North Carolina’s State Health Plan will discontinue coverage for weight-loss medications. This move will affect more than 24,000 state employees starting in the spring. Increasing costs of Ozempic, Wegovy and other GLP-1 class weight-loss drugs were behind the decision.

In 2023, the SHP spent $100 million on drugs, which raised concerns about a potential loss of $1.5 billion by 2030 if the coverage continued. Despite efforts to negotiate lower prices with drug manufacturers, the board ultimately decided to terminate all coverage starting April 1, 2024.

The SHP’s decision is not isolated. Other states and private insurers are grappling with similar challenges, facing pressure from drugmakers and employees to cover these medications while high demand keeps their prices high.

Tough Calls Across Public, Private Health Plans

As GLP-1 medications such as Ozempic and Wegovy become more popular for weight loss, both public and private sector employers are considering whether or not to include these drugs in their health coverage plans.

Employee interest and potential benefits for employers drive this shift for some private sector companies to offer access to GLP-1s — the class of drugs that include Ozempic and Wygovy. They see it as a recruitment and retention tool, with over two-thirds of companies that added these medications reporting increased enrollment, according to a 2023 study by Accolade.

Ozempic’s cost can exceed $1,000 a month, posing a significant challenge for many employees. Although there is potential for more people to use this drug, 38% of HR leaders cite that high cost as a concern. The move towards coverage is not uniform across the private sector.

Weight-loss coverage was not a significant expense for employers until late 2022. That’s when Wegovy prescriptions began to increase. The demand for GLP-1 class weight-loss drugs drove a 250% cost increase for employer-sponsored health plans in the first two months of 2023.

In North Carolina, the state covered weight-loss drugs for just 2,800 people in 2021. By the first of 2024, the number had reached close to 25,000.

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North Carolina Decision Mirrors Other States

State Treasurer Dale Folwell, responsible for the SHP in North Carolina, expressed remorse for the decision and emphasized the importance of prioritizing patients over profits.

The decision is limited to state workers, particularly those who use the medication for weight loss. People with diabetes will still be covered.

While negotiations between the state treasurer and drug manufacturers are ongoing, the decision made in North Carolina highlights the continuing challenge nationwide to balance the effectiveness of medications with their financial impact on health care systems.