(The Center Square) – Trustees for the North Carolina State Health Plan voted on Thursday to implement a moratorium on coverage for two weight loss drugs projected to drive up costs by $1 billion over the next six years.
The stoppage on new coverage begins Jan. 1 for the popular drugs Wegovy and Saxenda. Trustees chose to cut expenses in the face of a projected $4.2 billion budget gap over the next five years.
A total of 23,215 members on the plan currently use the medications at a net cost of more than $800 per member per month, with spending on the two medications expected to exceed $170 million in 2024.
State Treasurer Dale Folwell initially called on the board to consider ending coverage for drugs, which are also used to treat diabetes, but board members opted instead for the moratorium on use for weight loss.
Plan staff estimate that continuing to cover the drugs for weight loss would result in a premium increase doubling to $48.50 per member per month.
Folwell and Sam Watts, administrator of the State Health Plan, noted that the Danish multinational company Novo Nordisk that produces the drugs charges the plan much more than other customers, despite the fact that some of the medication is manufactured in North Carolina. In the Netherlands, the cost for the same product is $296 per month, Folwell said.
“All we want is for them to charge us what they’re paying in their home country,” he said.
Novo Nordisk reported a 32% increase in global operating profit for the first six months of 2023, compared to the same time frame last year, according to a profit report.
The report shows Wegovy sales in North America increased by 344%, and Saxenda sales by 27%, between the first quarter of 2022 and the first quarter of 2023.
The treasurer, who oversees the State Health Plan, noted the North Carolina State Health Plan accounted for 2% of prescriptions filled and 2.6% of the manufacturer’s entire North American profits in the first half of 2022.
Board members on Thursday acknowledged the spending is unsustainable, but several questioned if there were ways to cut down on costs. One idea was to negotiate directly with the manufacturer rather than through the state’s pharmacy benefits manager, or limiting coverage based on certain health criteria.
The state’s contract with pharmacy benefits manager CVS Caremark may complicate those efforts. The moratorium is intended to give the board more time to assess available options before eliminating coverage.
Several folks testified on Thursday about the health benefits they’ve witnessed since taking the drugs for weight loss, and suggested the state could ultimately pay more for health issues related to obesity if they cut coverage. Others blasted Novo Nordisk for overcharging the state and commended Folwell for taking action to force a change.
Watts noted that analysis suggests that the drugs provide about $135 a month per member in savings from improved health, but stressed the savings is dwarfed by the $800 a month per member cost.
“We are not questioning the efficacy of the drugs,” Folwell said in a statement, “but we simply can’t afford these medications at the manufacturer’s current price point.”