Latest / CareTalk: Healthcare. Unfiltered. / The Cost Crisis of Weight Loss Drugs

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The Cost Crisis of Weight Loss Drugs · CareTalk: Healthcare. Unfiltered.

• 0:00
  GLP-1 drugs like Wigovia and Zep-Bound for weight loss are all the rage, promising life-changing results.
• 0:06
  But at $1,000 or $2,000 a month or more, who can actually afford them?
• 0:12
  For some, insurance foots the bill.
• 0:13
  But why for them and not others?
• 0:15
  What's driving these coverage decisions?
• 0:17
  And what does the future hold?
• 0:24
  Welcome to Care Talk, America's home for incisive debate about health care business and policy.
• 0:29
  I'm David Williams, president of Health Business Group.
• 0:32
  And I'm John Driscoll, the chairman of Waystar.
• 0:35
  John, for some people, wrapping up in a blanket with a mug of hot chocolate or watching a sporting event with family is the best way to spend the month of December.
• 0:43
  But for others, it's making a list for Santa or making a snow angel, weather permitting.
• 0:48
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• 0:56
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• 1:16
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• 1:25
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• 1:28
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• 1:33
  That's betterhelp, h-e-l-p dot com slash care talk.
• 1:38
  Well, John, welcome to December.
• 1:39
  Well, Dave, I was with you on the BetterHelp stuff and it's really an important, you know, access point for getting low cost, wide availability help.
• 1:49
  But man, I'm not buying you on the snow angel.
• 1:52
  I just, that's just too hard an image for me to kind of survive.
• 1:56
  That that narrative but yeah, welcome welcome to our weird December saw that Bill's game in a blizzard.
• 2:03
  It sounds like blizzard conditions are coming And it's also a season from Thanksgiving to Christmas and Hanukkah where there starts to be a little bit of overeating and at a time when obesity and overweight America has gone according to The peculiar choice of Bobby Kennedy from like 10 % of the American population to 60 % of the population You know, the topic of weight loss drugs is, if not on people's minds before the holidays, is likely to be on it after the holidays, particularly with the new administration.
• 2:35
  So what about all these GLP-1 semi-glutide, Wigoby's, Zep-bound, happy, smiling, overweight people dancing on television?
• 2:44
  Like, where are we going here?
• 2:45
  Well, they've become extremely popular.
• 2:47
  I remember when I first heard about it and I heard people were paying $1,000 a month or more.
• 2:51
  thinking no one's going to use that, but sure enough, they are.
• 2:54
  And John, I thought we could talk a little bit about the state of insurance coverage for these drugs.
• 3:00
  This is so important.
• 3:01
  I guess you gave me another thought though, which is maybe if you put it on your list for Santa Claus, you can pop at least a few into the stocking.
• 3:08
  I can't afford that, David.
• 3:10
  We don't get paid enough here at Care Talk.
• 3:11
  We ought to talk to Vincent about that.
• 3:13
  Yeah, I mean, I would say that I really hope there is a Santa Claus so that it could bring these along.
• 3:20
  But John, it is around.
• 3:21
  David, before you go there, do you want to just Tell people a little bit of a background on obesity drugs, GFP1s and semi-glutide.
• 3:28
  You can skip most of the science, but I think explaining what these drugs are would contextualize the coverage question.
• 3:36
  John, everybody has wanted to have a magic pill for weight loss, and the history of these are riddled with real problems.
• 3:44
  Amphetamines, phen-phen, a lot of things that have ended quite badly.
• 3:49
  What's happened here is a little bit different, which is that...
• 3:52
  some drugs that had been prescribed for diabetes, which many people have, had been shown not just to control diabetes, but actually people had a significant weight loss as part of it.
• 4:02
  And so that gave the drug manufacturers the idea to actually put these products on the market for weight loss, which most people want.
• 4:09
  So they renamed them, reformulated them a bit, did some new studies and showed, hey, these drugs have really significant weight loss as a starting point.
• 4:19
  And then what people are also excited about is that it may lead to some other improvements in metabolic conditions like diabetes and heart disease and possibly even beyond that.
• 4:31
  So we're sort of in the wonder drug phase here of weight loss, even though people sort of vowed, hey, we won't go down that road again with a miracle pill.
• 4:39
  We won't expect that to work.
• 4:40
  Well, I think you make a really important point about the fact that, again, contextualizing...
• 4:47
  The need to reduce obesity or people who are overweight or particularly morbidly overweight is really important because one of the most damaging, dangerous and fastest growing diseases in America is diabetes.
