On this episode we get perspectives from three people involved in the debate over coverage of GLP-1 drugs, a group of medications that are used in the treatment of type 2 diabetes and obesity and are becoming increasingly popular as a weight-loss drug.
A class of drugs that are used in the treatment of type 2 diabetes and obesity are becoming increasingly popular as a weight-loss drug. However, the high cost of these GLP-1 drugs—the annual list price is around $12,000—has posed a dilemma for states as they decide whether to cover the drugs in their own state health plans, Medicaid and possibly require private insurers to cover the drugs.
On this episode, we get perspectives from three people involved in the debate: Kristen Niakan, a pharmacy management consultant with the actuarial and consulting firm Milliman; North Carolina Treasurer Dale Folwell (R); and Colorado Senator Dafna Michaelson Jenet (D).
Niakan explained the background of these drugs, who's using them, the costs involved, and the insurance coverage landscape across the country. Folwell walked through the decision in his state not to cover GLP one drugs for the state's employee health plan, and also discussed a separate decision in his state to extend coverage of the drugs to Medicaid recipients. Michaelson Jenet discussed her efforts to pass legislation that would've required all private insurance companies and the state Medicaid program in Colorado to provide coverage for the treatment of the chronic disease of obesity and the treatment of pre-diabetes, including FDA approved anti-obesity medication.
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Ed: Hello and welcome to “Our American States,” a podcast from the National Conference of State Legislatures. I’m your host Ed Smith.
KN: Despite the recent growth in media attention, GLP-1’s are actually not a new class of drugs. The first GLP-1 was actually approved in 2005 for the treatment of type 2 diabetes and the first GLP-1 for chronic weight management was approved in 2014.
Ed: That was Kristin Niakan, a pharmacy management consultant with the actuarial and consulting firm Milliman. She is one of three guests on this episode along with North Carolina Treasurer Dale Folwell (R) and Colorado Senator Dafna Michaelson Jenet (D). All three joined me to discuss a class of drugs called glucagon-like peptide-1 receptor agonists or GLP-1 drugs. These medications are used primarily in the treatment of type 2 diabetes and in some cases obesity. They’ve also become increasingly popular as an aid to weight loss. But at an annual average list price of almost $12,000, some health plans do not cover them or are restricting coverage. At least a dozen states pursued legislation addressing the coverage of GLP-1 drugs in 2024 with most measures requiring coverage by state regulated health plans. Niakan explained the background of these drugs, who is using them, the cost involved and the insurance coverage landscape across the country.
Folwell walked through the decision in his state not to cover GLP-1 drugs for the state’s employee health plan, and also discussed a separate decision in his state to extend coverage of the drugs to Medicaid recipients.
Dafna Michaelson Jenet discussed her efforts to pass legislation that would have required all private insurance companies and the state Medicaid program in Colorado to provide coverage for the treatment of the chronic disease of obesity and the treatment of pre-diabetes including FDA approved anti-obesity medication.
Here is our discussion starting with Kristin Niakan.
Kristin, welcome to the podcast.
KN: Thanks for having me, Ed.
Ed: To start, why don’t you tell the listeners about what your role is as a pharmacy management consultant at Milliman.
KN: Sure. So even though Milliman is an actuary firm, I am not an actuary. But I primarily work with clients across the pharmacy supply chain. That includes pharmaceutical manufacturers, pharmacies and payors such as commercial health plans and state Medicaid agencies among other supply team entities. I help clients manage cost and solve challenges related to the everchanging and complex health care environment in the US. And Milliman has access to extensive claims databases so a good amount of my work is using that data to answer questions and provide data driven insights to our clients.
Ed: Well, you are just the perfect person to have on as a guest for that very reason because this is a complex area and as many podcasts as I’ve done about prescription drugs, I always learn something new every time I do one, such as how to pronounce glucagon-like peptide-1 receptor agonists or GLP-1 drugs, which is what we are talking about today. Why don’t you just start by explaining basically what they are.
