New weight-loss drugs are driving up costs for Pennsylvania’s Medicaid program, officials told legislators this week, likely leading to more than $1 billion in new costs this year.
GLP-1 medications such as Ozempic and Wegovy, which help people lose large amounts of weight and maintain their weight loss, have been “one of the biggest cost-drivers in our system,” state Secretary of Human Services Dr. Val Arkoosh told legislators this week, during a pair of state budget hearings. The drugs help regulate blood sugar levels.
“Prescribing of these drugs rose dramatically,” Dr. Arkoosh said. “Far faster than I think anybody anticipated,” she said in response to questions from members of the House Appropriations Committee Tuesday.
The state already requires prior authorization for patients to be prescribed these medicines in cases of either diabetes or obesity; because of the high costs, it will try to rein in such prescriptions in cases where the drugs are being prescribed for obesity, she said.
State human service officials will ask a drug utilization review board next month to increase the prior authorizations needed to prescribe the drug for obesity, such as first requiring patients to attempt weight loss through diet and exercise programs, or try less expensive medications before moving on to the pricier GLP-1s. Most significantly, according to Secretary Arkoosh, if the proposal were to be approved, it would only allow the use of this type of drug for obesity for patients with an extremely high body mass index.
Spend now, save later?
Monroe County Republican Sen. Rosemary Brown asked during a budget hearing if such drugs could save money in the long run by helping to prevent other health complications that can arise from obesity.
“I think we have to be very careful and smart with — if we spend upfront, could we reduce the cost of a Medicaid patient and what we pay, which is growing and growing every year?” she asked.
While there is clear evidence of cost savings for the Medicaid program in cases where the drugs are prescribed for diabetes, there’s less evidence of savings in obesity-related cases, according to Secretary Arkoosh.
“We don't have that many years of experience here,” Arkoosh said. “And, you know, it could be that five years from now I come back and say, ‘You know what? The data is 100% clear. We should be using these drugs to cover obesity. It's very clear that it saves money.’... I do not have that data today.”
State Rep. Arvind Venkat of McCandless, an emergency room physician, said using drugs like Ozempic to lower patient weight also improves the risk of obesity-related comorbidities. In turn, this could also save the state money on Medicaid spending, he said.
“The evidence is pretty clear that GLP-1s and those who are obese can reduce the risk, through weight loss, of cardiovascular disease and kidney disease,” Venkat said. “The problem from our state budget and from insurance companies is that calculating those savings and realizing those savings takes a very long time.”
As GLP-1 drugs have become available and more widely prescribed for obesity, state Medicaid programs have grappled with how to deal with medications that can be life-changing for patients but costly for governments. Thirteen states, including Pennsylvania, allow such drugs to be prescribed for obesity, as of August, according to health policy organization KFF.
“There’s certainly other ways that people can engage in healthier living to lose weight without the taxpayers paying for a magic shot,” said Republican Sen. Scott Martin of Lancaster, Appropriations committee chair, who agreed with GLP-1 use for diabetes or pre-diabetes. “There is a legitimate reason to really look at… how they're prescribing this drug and what should be covered under a government safety net program.”
GLP-1 use just one factor driving up costs
More than 3 million Pennsylvanians are enrolled in Medicaid, which provides health care coverage for low-income and disabled individuals. The program is jointly funded by states and the federal government. The multi-billion dollar program is a large part of the state budget.
Other costs in the Medicaid program are growing because of overall growth in healthcare costs, the state’s many aging and elderly residents, and because post-pandemic, many people are sicker and have delayed care, which has resulted in higher costs, according to DHS.
A prescription cost-tracking website estimates the price of monthly Ozempic supply at $1,000. Martin asked Secretary Arkoosh to break down the cost.
“Who's getting what piece of that thousand dollars, and how much is going to the drug company, how much is going to a PBM [pharmacy benefit manager], how much is going to the MCO, the managed care organization, in this whole thing?” he said.
The cost of GLP-1 drugs have also prompted private insurers to limit coverage, especially when prescribed solely for weight loss. An October policy change for Pennsylvania Highmark insurance carriers added new weight baseline requirements for half a dozen GLP-1 medications.
“In the past year, there have been considerable challenges in this treatment area ranging from inconsistent medication supply, limited research on long-term benefits of these medications, and patterns discontinuing weight loss medications before clinical benefits can materialize,” Highmark said.
Other new requirements include sustained increases in physical activity for at least six months as well as weight loss of at least 5% before the medication will be reauthorized. For Wegovy, Saxenda and Zepbound, patients must be diagnosed with two weight-related comorbidities such as asthma, hypertension, cardiovascular or chronic obstructive pulmonary disease.
In a statement explaining the policy change, Highmark said the goal is to prioritize getting weight loss treatment to people who need it the most while also bringing down surging drug costs by limiting demand.
“We aim to balance access and affordability for our members and clients, and the rising costs associated with weight loss medications is impacting the affordability of health insurance for all members, not just those using therapy,” Highmark said.
Kiley Koscinski contributed to this story.