• 4:59
  And a lot of obesity predisposes you because you lose control of managing your insulin, but then leads to diabetes, which is a devastating disease and one that's rapidly growing in...
• 5:11
  not just in the United States, but in every developed country as people have moved from more traditional diets to overeating, to eating the wrong stuff.
• 5:19
  That has led to a strong desire to create drugs that could somehow interfere in that process.
• 5:26
  And amphetamines, which were popular, but quite dangerous and addictive, to fenphen, which was just dangerous and effective, there've been a lot of failed attempts at doing this.
• 5:35
  And so the development of the GLP ones that...
• 5:39
  Semi-glutide is the active ingredient that's used, have a couple of impacts that appear to be safe because there's wide use and very modest, if any, symptoms of it reduces the desire to eat.
• 5:57
  It reduces cravings potentially around things like alcohol.
• 6:01
  And it appears to have an impact on not just the gut to slow down the processing so you feel like you're full, but also on the brain.
• 6:10
  And we're just, like most drugs, as they start to scale in phase four, which is when they are actually in the field with humans using them, only now really understanding the full impact of these drugs.
• 6:23
  But they are super popular for the off-label use, the use that's not prescribed for weight loss.
• 6:30
  In fact, the highest concentration of these drugs appears to be in the Upper East Side of the New York City, which is the richest part of the country.
• 6:37
  when they're really, the primary indication is for diabetes to kind of reduce that overeating and that obesity that then could make the burden of carrying that disease and kind of managing your life much more easy.
• 6:51
  And just to be clear, these drugs have exploded in popularity across the US, which is why the question around coverage decisions, it becomes really important.
• 7:02
  we should get into that and kind of why coverage and the idiosyncrasies and inconsistencies there are really kind of intriguing.
• 7:10
  Yeah, it's interesting.
• 7:11
  know, of course people were using these products, you know, off label, as you say, it wasn't their indication for, they were using them supposed to be for diabetes used for weight loss.
• 7:21
  Now they have the indication for weight loss and it's just almost everybody, you know, most people in the country probably could qualify in one way or the other.
• 7:28
  And it's so difficult to lose weight.
• 7:31
  So this becomes a real conundrum for insurance companies, which they know it's probably as good for health long term, but their own payoff may not be there because you're going to spend a lot of money in the near term, but it doesn't mean that that health benefit and that lower cost will come out in the near term.
• 7:49
  So there's a real kind of a back and forth.
• 7:51
  And some of these things are not just a black and white, is it covered or it isn't, but there are some restrictions that would put in place things like for prior authorization.
• 7:58
  So for example, you some plans cover these drugs for weight loss, but then they say you have to get prior authorization and it's based on your body mass index.
• 8:07
  So, you know, just how obese are you, but also things like your prior weight loss attempts, like you have to prove that you've tried and failed something else.
• 8:15
  And then also there might be a requirement for an in-person provider relationship.
• 8:19
  So even though you and I are very much in favor of telehealth, they're also in a way trying to keep down the use of, know, physicians or that it just were nurse practitioners who were just Prescribing this drug and that's their whole practice as opposed in the context of a broader relationship Yeah, I think the context here is these drugs are growing so fast.
• 8:40
  I think that they were 47 billion dollars of of Revenues or market, you know in the market in 2024 by 2032 They're potentially gonna if the prices stay at the ridiculously high levels that they're at if that's gonna be 470 billion And so what insurers are worried about is not just the health of their covered lives, but first the cost of those covered lives so they don't go out of business.
• 9:09
  So hence all of the restrictions.
• 9:12
  The other side of that, Dave, is that obesity, morbid obesity and diabetes are one of the fastest growing and most dangerous.
• 9:21
  The cardiometabolic thing is how it's described, leads to heart disease.
• 9:27
  It leads to cancer.
• 9:29
  It leads to very high cost of care and just miserable lives.
• 9:32
  And if this wonder drug, this category of drugs could really stop that, that's pretty amazing.
• 9:42
  And so I guess, Dave, if you're running an insurance company, you know, like the brilliant, you know, Scrooge-like businessman that you are, put yourself in that mindset.
• 9:54
  How do you start to think about the decisions, but not just what to cover, but where to cover it for what populations, because that starts to get into the weird idiosyncrasies of coverage.
• 10:06
  Well, John, of course, if I just put on my Scrooge hat, which I didn't bring with me, which I should have, of course, deny, deny, deny.
• 10:14
  It's interesting, know, deny, delay, defer, all the Ds.
• 10:19
  It's good to see what's actually happening.