KN: So GLP-1’s are a class of medications that mimic naturally occurring hormones that slow gastric emptying. They increase the feeling of fullness and they promote insulin production which helps to lower blood sugar levels. And despite the recent growth in media attention, GLP-1s are actually not a new class of drugs. The first GLP-1 was actually approved in 2005 for the treatment of type 2 diabetes. And the first GLP-1 for chronic weight management was approved in 2014.
Ed: Around two decades and then being used for some of these current purposes for about a decade or so. You are right. It seems like it has just been in the last six months or a year that I think those of us who don’t really pay that close attention to it have seen it come up. And I don’t think a day goes by when I don’t get an email about a product or read a news story about it so. It certainly has become very current. So how are they used? Who are they prescribed for? What kind of conditions are they prescribed for?
KN: I just alluded to this, but initially GLP-1 agonists were approved for patients with type 2 diabetes and those drugs include Victoza, Trulicity, Ozempic and Mounjaro. And then they also gained indications for chronic weight management in individuals who are obese or individuals who are overweight with a weight related co-morbidity. And those drugs include Saxenda, Wegovy and Zepbound. And then most recently Wegovy received an additional indication to reduce the risk of cardiovascular death heart attack and stroke in adults with cardiovascular disease and who are either obese or overweight.
Ed: That sounds like we are talking about an awful lot of people you are saying that these cover. So how many are we talking about and how many people are actually diagnosed with these conditions that might be, depending on a lot of other factors, be eligible to receive these drugs.
KN: For type 2 diabetes, the CDC estimated that in 2021 there were 29.7 million people and that’s about 9% of the population in the US diagnosed with diabetes. And I noticed you said diagnosed and the number is larger if you consider that some portion of the population is undiagnosed. And then there are also higher problems of diabetes in certain populations. So, for example the prevalence of diabetes is higher in an older population. And then the CDC estimates about the prevalence of obesity among U.S. adults is almost 42% and then an additional 30% of the population is overweight. So, it’s a considerable portion of the population.
Ed: You’ve crunched the numbers on this. This is, as you were describing, one of the things that you do so let’s talk about the cost involved here. What’s the average monthly list price for some of these drugs that you mentioned.
KN: The two newest GLP-1’s for chronic weight management have a monthly cost ranging from $1,060 to $1,350. However, that is the gross cost. It does not reflect the net cost through a health plan or government payor, you know, after taking into account drug rebates paid by the manufacturers. The net cost will vary by plan and by product and it is generally not publicly available. But there are a few sources out there showing a monthly net cost around $700 to $900 for at least one of the chronic weight management GLP-1s.
Ed: So that’s the monthly cost. How long do people typically need these drugs? I’ve read things all over the place about it. What’s your research found?
KN: For GLP-1s for chronic weight management, these drugs are meant to be taken long-term. You know similar to other drugs used to treat chronic conditions. So, there have been studies that show that discontinuation of GLP-1s for chronic weight management leads to patients regaining the weight. So, despite the fact that these medications are meant to be taken long-term, some payers have experienced low adherence and persistence. There was one real world analysis of GLP-1 obesity treatment and it found that 32% of the members on treatment were persistent at one year.
Ed: Let me ask you another cost question which is what is the out-of-pocket cost to patients. Is that just all over the board depending on their insurance company?
KN: In Medicaid, there is not significant cost share obligations for patients. But in the commercial market, the patient out of pocket cost will, you know, it really depends on the individual plan design. So, for example, patients on a high deductible health plan are going to have greater cost sharing obligations than patients on a plan that might have richer benefit design. However, what we have seen in the data is that average patient cost share for a pharmacy is around 10 to 15% of a drug’s gross cost. So, this equates to approximately $100 to $200 per month based on that gross cost that I discussed earlier.
Ed: I guess the question we always have about a drug particularly one that seems as though it is really exploding in usage is whether there are other health effects longer term sort of downstream sort of things. Do we know about that at this point? Has there been a large enough population to use them to be able to have some predictability about what might happen?
KN: For GLP-1s indicator for chronic weight management, we are still waiting on some robust studies that outline the downstream health outcomes. There are studies that show the health outcomes of losing weight, but those are not necessarily specific to weight loss as a result of GLP-1 treatment. But we can imagine that for patients who are adherent to therapy and who lose weight, we may see improvements in things like hypertension, sleep apnea, back pain, mental health conditions and even you know the prevention of things like diabetes.
