High-cost weight-loss drugs drive nutritional counseling to employers

A few years ago, when Virta Health founder and CEO Sami Inkinen approached employers about taking advantage of the company's nutrition-oriented digital diabetes program for obesity-related weight loss, most companies were not prepared to commit.

Now, more employers are betting on nutritional counseling and training as they battle the rising costs of diabetes and weight loss medications, such as Nordisk Ozempic and Wegovy and Eli Lilly Mounjaro and Zepbound.

“Our goal is not to drive the maximum number of GLP-1 prescriptions, but we are the telemedicine company of choice for many employers to use these medications responsibly and then also wean members off them and maintain weight loss nutritionally “. Inkinen said.

The company published a peer-reviewed study a year ago that found that patients following Virta's nutritional counseling programs maintained their weight loss a year after stopping using GLP-1. But Inkinen says less than 10% of the weight-loss company's enrollees are using the popular medications; most opt ​​for nutritional counseling alone and still lose an average of 13% of their weight over the course of a year.

“Frankly, despite the message that maybe the pharmaceutical companies are pushing, no one really wants to take these drugs forever, if they have the choice and the tools,” he said.

For Virta, demand for such services resulted in record revenue growth of 60% in 2024 to more than $100 million, according to Inkinen.

He said the 10-year-old startup is on track to be profitable in the second half of this year.

Companies surveyed by the Purchaser Business Group on Health said glucagon-like peptide drugs, commonly known as GLP-1 drugs, are now a major driver of employer plan drug costs, with 96% of Respondents expressed concerns about long-term cost implications. .

As a result, more employers are seeking utilization management strategies, such as nutritional counseling and counseling services.

“Most employers want their plan members to have access to weight management medication options, such as GLP-1; however, they also want to ensure that they are clinically appropriate and accompanied by medical and health supports.” lifestyle modification to ensure long-term safety and health for the individual,” said Randa Deaton, vice president of buyer engagement at Purchaser Business Group on Health.

However, using those programs sometimes creates new hurdles when it comes to pricing GLP-1 in your pharmacy benefit plans, Deaton notes.

“We have seen that PBMs and drug manufacturers have been reducing their reimbursements when employers require a lifestyle management intervention as part of their medication criteria, so it has been challenging for employers to implement appropriate programs to support its workers and family members,” he said.

One of Virta Health's rivals, Omada Health, is also seeing strong demand for its GLP-1 weight loss management program, after partnering with Cigna Evernorth's division of pharmacy benefits into a program called EncircleRx. Enrollment in the program went from 2 million lives covered in the second quarter of 2024 to 8 million in the third quarter, according to Cigna CEO David Cordani.

“The market continues to absorb the affordability challenges” of GLP-1 drugs and is looking for a more value-based approach, Cordani told analysts on the company's third-quarter earnings conference call.

“Clients are watching, and clinicians are watching the start and stop dynamics that are occurring in some patients, which is also not producing the desired or intended outcome,” he said.

For both Virta and Omada, GLP-1's growth momentum is fueling speculation that the startups, which are more than a decade old, could go public this year, if market conditions are right.

Omada Health reportedly filed a confidential filing to go public with the Securities and Exchange Commission last summer, according to Business Insider. The company has declined to comment on the report.

Virta Health was valued at $2 billion following its latest funding round in 2021. It is Inkinen's second startup. He was one of the co-founders of the online real estate company Trulia, which went public in 2012 and was later bought by its rival. Zillow.

As for Virta's IPO plans, Inkinen says he's focused on growing the company for now.

“If you have something that works, it's a thousand times easier to just scale your thing, your team, your culture,” he said.