NC state health plan votes to end all coverage for Wegovy and other weight-loss drugs

The North Carolina State Health Plan will phase out coverage of existing prescriptions for popular weight-loss drugs, including Wegovy, as of April 1.

That was the 4-3 decision of the plan's governing board at its quarterly meeting Thursday.

The State Health Plan covers more than 700,000 state employees, retirees and their family members. Over the past year, Wegovy became the drug it spends the most on — about 10 cents on every dollar it pays for prescriptions.

Demand for weight-loss drugs, also called GLP-1 drugs, has surged in recent years due in part to a surge in advertising and celebrity testimonials.

The state health plan covered 5,000 prescriptions for the drugs at the beginning of 2023. By the end of the year, that number had quintupled, and plan administrator Sam Watts said the exponential growth in usage was predicted to continue in 2024 unless the plan took steps to limit it.

The board voted in October to drop coverage for new prescriptions of Wegovy, Saxenda and Zepbound starting this year, but to continue to cover prescriptions written before Jan .1. Nearly 25,000 members were allowed to keep coverage.

But the decision to cut coverage for future prescriptions caused the state to lose a 40% rebate offered by Wegovy and Saxenda's manufacturer, Novo Nordisk, through its contract with the plan's pharmacy benefits manager, CVS/Caremark. That contract says the plan is ineligible for the rebate if it limits utilization in any way.

The loss of the rebate means that, instead of paying $85 million for the grandfathered prescriptions, the state health plan would have to pay full price — $139 million — in 2024. That's a difference of $54 million.

“But that is less than the $170 million that we would have spent otherwise” if they continued to cover new prescriptions, state health plan administrator Sam Watts said.

Watts predicted that cost would have necessitated a hefty monthly surcharge of about $48.50 on every plan member, whether they used the drugs or not.

During the public comment period, one state employee asked the board not to phase out coverage. Maghae Ray said she has two chronic conditions that will become worse if she gains weight, and Wegovy is the only thing that's worked to help her keep it off.

Watts blames Novo Nordisk. He said they had tried to negotiate to limit coverage only to those who needed it most, or tighten requirements for prior authorization of the drugs, but Novo Nordisk refused to allow the plan to keep its rebate if it imposes any limitations.

With the rebate, the state was paying $800 for a month of Wegovy. Without the rebate, it costs $1,350.

“We either have to cover it for everyone with no restrictions or we simply cannot afford it,” Watts said.

Board member Wayne Fish likened it to extortion. "'If you won't do this, we won't give you the rebate for your existing prescriptions,'" he said. "That's like getting held up at gunpoint in a back alleyway."

"These are hard decisions," Fish added. "I've never liked the idea of cutting someone off cold turkey, but again, if we don’t do something, where will this plan be in a couple of years?"

The state health plan is one of Novo Nordisk's larger North American customers. The company on Thursday said politics and bureaucracy shouldn't get in the way of helath care.

“Denying patients insurance coverage for important and effective FDA approved treatments for obesity is irresponsible," a Novo Nordisk spokeswoman said in an emailed statement. "... We support access to appropriate treatments for chronic diseases — as determined by the patient and their doctor. We do not support insurers or bureaucrats inserting their judgment in these medically driven decisions, which can have a detrimental impact on the health and wellness of patients.

"We urge Treasurer Dale R. Folwell and the [North Carolina State Health Plan] to reconsider this decision and put patients first."

Board member Pete Robie pointed out that the cost of Wegovy in the U.S. is nearly four times its cost in Europe. "What are we really paying for?" Robie said. "Stock options? Dividends?"

"I agree that what Novo Nordisk is doing and what CVS/Caremark is doing is unconscionable," said board member Melanie Bush, "but I don't feel like state employees should have to pay the price."

Bush argued that the plan should maintain coverage of the existing prescriptions while negotiations continue. "This is a life-saving drug, and we're talking about denying it."

Board member Rusty Dukes moved to end all coverage April 1, even previously covered prescriptions. "This will let [Novo Nordisk] know we're serious," Duke said. "Has anything changed since October? Nothing."

Board members agreed the vote could be reconsidered if Novo Nordisk and CVS/Caremark come to a compromise.

Caremark spokesman Phil Blando said CVS Caremark’s main priority was negotiating the lowest cost for weight-loss drugs, based on the State Health Plan’s coverage choices. 

"Our negotiations with the drug manufacturers, including Novo Nordisk and Eli Lilly, have been underway for several months," he said in the statement. "Drug manufacturers need to stop dragging their feet and agree to offer their medicines at a fair price to North Carolina’s public servants."

Blando said he believes drug manufacturers can chose to lower the cost of weight-loss drugs and offer relief to the state health plan .

"We pass through 100% of any rebates the manufacturer offers to the North Carolina State Health Plan," Blando said. "Our clients receive manufacturer rebates when coverage for a drug meets certain terms and conditions, including inclusion on the formulary.

"If the terms and conditions are not met, CVS Caremark is not able to collect a rebate for its client,” he said.

Watts said negotiations with Novo Nordisk and the pharmacy benefit manager continue.

"We have seen movement, but not enough movement to say, 'Yes we have a solution,'" he said.