Ed: Given that you’ve done a lot of research on this, what did you discover in terms of how broadly health plans and pharmacy benefit managers are covering these drugs and how they are managing the utilization of these products.
KN: So, there is an industry report that cited 43% of commercial plans cover weight loss medications and then an additional 28% are considering adding coverage in the near future. Most commercial plans that offer coverage have some sort of utilization management criteria whether that’s a prior authorization or a step therapy. Some plans are aligning their utilization management criteria to the FDA label, but somehow restrictions beyond the FDA label. So, for example, that could be limiting utilization to individuals who have a higher BMI than what is included on the label. And then for GLP-1s indicated for type 2 diabetes you know there is the concern that those can be used off label for weight loss. So, for example, Ozempic being used for weight loss when in reality it is indicated for type 2 diabetes. And so, as a result, many plans will have a prior authorization for those drugs requiring a diagnosis of type 2 diabetes.
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Ed: Of course, a key concern of our listeners, people in state government, is the Medicaid side of the equation. What do you see as far as the decision states are making around whether or not to cover these medications and how strict the limitations are for their Medicaid programs.
KN: So, there are currently at least 13 state Medicaid programs that cover GLP-1s for chronic weight management and there are likely you know more states evaluating and assessing the financial implementations of adding coverage of GLP-1s for weight loss. Medicaid programs are managing utilization via prior authorization with a BMI requirement and then it’s really common to have an initial authorization as well as a maintenance authorization to ensure that patients are you know staying within a certain percentage of their goal BMI or you know maintaining a certain percentage of weight loss in order to continue therapy.
Ed: As we wrap up here again, of course, our audience is state lawmakers, policymakers, state legislative staff. I wonder what advice you would offer them both in terms of maybe how to better understand this topic and also what you see coming in terms of the kinds of decisions they will need to make in the next coming years.
KN: As far as resources, Milliman has a number of great white papers on the topic. There is a great article on pair strategies for GLP-1 medications for weight loss and that includes a framework for how pairs can evaluate adding coverage, how they can ensure appropriate utilization and evaluate the pharmacy’s supply chain strategy to ensure that they are getting the most optimal pricing. We have another white paper on GLP-1 utilization growth and management and Medicaid. So that paper goes into more detail on how state Medicaid agencies are covering GLP-1s both for type 2 diabetes and for chronic weight management. And it also provides a framework for ensuring appropriate utilization in the Medicaid program. And then I would also recommend that they speak with payers or state Medicaid agencies that have already added coverage to understand how those payers have made the decision to cover GLP-1s for weight loss and what their experience has been. What the uptake has been among the eligible population and to understand how those payers are managing utilization and spend in the therapeutic class.
Ed: Well, I think this is probably the beginning of a conversation on this topic that is going to go on for quite some time because it doesn’t sound as though this is becoming less popular. So, thanks so much for helping us understand this a little bit better and take care.
KN: Thanks for having me.
Ed: I’ll be right back with North Carolina Treasurer Dale Folwell.
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Treasurer Folwell, welcome to the podcast.
DF: Well, thank you for having me Ed. I hope this is of value to your listeners.
Ed: Well absolutely and I know that many of these listeners are your former colleagues when you were in the legislature so we appreciate you taking the time to talk to them. We wanted to talk about today, of course, is the use of these GLP-1 drugs. This seems to be increasing and states are split with some wanting to expand coverage of the medications and others wanting to restrict it. For state employees I know North Carolina landed on the side of restricting coverage and I wonder if you could just maybe walk our listeners through the circumstances that led up to that and just any detail if I’ve missed something here, please go ahead and clarify.
