1C or to enhance the weight loss benefit to the patient?”

Additionally, at least one study shows that patients likely need to be on GLP-1s long-term to sustain weight loss, as the risk of regaining the initial weight loss plus an extra 10-15% in body weight is possible. This added to my concern and begged the question, “What if costs rise initially and stay high or escalate in the future?”

Suggestions to Better Manage GLP-1-Related Expenses:

Leverage Prior Authorization (PA), regardless of indication for use.

Formulary placement of drugs is often a major spend driver, and PBM formularies, which are generally publicly available on PBM websites, include most, if not all, of the current GLP-1s available with indications for Type II Diabetes. More broadly, if PBMs’ PA processes result in higher approval rates for more expensive drugs, which may also have preferred formulary status, the consequence could be meaningfully higher total annual plan spend. In my opinion, PA can be very helpful, and plan sponsors should be actively engaged and aware of the PA process, approval rates, and all available options.

If GLP-1s are allowed for weight loss, consider the potential impact of coverage restrictions.

BMI thresholds, including body measurements and ethnicity, may be helpful, as BMI alone is not an accurate assessment of body composition and is not a marker of obesity for all individuals.

All Type II Diabetics may not need to be on a GLP-1 as the first line of defense; plan sponsors can consider implementing “try and fail” step therapy rules so that less expensive generic medications with a history of reducing A1C are used as the first line option with close patient monitoring, as clinically appropriate. That said, it’s important to be aware that prescribing guidelines for some patients suggest that GLP-1s may be appropriate first-line treatment options. I think it could also be wise to consider titration dosing and shorter days’ supply in these scenarios to reduce potential waste and unnecessary plan spend.

The kinds of measures mentioned here could result in claims being ineligible for rebates, so plan sponsors must assess the potential financial impact on the plan and members and balance that against potential access issues for members.

Engage a third-party care management program provider.

Many service providers in the healthcare ecosystem provide clinician-led, telehealth-based lifestyle and nutrition programs aimed at supporting healthy outcomes for patients throughout their GLP-1 journeys. These providers can help optimize dosing of GLP-1s, potentially enhancing the financial benefit to plans. Some have helped patients maintain a healthy weight after they stop using GLP-1s, but again, the utilization of such programs could have an impact on rebate eligibility.

Limit GLP-1 supply.

Limiting waste is a large concern when managing drug spend. Since GLP-1s fall into a “maintenance” category, it is possible that some plans allow up to a 90-day supply of GLP-1s for diabetic users. When allowing the use of GLP-1s for weight loss, I suggest only allowing up to a 30-day supply. Not only will this limit the plan’s financial exposure, but it also has the potential to eliminate or significantly reduce waste. In my experience, when GLP-1s are prescribed for weight loss, some users are unable to tolerate the side effects before the supply is exhausted. In these instances, it is important that plans have not already paid for excess medication, as there is no opportunity to recoup funds after they have been dispensed and the chain of custody has been broken.

Discourage cosmetic use of GLP-1s.

Most plan sponsors don’t pay for cosmetic procedures or medications unless medically necessary. For context, I am defining cosmetic use as when a patient accesses a GLP-1, in an effort to lose a small amount of weight for the sole purpose of improving their appearance, as this type of use is misaligned with approved FDA indications and clinical guidelines.

The fact that the FDA has historically allowed FDA-approved compounding pharmacies to make the generic version of branded medications during drug shortages is exacerbating the GLP-1 problem. GLP-1 demand has been so high that Ozempic and Mounjaro are on the FDA shortlist and may be “manufactured” by certain FDA-approved compounding pharmacies. This practice has made pharmaceutically compounded semaglutide & tirzepatide injections more accessible to medical spas and plastic surgeons. Even though plan participants pay cash for the compounded products, the potential financial fallout from any adverse side effects or other health issues could certainly hit a plan’s bottom line.

Consider co-insurance instead of copays if covering GLP-1s for weight loss.

When a plan member needs a knee replacement because of overuse or injury, they may be responsible for paying a percentage of the cost of that procedure up to their total out-of-pocket cost for the year. If health plan administrators can implement that rule for medical procedures, then pharmacy benefits administrators can certainly implement a similar process for GLP-1s when used for weight loss.

Readers may recall when curative treatment options for Hepatitis C became available. Plans often paid $60,000 for a course of therapy with no guarantee that the employee would stay with the company. If co-insurances had been in place, the member would have had more at stake financially. That would offset the cost to the plan, potentially mitigating the risk of an employee moving on to another opportunity.

A 20% - 30% coinsurance could be implemented for GLP-1s for weight loss; I believe patients are generally more invested in treatment and compliant when they have skin in the game. They are also less likely to continue a medication that is not working or making them feel worse if they are covering a portion of the cost.

So, What Can Plan Sponsors Conclude About Covering GLP-1s?

Costs associated with GLP-1s don't need to be a runaway train. As someone who has analyzed pharmacy expenditures for the past 20 years, mainly in the Medicare space, it is tempting to default to the thought process that commercial plans shouldn’t pay for GLP-1s for weight loss until Medicare does.

While Medicare does cover GLP-1s for diabetes and heart problems, adopting that logic for the weight loss indication in the commercial space may not be realistic. Rather, it is necessary to engage in a risk versus benefit conversation with members about their overall health and the potential long-term implications of being on any drug, including GLP-1s, regardless of the rationale for use. Plan sponsors and fiduciaries must address this problem to continue supporting the existing use of GLP-1s for diabetic members until it becomes feasible to open use up for all indications.

When considering approval of a GLP-1 specifically for weight loss, I believe member education is crucial. The labels are clear. These medications are meant to be administered in concert with dietary discipline and increased physical activity (i.e., exercise). Members must also understand that to gain access to the medication, they must first meet PA criteria (e.g., physician attestation is required). Having appropriate PA and routine oversight could help prevent some of the adverse events associated with GLP-1 use (gastroparesis and elevated risk of asymptomatic pancreatic cancer are some of the scarier stated adverse effects) before they become a significant health concern.

The bottom line of any recommendation is that there is no “one size fits all” approach to covering GLP-1s for weight loss and diabetes. Each member will have a unique experience with the medication; some may be able to titrate on and off GLP-1s with little issue, for example. There is also no denying that when GLP-1s work to reduce A1C and weight, they have the potential to reverse Type II Diabetes, which can improve outcomes for patients and save plans significant money over time.

Plan sponsors and fiduciaries must challenge themselves to have hard conversations and visit and re-visit this topic in their routine meetings. Whether everyone likes it or not, we live in the GLP-1 world. It is now our job to manage it.