• 10:21
  It gives you some evidence.
• 10:22
  So one thing that's interesting is if you look at the employer insurance market, and you look at those companies that are self-insured versus those that are fully insured, there is a difference.
• 10:33
  So the self-insured ones tend to be companies where there's a longer employee tenure.
• 10:39
  So employees tend to be there for a longer time.
• 10:41
  There's more of an opportunity to recover the cost.
• 10:44
  The finances might actually add up for them.
• 10:46
  And so we see that actually self-insured plans are more likely than the fully insured plans to offer coverage.
• 10:54
  And then they're both more likely than in the individual market.
• 10:57
  The individual market is one where the plans worry about what they call adverse selection.
• 11:02
  And I saw an article that actually compared this to what happened with HIV drugs.
• 11:07
  So the insurers might be required to cover HIV drugs, but they could put them, you know, make it more or less attractive, have it in a more expensive formulary tier, et cetera.
• 11:18
  They're doing something similar.
• 11:20
  Do you want to just explain what adverse from the insurer?
• 11:24
  do you Ebenezer Scrooge?
• 11:28
  Why do you care?
• 11:29
  What does adverse selection mean and why do you care?
• 11:32
  So adverse selection means that you're attracting patients to your plan that you don't want.
• 11:40
  And the main reason you don't want them is because they're going to be very expensive.
• 11:44
  And so you could see why an HIV patient would be very expensive.
• 11:48
  They're sick.
• 11:49
  They require expensive medication.
• 11:52
  So all else being equal, if you're a Scrooge-like insurer, you don't want them in the plan.
• 11:56
  It's a little bit less like that with the weight loss drugs, but still sort of the same idea.
• 12:01
  Hey, people who want weight loss drugs, it's going to cost me more to cover the drug, but also they're probably going to be sicker.
• 12:07
  There are supposed to be mechanisms in place, John, that actually balance this out so that you're not encouraged to do adverse selection because you get a higher payment if people are sicker.
• 12:17
  But the sense is the risk adjustment doesn't fully cover this.
• 12:21
  And so you see quite unusual to have coverage for these weight loss drugs in the market.
• 12:27
  Well, and I think it's actually even harder when you're dealing with a new drug.
• 12:32
  like that was the case of HIV drugs.
• 12:35
  when, just to contextualize what you're saying, is if you make, if you, if I as Ebenezer Scrooge don't...
• 12:43
  put the most expensive drugs for people who've got HIV and AIDS in the highest tier, you by putting it in highest tier, the most expensive drug, I'm gonna draw more HIV patients to my insurance company versus yours.
• 12:59
  And so often early on, while it's unfair for a lot of the sickest people, insurance companies will defensively try to tier the cost, tier meaning increase the cost for some of these expensive drugs as a defensive mechanism so they don't feel like they're gonna be, that their costs will not be above average.
• 13:20
  Having said that, the way that these drugs are being handled is kind of weird because we know that in general, with millions of people taking them, they're leading to 15 to 20 % weight loss.
• 13:34
  We're seeing in clinical trials, very strong positive reduction of cardiac risk factors.
• 13:41
  Heart attack, know, heart attacks and cancer are still the most likely way you're going to get killed in America as an adult.
• 13:46
  You die in America that are preventable, that are potentially preventable and manageable.
• 13:51
  And they're pretty, you know, unlike a lot of drugs, they're apparently pretty easily, pretty well tolerated by most of the people who take them, which is I think why it's leading to this disagreement, which is not uncommon for new drugs or new procedures that are expensive.
• 14:09
  But let's, let's perhaps.
• 14:11
  delve into some of those inconsistencies in coverage, Dave, because it is peculiar looking at it from the outside.
• 14:18
  John, one way, I have to go back to what you talked about, adverse selection.
• 14:23
  And my favorite story is actually one you told me years ago.
• 14:26
  And I'm not saying you were involved in this or not, but back in the early days of Medicare, HMOs, a good way to make sure you got the healthiest patients was to put the enrollment office on the fourth floor of a building that had no elevator.
• 14:40
  That was literally well before I got into the business of Medicare managed care.
• 14:44
  That's exactly what folks did.
• 14:46
  They would require the older enrollees to see if they could go up the three or four stairways until that was literally outlawed.
• 14:53
  Yeah.
• 14:54
  So anyway, so I like that story.
• 14:55
  A good way to look at the different perspectives on this, John, is to see the decisions that have been made.
• 15:00
  I think it was Robert Wood Johnson Foundation has coverage.