DF: I’ll be glad to. To start with as our friends at NCFSO say when you see one state treasurer’s office, you’ve seen one state treasurer’s office. We actually manage $258 billion at our treasurer’s office one of the largest pools of public money in the world. And one of those responsibilities is the state health plan which is the largest purchaser of health care in North Carolina on behalf of those that teach, protect and otherwise serve nearly 750,000 participants. Very quickly we found that our state health plan which was already insolvent from an operating budget standpoint as well as a balance sheet standpoint was under siege because of the cost of the rapid rise in these GLP-1 drugs. I want to be clear with all of your listeners that we take diabetes seriously. We take obesity very seriously as a disease. The same board who had to make the excruciating decision to eliminate the coverage of this drug is the exact same board that generally speaking that made the decision five years ago before anybody was talking about this to eliminate the cost of insulin, to eliminate the cost of diabetes testing.
We know what insulin inherence does for our medical costs. We tried to have our finger on the pulse of these issues. But when you have the cost of one drug, one month’s supply for 25,000 people it is almost equivalent to a 4% retirement bonus for 250,000 people.
Ed: Well, I think these have got to be excruciating decisions because you’re in a position of having to weigh the costs and benefits to different groups of people.
Ed: So, I know just recently that the state health department, of course a different department from yours, there in North Carolina, announced it would start covering these drugs for people on Medicaid. And I know this got a lot of press questions and frankly I thought you had a some pretty interesting responses to those and I wonder if you could share those with our listeners what your perspective is on that.
DF: Well, my perspective is they still haven’t answered the question of how much are they paying for it. Tell me what this is costing you. Still have not been able to get this information so not only was it costing them but how are they paying for it especially since North Carolina hasn’t had its first anniversary in terms of Medicaid expansion.
Ed: Oh, I see. That’s right. North Carolina did expand Medicaid just very recently.
DF: Just to be clear, we don’t – I’ve never questioned the ethnicity of this or the seriousness of obesity as a disease. We are not questioning any of that. We are just questioning what we are having to pay for it.
Ed: Let’s talk a little bit more about this pricing because as I understand it if I read this correctly, the cost of I guess a month’s worth of this prescription is something like $22 and the actual price that’s paid whether it’s by the insurance company or an individual is excess of $1,000. Am I right on that? Is that about the range?
DF: The cost to manufacture this is probably less than $50. The retail price is north of a $1,000.
Ed: If the price came down, is it something you think that they board would reconsider in terms of coverage and how much would it have to come down.
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DF: We are interested in doing the most good for the most number of people. That’s true yesterday. That is true today and that will be true tomorrow. If they would cut the cost of this drug to what they charge the people in their home country, we know that all citizens are important, but we are talking about those that teach, protect and otherwise serve. That’s who our customers are. If they will cut the price of this product to the price they charge people in their home country on behalf of our members who teach, who protect and who otherwise serve, I think we could find a way to budget it.
Ed: Let me ask you this as we close out. Thinking about your former colleagues in the legislature, other policymakers, what advice would you have for them. And we are going to link some materials I think you have on this podcast, but what kind of advice would you offer them as they would grapple with this and I think probably in every state and territory that is what they are grappling with.
DF: What I would say to them is what I’ve always said and that is it doesn’t matter how thin you slice this piece of paper. There are always two sides. Our job and I think the people listening to this podcast’s job generally speaking is to advocate for the invisible. You know how I describe the invisible. Those that don’t have enough money to have political influence. They will not be walking the halls of the legislature. They won’t be making campaign donations. They won’t be sending emails or making phone calls. They don’t have enough money to have a political influence. They work one or two jobs, pay their taxes and pray for a better outcome. So, every decision we make, we need to be focused on who what can do the most good for the most number of people and it is not the people who will be donating to campaigns or walking the halls of the general assembly. It’s the invisible. If we can be fair and just as we can advocate for the invisible, its unimaginable what we can accomplish not just on this issue but health care costs, insurance costs and all these other topics that I’ve talked about for years.
Ed: Well Treasurer Folwell, thank you so much for taking the time. This is I think a really important topic and one of interest to legislators and staff all over the country. Thank you very much. Take care.
DF: Well, thank you and it has been an honor to know of your organization for the last 20 years and thank you for what you do to advocate.
Ed: I’ll be right back with Colorado Senator Dafna Michaelson Jenet.
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Senator, welcome to the podcast.
DJ: Thank you for having me.
