MV TELEGRAPH

The approval of two gene therapies to treat sickle cell disease has given hope to patients who suffer from the debilitating disease, which overwhelmingly affects Black people and people of color.

Health officials now face a challenge in finding a way to provide equitable access to the costly treatments.

The crippling episodes of pain from the genetic blood disorder make life unpredictable for patients like Michael Goodwin. Sickle cell has forced him to leave his job and at times taken him away from his family.

“I can be in the hospital 20 days out of the month sometimes,” said the 36-year-old Goodwin. “I’ve been in hospital a lot more as I’ve gotten older, which hurts me, because I have a son now and I’m married.”

Still, he’s hesitant to try the new one-time gene therapies because they require months of intensive medical preparation, including chemotherapy, to prepare patients’ bone marrow stem cells for extraction and gene editing.

Goodwin also worries about the cost. Vertex Pharmaceuticals‘ gene therapy Casgevy lists for $2.2 million, while Bluebird Bio‘s treatment Lyfgenia lists for $3.1 million.

“I do have insurance, but … I already have medical bills,” he said.

The therapies were cheered as a long-awaited breakthrough to treat the disease when they were approved in December. But the hurdles toward ensuring equitable access, and the lack of infrastructure in place to administer the nascent treatments, have raised questions about just how many people will benefit from them.

Blood sample of patient positive
tested for sickle cell.

Kitsawet Saethao | Istock | Getty Images

Goodwin’s hesitancy to pursue treatment is no surprise to Dr. Julie Kanter, director of the Adult Sickle Clinic at the University of Alabama at Birmingham.

“My guess is even if we opened the gates today to everybody getting this therapy, at most only 10% of those individuals affected by sickle cell would want this therapy,” said Kanter, who also serves as the president of the National Alliance of Sickle Cell Centers. “And even that would be too much for us to manage right this second.”

More than 100,000 Americans have sickle cell disease, according to Centers for Disease Control and Prevention estimates, and between 50% and 60% of them covered are covered by the federal and state insurance program Medicaid.

Kanter said it will take time to ramp up capacity and to set up facilities across the country to treat patients at scale.

“We really hope that having the National Alliance of Sickle Cell Centers will allow us to strengthen our centers to generally care better for people living with this disease, which we haven’t been able to do before because the cost is a problem,” she said.

High cost brings a new payment model

As they figure out how to ramp up treatment capacity, state and federal officials are grappling with how to provide access to the costly new treatments for the thousands of patients covered by the Medicaid safety net program.

“It’s giving us an opportunity to respond to folks with medical conditions for which there have not been very satisfying treatments. But I think the immediate consideration is the cost is very high. And state budgets simply cannot manage that on their own,” said Kate McEvoy, executive director of the National Association of Medicaid Directors.

A University of Washington analysis found that at a price of $2 million or less, the one-time gene therapy treatments would provide an acceptable value, offsetting the lifetime medical and quality-of-life costs for acute sickle cell patients. Many who suffer from the disease require multiple hospitalizations and blood transfusions, which can leave them unable to work.

But the researchers concluded that a lower price closer to $1 million would help ensure greater access.

The Biden administration is launching negotiations in the coming weeks with Vertex and Bluebird Bio to obtain discounts for state Medicaid plans, with payments linked to patient health outcomes. It is part of the Centers for Medicare & Medicaid Services’ Cell and Gene Therapy Access Model, which aims to make new high-priced treatments easier to obtain. Approval of the sickle cell treatments prompted the administration to begin implementing the new payment demonstration program one year early, starting in January 2025.

“There are probably about 100 therapies in the pipeline at the FDA in an advanced stage of application … so this is a real-time priority in terms of developing strategies that are going to undergird Medicaid programs capacity to cover the treatments,” said McEvoy.

The direct talks with the sickle cell drugmakers come as large pharmaceutical firms like Merck, Eli Lilly and others are suing the Biden administration over the Inflation Reduction Act Medicare price negotiations, which got underway in February. Those talks could see sharply lower price offers on the first 10 drugs selected for negotiation.

But on Vertex’s quarterly earnings call this month, executives expressed confidence about the negotiation process in this case. They said discussions with individual state Medicaid agencies will help ensure wide access and address long-standing inequities of care in the sickle cell disease community.

“We’re not waiting for the demo before we secure access for patients who are covered by Medicaid,” Steve Arbuckle, Vertex executive vice president and chief operating officer, told analysts. “If you look at the profile of Casgevy, it is so incredibly strong that really we’re talking about an outcomes-based agreement which is looking at whether a very, very small number of patients may not respond.”

Employers are taking note

Private employer health plans are also grappling with how to pay for an increasing number of novel treatments with seven-figure price tags, said Morgan Health CEO Dan Mendelson, whose firm focuses on workplace health programs.

“Many employers look at cell and gene therapies, see the costs, and are carving them out of their benefits. They know the therapies are valuable,” Mendelson said. But for smaller companies, “one case could exceed the cost of insuring an entire population in the course of a year and the employer doesn’t even know if the employee is going to stick around.”

Morgan Health is exploring new risk-sharing payment models that could help small- and medium-sized businesses cover the rising costs of specialty treatments coming onto the market.

Goodwin is covered under his wife’s employer health insurance. He hasn’t explored what kind of coverage her plan will provide for the new sickle cell treatments, because he’s still not sure whether they’re right for him.