• 15:04
  They have a coverage map where you can look at the different coverages for the weight loss drugs.
• 15:08
  And if you look at Medicaid, so Medicaid is a program for low income people who tend to be sicker.
• 15:16
  If you look at where Medicaid benefits are most generous, they're usually in the more liberal states like Massachusetts, New York, Connecticut, et cetera.
• 15:26
  And that is roughly the case here.
• 15:28
  So there's 14 states that cover weight loss drugs as part of Medicaid.
• 15:32
  And it's those blue states I mentioned, but it's also Mississippi, right?
• 15:37
  Which is not a liberal state.
• 15:38
  But it's one where that burden of obesity on the health care system is so apparent that they say, you know what, this is not a decision about liberal or not.
• 15:49
  It's a dollars and cents.
• 15:50
  I think we're going to get our payoff soon if we cover obesity treatment.
• 15:54
  Yeah, I think I think the way to think about this is.
• 16:00
  Whenever there's a new drug or a new procedure, insurers are all over the place.
• 16:05
  I've never seen so many positive results so quickly around a drug, Weight loss has been the uncrackable problem while it's growing for the entire population.
• 16:17
  Diabetes is the most expensive condition for the country.
• 16:21
  And anyone who's going to have an employee for more than a few years is going to run into this situation where they're The long-term costs of avoiding prevention for things that you should invest in upfront That often that historically a lot of health insurers were willing to pay for Is going to cost you in the long run and so what you're seeing is Private employers are starting the self-insured those employers that actually pay their own effectively self-insured by paying for their own employees coverage are starting to actually cover this because they would typically keep an employee for or three years or more.
• 17:00
  What you're finding in the fully insured or not insured market is that people are the insurers are not covering at it as consistently if at all.
• 17:12
  But I think that the underlying there's a lot of noise around coverage when really the fundamental problem here Dave is these costs these drugs cost too damn much.
• 17:22
  Do you want to talk about how ridiculously expensive these drugs are?
• 17:27
  and the whole compounding piece before we then get into the coverage, because I think that cost is going to be completely, is really what's driving some of these conservative and somewhat idiosyncratic coverage decisions.
• 17:39
  Well, John, I knew you were a fanboy for these drugs, but I didn't know to what exactly extent.
• 17:44
  I've never heard you...
• 17:45
  I'm a fanboy of making them cheaper.
• 17:47
  Yeah, okay.
• 17:48
  But nonetheless, so yeah, so in terms of the compounding piece, so the drugs are expensive, but they're made from...
• 17:57
  They're made from well-known chemicals that are pretty standard and easy to make.
• 18:03
  And so there's a huge opportunity, especially when there's been a shortage of product on the market, for people to rush in and fill the void with something that's cheaper and perhaps equivalent, because it should be.
• 18:17
  And so you've got a lot of sites that are selling these medications, and they're compounding them.
• 18:21
  So they're mixing them up themselves.
• 18:23
  And they've been allowed to do that when there's a drug shortage.
• 18:26
  Now it's a bit of a gray area.
• 18:28
  If the FDA says that shortage isn't there.
• 18:30
  And so you see sort of the push and the pull.
• 18:33
  But there's a big market of people that are not authorized.
• 18:37
  Now of course, you see the drug companies going after those folks in any way they can.
• 18:43
  Suing them, trying to say that it's actually these drugs are too complicated for compounders and they're using our brand name or marketing or whatever.
• 18:53
  But yeah, John, they're trying to get paid based on the value that you're describing.
• 18:57
  I mean, just to contextualize this, these drugs can cost $1,000 or more cash cost.
• 19:03
  And obviously, pharma has its normal ridiculous margins, but these are very low costs to build and compound.
• 19:09
  And there are direct to consumer sites that can make a lot of money selling them for $100 a month.
• 19:16
  So it's literally a 10x difference.
• 19:18
  And what the FDA has done, the...
• 19:22
  companies initially talked about their own limits and shortages because the demand is through the roof and the demand is through the roof not so much because of the insured markets but because of the cash market.
• 19:33
  And so the FDA responded by allowing the compounders, compounders, the way to think about compounding is just smaller batch manufacturing, more like generic manufacturing.
• 19:45
  And those companies are thriving.
• 19:46
  As far as I can tell, there don't appear to be at least reported quality or quality concerns at all.
• 19:55
  And so of course now that the big pharma guys who are the Novos and the Lilies, mean, Novo has made so much money on this particular drug that it's literally changed the economy of the country.
• 20:07
  Yeah, Denver, it's not just like this anymore.
• 20:10
  I mean, it's insane.