Ed: We are getting some different perspectives on GLP-1 drugs on this episode and that’s something you addressed in legislature that you proposed this session in the Colorado, Senate SB 2454. Why don’t you tell the listeners what was in that legislation.
DJ: Well Senate Bill 2454 would have required the state to cover anti-obesity medications not just the GLP-1s, but the full gamut of anti-obesity medications in Colorado. And it would have also required insurance companies to cover anti-obesity medications as well.
Ed: Now would that have affected state employees or are they already covered for this class of medications?
DJ: State employees are already covered.
Ed: I’m always interested in why lawmakers want to pursue a piece of legislation so what was it that made you want to pursue this piece and spend your time on it.
DJ: I’ve been working with UC Health on anti-obesity medication laws for some time now and it was finally the right time to move the bill forward after the state covered state employees. For me it is also a personal story. I am a user of Wegovy and it made my A1C normal for the first time in five years. I knew I was going to get diabetes one day and now I don’t know that I’m going to get diabetes one day. And that’s a miraculous feeling that I would love others to be able to share.
Ed: This bill passed in the Colorado Senate, but ultimately did not make it through the House. What was the problem and how will you change your approach when you try to pass it again, which I’m sure you will.
DJ: Yeah. It’s definitely coming forward again. There were a couple of stumbling blocks. There is the insurance side and the Medicaid side. On the insurance side, we did in Colorado, we have something called SB40. I can’t remember what year it was, but it requires an actuary analysis of anything that is an insurance mandate. So, we did the actuary analysis. We submitted and were selected and went through the process and the actuary analysis was required to show cost savings. It looked like insurance was going to increase by $7 per payer per month and the governor was absolutely not about that. The governor’s entire goal is saving people money on health care and he was not willing to move forward with a bill that increased individual payer’s monthly bills. So that was on the insurance side. I think this
On the Medicaid side, we had a whole differently problem. The Medicaid department gave us a fiscal note showing that it would cost $11 million to the state to cover GLP-1 inhibitors. $11 million. That was basing it on 40% of all eligible people starting on the medication starting specifically on Ozempic or Wegovy on day one. First of all, we know that that’s not how it works. Second of all in states where Medicaid has covered GLP-1 inhibitors, utilization is approximately around 1%.
Ed: Yes. That is what I’ve read. And for those of us who are not experts in this area, it seemed like the utilization rate was surprisingly low.
DJ: Surprisingly low utilization and that’s okay because right now the medication is really expensive. As utilization ramps up, as people become more comfortable with the medication, I think we will see a higher user rate and I think it will become the norm for people with pre-diabetes to actually treat that so it doesn’t become diabetes. I mean that’s a miracle. You know right now, I can’t get Medicaid to cover it. There is also some internal debate on whether or not obesity should be covered or it is something that someone should be able to handle by themselves through diet and exercise.
Ed: This is, of course, an issue that probably every legislature will need to deal with and you are in a great position to share some advice about the challenges you faced in trying to pass legislation. So, what advice would you share with your colleagues around the country?
DJ: I think that it is really important that people understand that science has shown obesity to be a chronic disease. And would we say about cancer, first you got to go work out, then we will give you that chemotherapy. Absolutely not. But will they say it about obesity – 100%. So, you need to be ready to fight that battle and the other thing you need to be ready to fight is inaccurate information from your fiscal analyst. So, making sure you are running your own numbers. So those are the key pieces of advice that I would give.
Ed: Senator, this is a subject of great interest around the country and I appreciate you taking the time to share your experience. Take care.
DJ: Absolutely. Thank you for tackling this issue.
Ed: I’ve been talking with Kristin Niakan, North Carolina State Treasurer Dale Folwell and Colorado Senator Dafna Michaelson Jenet about the coverage and approaches to GLP-1 drugs in different states. Thanks for listening.
You can check out all the podcasts from the National Conference of State Legislatures by searching for NCSL podcasts wherever you get your podcasts. This podcast “Our American States” dives into some of the most challenging public policy issues facing legislators. On “Across the Aisle” host Kelley Griffin tells stories of bipartisanship. Also check out our special series “Building Democracy” on the history of legislatures.
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