In June 2021, North Carolina's state employee insurance plan paid for 2,800 people to take weight-loss medications.
Last year he paid close to 25,000. Drugs like Wegovy cost the North Carolina State Health Plan $100 million last year, seemingly coming out of nowhere to account for 10 percent of its prescription drug spending.
“This is something we never anticipated,” said Dale Folwell, the state treasurer whose office administers the health plan.
Alarmed by rising costs, the health plan's board of directors voted Thursday to end all coverage of weight-loss drugs, including Wegovy, which accounts for the vast majority of its spending on obesity drugs. The plan will continue to cover versions of the drugs for people with diabetes.
In recent years, appetite suppressant medications have gained popularity because they are extraordinarily effective in helping patients lose weight. Research suggests the medications can pay for themselves or even save money in the long run, preventing heart attacks and strokes that lead to huge hospital bills.
But for employers and health plans that cover most of the cost of prescription drugs, the bill for these drugs is overwhelming and now needs to be paid. In recent months, the University of Texas system and the Ascension hospital chain have stopped paying for their workers' medications. Those who continue to cover the drugs are imposing new restrictions aimed at reducing costs. The Mayo Clinic, for example, will now provide its employees with a lifetime benefit of just $20,000 for medications.
Medicare, by comparison, does not cover prescription weight-loss medications, but it does cover weight-loss surgery.
In North Carolina, Thursday's vote to end coverage appeared to be the first in the country by a state health plan. The plan uses state funds to pay most of the prescription drug costs for 740,000 public workers, teachers, retirees and their families.
The state health plan is in financial difficulties. Last year, its cash position decreased by $250 million. Trustees who voted to end coverage said they had a duty to do the most good for the most people.
“Our responsibility as fiduciaries is to the state health plan,” said Rusty Duke, an administrator. “We are talking about a small number of people in relation to all the members.”
Coverage for weight loss drugs will end April 1 unless a last-minute deal can be reached to reduce costs.
To continue taking weight loss medications, patients will have to pay out of pocket. Medications can cost more than $16,000 a year without insurance coverage, a daunting prospect for workers whose average annual salary is $56,000. Most patients regain their lost weight if they stop taking the medications.
In recent weeks, state health plan officials explored whether they could cut costs by imposing restrictions on who could get the drugs, but were told they couldn't do so without losing $54 million in discounts this year from the drug makers.
Jessica Uhrick-Rieger, a 44-year-old state employee, started taking Wegovy in October 2022. She has since lost 103 pounds and no longer has prediabetes. But she won't be able to afford Wegovy's sticker price of $1,349 a month.
“That's more than my mortgage,” he said.
Folwell, chairman of the health plan's board of directors who did not vote Thursday, has been outspoken about the plan's unsustainable spending on weight-loss drugs. (Outside of his day job, he is running as a Republican for governor of North Carolina on a political platform that prioritizes substance over style.)
It talks about the dilemma facing the health plan in easy-to-understand terms: For example, if the plan had covered drugs without limits this year, the cost would be enough to pay for a 0.5 percent pay increase for all state employees. . And he has harshly criticized Novo Nordisk, the maker of Wegovy, for what he calls price gouging. The plan has been spending about $800 per month per patient for Wegovy, while patients are responsible for an average monthly copay of $37.
“I'm not questioning the effectiveness of this,” he said. “I'm wondering what they're accusing us of.”
Novo Nordisk spokeswoman Allison Schneider called the trustees' decision to end coverage “irresponsible” and added that the company had been working with state health plan officials to address concerns about costs. “We do not support insurers or bureaucrats inserting their judgment into these medical decisions,” she said.
Some in North Carolina see a bitter irony in the fact that Novo Nordisk manufactures and packages Wegovy in Clayton, North Carolina, a short drive from the government offices where state health plan officials are trying to figure out how to pay for the drug. .
Critics of the company have drawn attention to the tens of millions of dollars in incentives Novo Nordisk has received from both the state and the county where its plants are located.
“It certainly adds insult to injury,” said Ardis Watkins, executive director of the North Carolina Association of State Employees, a group that lobbies on behalf of state health plan members. “Our economic climate, which has become so attractive for companies to locate here, is being used to make a drug that is tremendously marked up.”
Ms. Schneider said Novo Nordisk employs more than 2,500 North Carolinians and has invested more than $5 billion in capital expenditures in the state.
State health plan staff have been closely monitoring Wegovy's spending growth. About a year ago, it became the health plan's most expensive drug, surpassing the plan's long-time maximum spend, the blockbuster anti-inflammatory drug Humira.
“Suddenly, Wegovy was on the loose,” said Sonya Dunn, a health plan manager who routinely reviews reports showing the plan's prescription drug spending reaching new highs.
The North Carolina State Health Plan has been more lax than other employers and insurance programs in the way it covered obesity medications. Until recently, patients could get coverage without providing documentation that they had the body mass index or certain medical conditions that the Food and Drug Administration had approved to be eligible for the drugs.
Plan employees pay monthly premiums ranging from $25 for an individual to $720 for a family. The plan has not raised premiums for members for seven years, a priority, Folwell said, to recruit young workers to join and stay in state government. If coverage of weight-loss drugs had continued without limits, health plan officials had predicted premiums would increase by $50 a month next year.
Meghan Ray, a state employee who takes Wegovy, said she was disappointed by the trustees' vote. She started Wegovy two years ago due to a medical condition that could endanger her sight if she weighs too much. Since then, she lost 32 pounds and stopped taking blood pressure medication.
Ms. Ray, 41, who spoke at the board meeting Thursday, said she feared she would eventually have to undergo another stomach reduction surgery that would be costly for the state health plan because she does not have the money to pay for it. his pocket. for Wegovy.
“The state doesn't pay me enough to be able to afford it,” he said in an interview. “It's more important than being able to pay for gas to get to work or food to feed my family.”
The board voted narrowly, by a 4-3 margin, to end coverage of the drugs.
Wayne Fish, an administrator who voted against ending coverage, is himself a state employee and works in correctional food service. He said he was distressed by compensation.
“These are difficult decisions,” he said. “We see the solvency of the plan and so on, but they are also people's lives. “I don't know if there's a way to balance this.”