• 20:13
  And the other thing to note is the way that the pharmacy market is structured.
• 20:18
  Most retailers, or your local retail pharmacy is gonna lose money on the distribution, but the PBMs and the insurers and the farmers are raking it in.
• 20:28
  And so all of those distorted economics did kind of somewhat mask the power of these drugs to potentially transform the challenge of obesity in America.
• 20:43
  The other thing that's happening then is that, the federal government and state governments and employers are all trying to figure out because they don't have the bargaining power to reduce the cost.
• 20:57
  The feds don't, you know, only negotiate a few drug prices.
• 21:01
  And while pharma is raking it in, the insurers and the employers and the people who making these decisions, it's getting kind of complicated.
• 21:08
  I mean, maybe you could talk a little bit about what's going on in Medicare and Medicaid and some of the blues plans.
• 21:14
  for Medicare, John, The Biden administration has proposed coverage along also proposed coverage in Medicaid as well And they say that could impact about three and a half million people in Medicare and about four million in Medicaid could become newly eligible as a result And again just to be clear.
• 21:30
  I think they were covered for diabetes before yeah, or the very specific indication, but this is around obesity and weight loss, which is a significant problem in the elderly that leads to lots of other conditions Because of the problems with weight loss drugs in the past, actually Medicare doesn't allow coverage of weight loss drugs.
• 21:50
  It's just that's a category.
• 21:51
  Now that was before the GLP once.
• 21:53
  So it could have an impact.
• 21:54
  Now who the heck knows what's going to go on?
• 21:56
  I don't know that, you know, Biden is going to be that influential, you know, in the new administration.
• 22:01
  and Bobby, your favorite nominee for HHS, who I think is a lousy idea, I might add, is actually really anti-pharma.
• 22:12
  And he sort of suggested, not perhaps unfairly, that we should fix our food supply and diet problem before we look at kind of helicopter, sort of spraying drugs all over America.
• 22:27
  Yeah, yeah, yeah.
• 22:28
  All right.
• 22:29
  So let's close up by talking about this topic, because I can see we could go all in there.
• 22:32
  And I'm hungry, because I'm not taking the required medications.
• 22:36
  I'll get you something from HIMSS.
• 22:38
  We can get you a compounded thing.
• 22:40
  I just saw it on TV.
• 22:41
  get me some weight loss and some testosterone while we're at it, I could use both.
• 22:45
  Well, you got to talk to Bobby about testosterone.
• 22:47
  He's the testosterone guy.
• 22:49
  So the thing about a couple of notes of caution here about these drugs, one is that it hadn't been on the market that long.
• 22:56
  It takes a while to see the long term effects.
• 22:59
  So we'll have to see the good effects and also any bad effects that emerge.
• 23:04
  And since it's affecting so many people, if there's even something that's a small percentage, it could be a big impact.
• 23:11
  The other thing and a reason why some of the blues have said that they've been withdrawing coverage is just the question of adherence and whether people will actually keep taking the medication for a long enough time to get the benefit.
• 23:25
  You get the cost, could come pretty quickly, spend $10,000 or so, but maybe you don't get the longer term benefit and that's something to worry about.
• 23:33
  Now on this question about the food supply, so this I would say has been mirrored a little bit with statins.
• 23:38
  So as you may remember, there was a lot of discussion before about people getting their cholesterol down and diet and exercise and this sort of thing.
• 23:46
  And it was damn hard to get anybody to do that, really hard.
• 23:49
  It's just about as hard as weight loss.
• 23:51
  Impossible.
• 23:51
  Yeah, impossible.
• 23:52
  So they said statin is kind of, that's the message.
• 23:55
  Now, Bobby may have the right idea potentially about big food, but you know what?
• 23:59
  He's not running the Department of Agriculture and the Department of Agriculture is going to be run by the They love big food.
• 24:05
  Yeah.
• 24:06
  Process, process, process.
• 24:07
  I don't think there's going to be anything really that's done other than the talk in this new administration on the food question.
• 24:13
  It's going to give us plenty to talk about, David.
• 24:16
  All right, food for thought, John, and we'll go for dessert.
• 24:20
  So anyway, that's it for yet another episode of Care Talk.
• 24:22
  We've been talking about GLT-1 drugs, weight loss, how they're paid for, and various miscellaneous topics as well.
• 24:29
  I'm David Williams, president of Health Business Group.
• 24:31
  And I'm John Driscoll, chairman of Waystar.
• 24:33
  If you like what you heard, what you didn't.
• 24:34
  Let me know what you