Plan sponsors may only have a few months to decide how they'll cover obesity drugs

GLP-1 drugs have revolutionized diabetes coverage, as obesity treatments roll out in Canada, plan sponsors have a huge decision before them

Plan sponsors may only have a few months to decide how they'll cover obesity drugs

Glucagon-like peptide-1 (GLP-1) diabetes drugs like Ozempic and Mounjaro have become household names. They have grabbed headlines not only for their success in treating diabetes, but their success in controlling appetite. Because of that success plan sponsors and insurance companies have worked to ensure that people with diabetes have access and coverage for these drugs in a manner plan sponsors can afford.

Tim Clarke, President of tc Health Consulting, says that GLP-1 drugs have  made diabetes the #1 category across nearly all drug plans.

“Diabetes has been a top 3 cost category within most drug plans for years, but the GLP-1s have changed diabetes from being A priority to being THE priority for the benefits industry,” he says.

Now, a new generation of GLP-1 drugs approved for the treatment of obesity are heading towards the Canadian market, raising another set of new questions that plan sponsors need to be ready to answer. While some of these obesity drugs have been approved by Health Canada, their supply has been limited as pharma companies focus on giving diabetics access. Many plan sponsors have been working to limit the “off label” use of diabetes drugs like Ozempic for obesity and weight loss treatments. As they engage in that work, Clarke says they have only a matter of months before GLP-1 obesity drugs arrive on the market and force plan sponsors to decide who and how much they will cover.

“The best estimates right now are that GLP-1 drugs for weight loss will be available in Canada around mid to late spring, which means plan sponsors have between February and May to figure out exactly how they’re going to handle this, because once they’re available you better have your thought process done,” Clarke says. “It may be challenging for some employers to accept the costs given what we expect to be significant demand for these treatments.”

Health Canada guidelines designate anyone with a BMI over 30 as obese and eligibility could expand to anyone with a BMI over 27 with an underlying condition. Those numbers would make a significant proportion of the working population eligible for coverage. According to Statistics Canada, about one quarter of Canadians are living with obesity. Plan sponsors are probably going to have to set additional qualifications beyond just those baseline numbers to ensure that the individuals who need these drugs can access them while ensuring the cost doesn’t balloon into a place of unsustainability.

Anti-obesity medications have been available in Canada for many years. Their cost impact to date has been quite modest, but their coverage — or lack thereof — has evolved in parallel to the scientific and societal shift in viewing obesity as a chronic disease rather than a result of poor lifestyle decisions.

While many people argue that that there is significant overall value derived from GLP-1 drugs in terms of population health and reductions in cost to the healthcare system, the value proposition for a Canadian plan sponsor is less clear. If an employee gets their obesity drug covered, they may not need to claim the expenses of medical devices or other drug treatments later in life. However, through the narrow lens of positive financial impact for a plan sponsor, Clarke does not see the numbers working out.

While there may be an ROI to the healthcare system overall, much of the return comes from reductions in future health costs, most of which will accrue to the public health system. For employers, the ROI must  be looked at as a combination of better health, and the positive business impact of healthy, engaged employees who feel supported by their employer.

While drugs like Ozempic, Mounjaro and Wegovy are dominating the conversation today, Clarke notes that there is a great deal of innovation ongoing in this space which we should expect to continue. This innovation is positive for the health of Canadians, but Clarke expects costs are unlikely to drop materially until these drugs go generic. Until that time, there are cost considerations, Clarke believes plan sponsors need to have their policies and their answers ready as soon as possible.

“Obesity is changing. It’s prevalence, our understanding of the science behind it, our perceptions and the options to treat it all of these are changing and will continue to change for years.” Clarke says, “For benefits plan sponsors and insurers, your obesity strategy today will need to reflect these changes as they happen.”  

Clarke views GLP-1 drugs as a tremendous health innovation that will improve the lives of many Canadians, starting with those suffering with diabetes or obesity. He believes that obesity should be viewed by plan sponsors as a complex chronic condition and that view should inform a supportive approach. However, that support needs to balance cost against other business priorities which means plan sponsors need to have their GLP-1 obesity strategies in place soon.

“For plan sponsors, it is critically important to have a strategy for how you’re managing obesity and it needs to be articulated internally relatively quickly,” Clarke says. “You will need to answer the question of ‘are we covering obesity drugs in our plan, and why?’ Because once GLP-1s approved by Health Canada for obesity are available, plan members will ask for them, and you better have a solid answer. Even if it’s ‘we want to support the health of our plan members, but we need time to fully understand how new drugs fit into our overall benefits plan.’ You don’t need to have all the answers the day these hit the market, but you better have given thought in advance to how you’ll answer the questions plan members will inevitably be asking.”