GLP-1 Drug Costs Strain Budgets, Drive Insurance Premium Increases

The popularity of pricey GLP-1 drugs has hit the budgets of users and is driving up health insurance costs across the board. About 30 percent of health insurance premium increases this year are attributed to GLP-1 drug costs, according to a health care policy researcher at Harvard Medical School.

In the U.S., about 12 percent of adults say they're already on GLP-1 drugs. Worldwide, more than 25 percent of adults could benefit from the weight-loss treatment, according to new research from Mass General Brigham.

The Trump administration in November announced new deals to lower the cost of the notoriously pricey drugs to a $50 monthly copay for people who rely on Medicare for health insurance. But costs vary widely, causing some states to end coverage or restrict who qualifies for them under Medicaid plans. The newly launched TrumpRX platform offers some GLP-1 discounts aimed at those who lack insurance or would pay more under their coverage.

A consumer advocacy group has petitioned the Trump administration to use a federal law to authorize generic competitors for GLP-1 drugs for treating obesity and diabetes, arguing that prices are "unjustifiably high" for too many Americans. Public Citizen maintained that federal and state spending on the drugs, which are sold by Novo Nordisk and Eli Lilly, has strained budgets. The group argued that concessions granted in recent deals with the Trump administration to make the drugs more readily available through Medicare and Medicaid are "insufficient" to widen access.

Although the proposed coverage expansion for the health care programs and a $50 per month copay for Medicare beneficiaries may improve access for some, others may not benefit. That's because some Medicare and Medicaid plans may choose not to participate if prices for the drugs present budgetary concerns due to increased use, the petition stated.

The drugs are expensive in part because they're effective, and patients value what they offer. But they're also patent-protected, so generic drug manufacturers can't produce these compounds for another few years. The companies that make these products are effectively monopolists. There is some competition, because there are a handful of these molecules that can be used for weight loss. And the price has come down quite a bit, even in the last few years. A recently approved Wegovy pill will cost $150 a month for patients without insurance.

What a patient ends up paying for these drugs depends on the type of coverage they have. Medicaid has very low out-of-pocket costs and covers virtually all drugs, but only a few states cover anti-obesity medications. Even patients in one of those states that do face substantial access restrictions. A Medicaid patient would need access to a physician who can write a prescription, and to go through administrative hurdles like prior authorization. Medicare Part D, which is the part that covers prescription drugs, does not cover drugs that treat obesity, though that may be changing under the Trump administration's recent deals with manufacturers.

Employer-sponsored plans tend to be more generous when it comes to coverage, but they also require more cost-sharing and, again, administrative hurdles like prior authorization. Out-of-pocket payers can access these drugs through the direct-to-consumer, telehealth services that are popping up online, which offer prescriptions at around $100 or $200 per month these days.

The situation is pretty much unprecedented, especially when talking about one in four adults being eligible for these drugs under the widest standards. The only comparison is statins, commonly prescribed to lower cholesterol. A similar share of adults is eligible for those drugs, but much cheaper generics are available, and when they first came out, they weren't nearly as widely prescribed.

The drugs are heavily rationed, and it's part of why the fully out-of-pocket, direct-to-consumer channel is so popular: because a lot of patients can't get the drug reimbursed through their insurance. From the insurers' perspectives, the solution is clear: Raise the cost of coverage, or at least the cost of insurance plans that cover these drugs.