US employers hire virtual providers as weight-loss drug gatekeepers

[December 13, 2023]  By Patrick Wingrove

(Reuters) - U.S. employers facing surging costs from paying for Novo Nordisk’s Wegovy and similar obesity drugs are hiring virtual healthcare providers like Teladoc to implement weight-loss management programs, a dozen consultants, pharmacy benefit managers, analysts, and providers told Reuters.

These programs may require diet and exercise before granting access to the medicines, and in some cases will become employees' sole covered option for medications like Wegovy and Eli Lilly’s rival therapy Zepbound, which have list prices of more than $1,000 a month.

They could help companies cut costs by limiting employees to small networks of less expensive providers or by delaying prescriptions with lifestyle change mandates, one of the benefits consultants said.

Another consultant touted the benefits of such programs, saying diet and exercise regimens could lead to long-term improvements in patient health.

“Many (employers) were skeptical about the cost of these drugs at the beginning of the year, but that mindset has shifted. Employers and health plans are now increasingly more willing to cover them, with the right programs in place,” Teladoc executive Ananth Balasubramanian said in an interview.
 

More than a quarter of 152 employers surveyed by the Business Group on Health said they would use virtual providers to oversee obesity drug prescriptions next year.

Boeing, Hilton, and Fortune Brands are among companies that have signed up for or expanded deals with virtual healthcare providers, according to sources familiar with the matter.

Truist analyst Jailendra Singh forecast the market for virtual obesity drug management could reach $700 million in 2024 and grow to as much as $9 billion longer term, assuming providers charge around $30 per member, per month, and $50 for physician appointments.

Reuters reported in June that the popularity of obesity medicines had U.S. employers rethinking insurance coverage, but most only required special authorization or had stopped covering diabetes drugs off-label for weight loss.

Healthcare benefits consultant Aon outlined ideas to manage use of these GLP-1 drugs through "step therapy" and narrow networks or "centers of excellence" in August in a 10-page document for corporate clients.

It suggested at least one to three months of lifestyle changes through programs from telehealth companies or pharmacy benefit managers (PBMs) before patients are prescribed the medicines, which would help them adopt long-term approaches to healthier nutrition and exercise and give them coaching and other support.

Wegovy and Zepbound belong to a class of drugs called GLP-1s developed for type 2 diabetes that reduce food cravings and cause the stomach to empty more slowly. They have been shown to reduce weight by an average of 15% and 20%, respectively in clinical trials.

American Medical Association President Jesse Ehrenfeld said selecting telehealth providers with no in-person care inappropriately steers patients away from their current physicians, threatening continuity of care.

An office building with Aon logo is seen in the Central Business District of Sydney, Australia, June 3, 2020. Picture taken June 3, 2020. REUTERS/Loren Elliott/File Photo

“Telehealth should be a supplement to, not a replacement for, in-person provider networks," he said.

DIET AND EXERCISE

Step therapy, which first requires completion of a diet and exercise program and may limit the duration of the medicine's use, is the main service employers are seeking, according to three virtual healthcare providers.

Blue Cross Blue Shield of Michigan, a health insurer with more than 5 million members, said next year it will offer employer clients an option for patients to sign up for Teladoc’s weight management program that involves six months of diet and exercise before patients can get Wegovy or Zepbound.

They must continue the diet and exercise requirement in order to keep being prescribed the drugs.

Companies are also starting "centers of excellence" for weight loss that would limit who could prescribe the drugs.

Such specialized programs set up to even out service quality and save money on high cost-procedures like knee replacements are already common in fields like cardiology and bariatric surgery but are rarely administered virtually.

Richard Frank, an executive at virtual provider Vida Health, said his company planned to manage a weight-loss center of excellence for at least one of its clients next year. He said Vida will help improve patients' quality of life by getting them to focus on more than just weight loss.

Its step-therapy program wasn’t created to introduce hurdles, but to get patients the right care at the right time, he said.

Capital RX, a PBM with more than 200 clients covering around 2.4 million people, said about 20% of its clients were interested in centers of excellence for obesity.

BMO analyst Evan Seigerman said the market for GLP-1 obesity drugs will be supply driven next year and “roadblocks” like these are unlikely to impact Novo or Lilly sales.

Both Wegovy and Zepbound U.S. approvals included language that they should be used along with diet and exercise changes.

By using weight loss programs, employers could spread the cost of a drug or avoid paying for it entirely, said Jeff Levin Scherz at benefits consultant Willis Towers Watson.

“They will delay eligibility, and by the time people are eligible, they might no longer be on the plan,” he said.

(Reporting by Patrick Wingrove in New York; editing by Caroline Humer and Bill Berkrot)

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