Raleigh, North Carolina — Cost-cutting efforts by a controversial North Carolina health plan are expected to add tens of millions of dollars more to the state's costs this year.
In October, the board of directors of the North Carolina Health Plan, which serves more than 700,000 state employees, retirees and their families, voted to discontinue coverage for new prescriptions for the weight loss drug Wegoby, citing its high cost. It was resolved.
But with coverage reduction decisions that took effect Jan. 1, the state will also lose rebates offered by pharmacy benefit directors and drug manufacturers, a measure expected to cost the state $54 million. has been done.
Demand for weight loss drugs has skyrocketed in recent years, due in part to a proliferation of advertisements and celebrity testimonials. The state's health plan covered 5,000 prescriptions for the drug at the beginning of 2023, rising to 25,000 by year's end.
“It was approved in 2022, and by 2023 it will be our number one drug,” said interim program director Sam Watts. “It's effective. And there's also the friend and neighbor factor. You hear about it. You see people who have lost weight.”
But the demand for Wegovy was huge, Watts said.
State health plans spent about $1 billion on prescriptions across plans in 2023, Watts said. Weight loss drugs accounted for $100 million, or 10% of the total. This includes a huge rebate of $540 per $1,349 monthly prescription from Wegovy, a 40% savings.
“If we had continued to cover them, we would have had to pay twice the premiums that most members of the state health insurance plan have to pay,” Watts said. “To make this one drug available to everyone in the state's health plan, we would need to add an additional $48.50 per month per unit or per family.”
He said the plan's efforts to negotiate limits on insurance coverage (for example, offering coverage only to people who are dangerously overweight) are a result of efforts by CVS Caremark, which administers pharmacy benefits, and Novo Nordisk, the drug manufacturer. He said he was refused and warned that the plan would be lost. Large rebates will be paid if any measures are taken to curb usage.
Watts said that under Novo Nordisk's agreement with CVS Caremark, restricting access to Novo Nordisk's medicines would result in the loss of health plan discounts.
“All of our proposals to reduce the number of users or focus on those who need it most were rejected,” Watts said. “Each time, the answer was that I would lose my rebate.”
CVS Caremark said prices for weight loss drugs are “totally unsustainable” and that it is negotiating with drug companies on behalf of state health plans to make the drugs more affordable. “We remain confident in our ability to offer a solution to state health plans that offers significant discounts while also providing coverage for weight loss medications,” CVS Caremark spokesperson Philip Brand said in a statement. said.
A Novo Nordisk spokesperson declined to comment.
Watts said the board chose to continue covering the state plan's 25,000 existing Wegovy prescriptions at the end of 2023. But the plan will no longer be eligible for the 40% rebate, so the cost of those prescriptions will increase by about $54 million in 2024.
Watts says it's still better than the alternatives.
“What the board was considering was [projected] Our net spending next year will be $170 million to $190 million,” Watts explained.
If the company had been able to stop applying new prescriptions to Wegovy while maintaining rebates on existing prescriptions, projected annual costs would have fallen from $85 million to $100 million, he said. .
Watts said the loss of the rebate would push revised expected spending on Wegovy in 2024 up to $130 million to $139 million. “But that's less than the $170 million to $190 million we would have otherwise spent.”
“And that's a big part of our frustration with pharmacy benefit managers and manufacturers,” he added.
Watts said some board members have expressed concerns about CVS Caremark's ability to negotiate the best deal for the plan, but there are no plans to terminate its contract with the pharmacy benefits manager. Stated.
Watts also emphasized that the plan will continue to cover diabetes drugs if there is evidence that a patient has diabetes. Some diabetes medications, such as Ozempic, are also known to have weight loss side effects.
