Employers drop obesity drug coverage as cash-pay programs grow

HCA Healthcare, one of the largest hospital systems in the U.S., recently made a decision that has caught the attention of both employees and experts in the healthcare industry. The company announced that it will no longer cover the cost of popular obesity drugs, Zepbound and Wegovy, starting next year. Instead, employees were directed to purchase the medications themselves through discount programs offered by the drugs’ manufacturers, Eli Lilly and Novo Nordisk.

According to a notice seen by STAT, HCA reported a 90% increase in the use of GLP-1 weight loss drugs this year, leading to a significant rise in costs. This decision to shift the burden of purchasing these medications to employees is seen as a cost-saving measure for the company. Craig Garthwaite, director of health care at Northwestern University’s Kellogg School of Management, explained that by directing employees to the manufacturer discount programs, HCA is able to save money compared to providing coverage through insurance.

This move by HCA is part of a larger trend, as more companies are reportedly considering dropping coverage for weight loss drugs in their health plans due to rising costs. The availability of discount programs from drug manufacturers like Lilly and Novo may be contributing to this shift. These programs, which offer the medications at lower cash prices than the list prices, have been heavily promoted as a way to improve access to the drugs.

Interestingly, the growth of these consumer offerings may be making it easier for employers to stop covering the drugs through insurance. The complexity of the U.S. healthcare system, which involves pharmacy benefits managers and manufacturer rebates, means that employers often do not know the actual price they are paying for each medication in their health plans. Jim Winkler, chief strategy officer of the Business Group on Health, noted that some companies are finding that the cash prices offered through the manufacturer programs are more affordable than what they can negotiate with the manufacturers through group health plans.

In fact, HCA stated in its notice that the discounts available through Lilly and Novo’s programs can make the medications less expensive than what group health plans currently negotiate with the manufacturers. As a result, more companies may follow suit and shift the responsibility of purchasing these medications to employees. This raises questions about the affordability of these drugs for everyday people, despite the availability of discount programs.

Overall, the decision by HCA Healthcare to stop covering obesity drugs in its health plans reflects a larger trend in the industry. As companies grapple with rising healthcare costs, they are exploring alternative ways to provide access to essential medications while also managing expenses effectively. The impact of these changes on employees and the broader healthcare landscape remains to be seen.