Raleigh, North Carolina — North Carolina health plans will phase out coverage for existing prescriptions of popular weight-loss drugs, including Wegovy, starting April 1.
This was the decision made 4-3 by the program’s management committee at its quarterly meeting on Thursday.
The state health plan covers more than 700,000 state employees, retirees and their family members. Over the past year, Wegovy has become its most expensive drug — costing about 10 cents for every $1 spent on prescription drugs.
Demand for weight-loss drugs, also known as GLP-1 drugs, has surged in recent years, driven in part by a surge in advertising and celebrity recommendations.
At the beginning of 2023, the state health plan covered 5,000 drug prescriptions. By the end of the year, that number had increased fivefold, and program administrator Sam Watts said usage was expected to continue growing exponentially in 2024 unless the program took steps to limit it.
The board voted in October to no longer cover new prescriptions for Wegovy, Saxenda and Zepbound starting this year, but to continue covering prescriptions filled before Jan. 1. Nearly 25,000 members were allowed to retain coverage.
But the decision to cut future prescription coverage resulted in the state losing a 40% rebate provided by Novo Nordisk, the maker of Wegovy and Saxenda, through a contract with CVS/Caremark, the plan’s pharmacy benefit manager. The contract states that if the program limits use in any way, it will not be eligible for rebates.
Losing the rebate means state health plans will have to pay the full price ($139 million) in 2024 instead of paying the $85 million in grandfathered prescription drug costs. The difference is $54 million.
“But it’s less than the $170 million we would have spent” if they had continued to cover new prescriptions, said Sam Watts, the state health plan administrator.
Watts predicts that each plan member will pay a hefty surcharge of about $48.50 per month, regardless of whether they use the drugs.
During the public comment period, a government employee asked the board not to phase out coverage. Maghae Ray says she has two chronic conditions that get worse if she gains weight, and Wegovy is the only thing that helps her control her weight.
Watts placed the blame on Novo Nordisk. He said they had tried to negotiate to limit coverage to those who needed it most or to tighten requirements for prior authorization of drugs, but Novo Nordisk refused to allow the plan to keep its rebates without imposing any restrictions.
With the rebate, the state can pay Wegovy $800 a month. Without rebates, it would cost $1,350.
“Either we have to provide coverage to everyone without restrictions, or we simply can’t afford it,” Watts said.
Board member Wayne Fish likened it to extortion. “‘If you don’t do this, we won’t offer a discount on your existing prescription,'” he said. “It was like being held at gunpoint in a back alley.”
“These are tough decisions,” Fish added. “I never like the idea of cutting someone off suddenly, but again, where will this program be in a few years if we don’t take action?”
State health plans are among Novo Nordisk’s larger customers in North America. The company said Thursday that politics and bureaucracy should not get in the way of health care.
“It would be irresponsible to deny coverage to patients for an important and effective FDA-approved obesity treatment,” a Novo Nordisk spokesperson said in an emailed statement. “…We support efforts based on the recommendations of patients and their physicians. decisions, to obtain appropriate treatments for chronic conditions. We do not support insurance companies or bureaucrats inserting their judgment into these medically driven decisions, which can adversely affect patients’ health.
“We urge Treasurer Dale R. Folwell and [North Carolina State Health Plan] Reconsider this decision and put patients first. “
Board member Pete Robie noted that Wegovy’s costs in the United States are nearly four times what they cost in Europe. “What’s the real price we’re paying?” Robbie said. “Stock options? Dividends?”
“I agree that what Novo Nordisk and CVS/Caremark did was unreasonable, but I don’t think state employees should pay the price,” said board member Melanie Bush.
Bush argued that the plan should maintain coverage of existing prescriptions while negotiations continue. “This is a life-saving drug and we’re talking about denying it.”
Board member Rusty Dukes proposed ending all coverage on April 1, even for previously covered prescription drugs. “This will make [Novo Nordisk] Know that we mean it,” Duke said. “Has anything changed since October? there is nothing. “
Board members agreed to reconsider the vote if Novo Nordisk and CVS/Caremark reach a compromise.
Caremark spokesman Phil Blando said CVS Caremark’s first priority is negotiating the lowest cost for weight-loss drugs based on state health plan coverage options.
“We have been negotiating with drug manufacturers, including Novo Nordisk and Eli Lilly, for months,” he said in a statement. “Drug manufacturers need to stop stalling and agree to a fair price for North America. Carolina’s public servants provide medicine.”
Brando said he believed drug manufacturers could choose to lower the cost of diet pills and provide relief to state health programs.
“We pass 100 percent of any rebates offered by manufacturers to North Carolina Health Plans,” Brando said. “Our customers receive manufacturer rebates when coverage for a drug meets certain terms and conditions, including inclusion on a formulary.
“CVS Caremark will not be able to collect rebates from its customers if the terms and conditions are not met,” he said.
Watts said talks with Novo Nordisk and PBMs are continuing.
“We’ve seen some progress, but not enough movement to say, ‘Yes, we have a solution,'” he said.