Amid growing evidence of the long-term health benefits of obesity medications, thorny questions remain about their value to employers.
In the near term, employers will cover obesity drugs like Novo Nordisk's NVO,
LLY from Wegovy and Eli Lilly & Co.
Zepbound will spend far more than it will save, according to a report released Wednesday by JPMorgan Chase & Co.'s Morgan Health unit. Any long-term health savings may not matter much for some companies with high employee turnover. The report said that the average length of service of an employee in the American private sector is 3.7 years.
The bottom line, according to the report: “The seemingly insatiable demand” for these high-cost drugs creates “a new state of play, where the interests of consumers sometimes conflict with those of employers.”
Nearly half of people in the United States have employer-sponsored health coverage, but only about 40% of large employers cover GLP-1 medications for obesity. Many drug cover providers use an arsenal of strategies to limit their use, including requiring workers to have a diagnosis of obesity and other health problems before coverage begins, limiting the amount or duration of coverage, or requiring prior authorization or drug coverage. Medications only when alternative treatment options have been exhausted.
However, the drugs' ability to improve long-term health is becoming clearer with new research, including a major study that found that Wegovy can significantly reduce the risk of heart attack, stroke, or death from cardiovascular disease in people who… They do not suffer from diabetes.
As such research accumulates, “part of the employer community may look at the data and say, 'Well, this is a health economics story,'” David Ricks, Eli Lilly's CEO, said Tuesday during a friendly conversation at the J.P. Morgan Healthcare Conference in 2018. San Francisco. But most employers view obesity drug coverage as a benefit only for employees, Ricks said.
Lilly has seen “good growth” in employer drug coverage, with many choosing to cover the entire drug class rather than just a specific drug, Ricks said.
However, for other industry players, many questions remain about coverage decisions made by employers and other private payers. In the private payer market, “you run into a mobility problem,” where a company might decide to cover an obesity drug today but the health savings payoff comes 10 years later, when the patient is covered by a different plan, David says. Gluckman, vice president of investment banking and global head of healthcare at Lazard, said during a panel discussion on healthcare innovation hosted by Boston Consulting Group alongside the JPMorgan conference on Tuesday. “All of that needs to be known,” Gluckman said.
Morgan Health, which invests in health care companies while also helping manage health benefits for JPMorgan employees, offers some recommendations for other employers: Consider “advanced primary care,” where providers work collaboratively with a care team that gives patients support Personally ongoing; ensuring “appropriate” use of medicines through prior authorization and other measures; And consider linking payments to health care providers to patient health outcomes – an approach that has so far gained little interest in the private sector despite its established use in government programs such as Medicare.
The idea of tying provider payments to the outcomes they provide for patients, a “value-based care” approach long used in government programs, has not taken hold in the private sector in part because of less concentration of market power, Morgan Health CEO Dan Mendelsohn told MarketWatch. In the private sector, “it has to grow more organically,” Mendelsohn said. But with the right tools and technology in place, “there will be increasing demand for it over the next five years.”
In its own health plan, JPMorgan has already dipped its toe into the strategy, Mendelsohn said, through a contract with a primary care provider that cares for some employees in the Columbus, Ohio, area. The provider has “up and down risks,” he said, with payments fluctuating depending on patient health outcomes such as blood sugar levels, cardiovascular health and rates of routine screenings, such as mammograms and colonoscopies. “They may get paid less if they don't meet the goals, but what we hope is that we will pay them more because they have better health outcomes,” Mendelsohn said.
The company is also giving Columbus-area workers an extra boost to take care of their health, recently opening three advanced primary care centers in its city offices — and giving workers about $25 to pay for visits to those clinics, Mendelson said. He said.
Morgan Health is also reconsidering JPMorgan's approach to coverage of obesity drugs, Mendelsohn said. The company currently provides the medications free of charge to employees who have a BMI over 30 or have another chronic condition, such as diabetes, Mendelsohn said. He said that creates a “very high demand” for the medications among employees. But even though they can be obtained for free, many workers stop taking the medications due to side effects such as nausea and vomiting. “It's a waste for us,” Mendelsohn said. “This is a waste of resources for the system.”
Morgan Health is now looking at ways to coordinate wellness and primary care programs to help patients adjust their diet and lifestyle rather than just prescribing medications, Mendelsohn said.
As workers demand drugs and companies tinker with their coverage strategies, there is a lack of long-term data on the potential payoff for employers. The report said more research is needed to determine how long it takes employers to realize cost savings by providing obesity drug coverage, as their savings “depend on employees remaining with their employers long enough for the avoided costs to accumulate.”