“If they could guarantee me the outcome — that I wouldn’t have sickle cell … I would do it in a heartbeat. In a heartbeat,” he said.

In addition to discussions over payments, Vertex and Bluebird Bio are taking steps to educate doctors and patient communities about the benefits of their new treatments.

Vertex expects its first commercial patient to begin treatment in the coming weeks. Bluebird said it anticipated its first patient would start Lyfgenia in the first quarter.

Many U.S. companies are grappling with health insurance coverage issues for workers when it comes to GLP-1 drugs for weight loss.

Despite the hefty price tag — typically between $1,000 to $1,500 a month — consumers are clamoring for drugs like Novo Nordisk‘s Wegovy and Eli Lilly‘s Zepbound. This class of drugs, historically used to treat diabetes, has gained broader appeal, and while some employers are providing coverage, often with limitations, others are struggling to determine how to cover them without breaking the bank.

An October survey of 205 companies by the International Foundation of Employee Benefit Plans found 76% of respondents provided GLP-1 drug coverage for diabetes, versus only 27% that provided coverage for weight loss. But 13% of plan sponsors indicated they were considering coverage for weight loss.

“Right now, there’s still a lot of questions among employers,” said Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans. In addition to high costs, companies don’t have long-term data on effectiveness and potential side effects to support coverage, and some are just biding their time until more of this information exists.

Still, many benefits experts say it’s a matter of when, not if, more employers will cover GLP-1 drugs.

Certainly, prescription volumes of GLP-1 weight loss drugs are soaring. Novo Nordisk recently became Europe’s largest publicly traded company due to investor enthusiasm about the obesity market, and it just made a major acquisition in a bid to increase manufacturing capacity of GLP-1 treatments due to demand, buying drug manufacturer Catalent for $16.5 billion to increase the supply of Wegovy and diabetes shot Ozempic.

Meanwhile, Eli Lilly’s recent results were buoyed by the launch of Zepbound, which won approval from U.S. regulators in early November and raked in $175.8 million in sales for the fourth quarter. Wall Street’s most optimistic assessment sees a drug that can post more than a billion dollars in sales in its first year on the market and eventually become the biggest drug of all time. 

Here’s what employers and employees need to know about the changing landscape for weight-loss drugs and health insurance coverage.

Annual cost is the elephant in room at $18,000 per employee

At least 70% of the top 18 commercial health plans Tufts Medical Center tracks in its specialty drug database cover GLP-1 drugs for obesity, with varying limitations. But the largest companies in the U.S. are generally self-insured, so they’re the ones calling the shots when it comes to coverage — and for them, cost is a major issue.

States can decide whether to cover weight-loss drugs under Medicaid, which means coverage can vary, according to a report from KFF. The state of North Carolina recently made the decision to stop coverage of obesity drugs for state employees.

Medicare doesn’t cover weight-loss medications, with the exception of patients with Type 2 diabetes. Notably, 76% of older adults think Medicare should cover prescription medication for weight management, according to recent findings from the National Poll on Healthy Aging. 

At $1,500 a month, employers could be paying $18,000 a year for just one employee’s supply of weight-loss drugs, said Greg Stancil, a senior account executive at Scott Benefit Services. If you’ve got, say, 56 employees on the drug, that’s over $1 million a year. That’s a cost that “just didn’t exist in 2022, now they have this potential long-term expense they’re trying to figure out what to do with,” Stancil said.

“The balancing act is maintaining a robust benefits package so they can recruit and retain employees, but also managing the cost of that package to keep costs down for employees and the employer,” Stancil said. “Every employer would love to cover everything to make everybody happy, but somebody’s got to pay for it.”

Employers already covering weight-loss drugs say it’s worth it

Ninety-nine percent of companies already covering GLP-1s say they plan to continue covering them, according to a survey by Accolade, a personalized health-care company. Among other things, these employers cite higher employee satisfaction and wellbeing, increased engagement in other wellbeing programs and improvement in other health conditions as reasons for covering.

“HR benefit leaders recognize this is something employees want because a lot of people do want to lose weight,” said James Wantuck, associate chief medical officer at Accolade.

BMI, obesity and questions in plan design

There are obvious benefits to losing weight and associated health benefits, but there are other health-care and cost concerns employers have to factor in.

What might the utilization be within the company? Who should be covered? Should there be limitations such as someone who has an obesity diagnosis, or BMI over a certain limit?

A majority of companies (79%) that cover these drugs do require insured members to jump over some hurdles before coverage is approved, according to the survey by the International Foundation of Employee Benefits Plans. This includes requiring prior authorization; using step therapy (32%), which requires the use of other lower cost medications first; and specific eligibility requirements (16%). The survey also found that companies allowed to select multiple cost-controls, if applicable, also use annual and lifetime maximums. Fourteen percent of respondents who cover these drugs said they had no cost-control mechanisms in place.

Potential long-term costs to employers is an issue, and an especially hard calculation since no one really knows how long people will need to stay on the drugs for long-term effectiveness, while going off the drugs is associated with gaining weight back.

Employers are “really struggling to determine the cost versus benefit,” Stich said. 

Even though GLP-1 drugs are high-priced, they currently represent only 6.9% of annual claims, according to data from the International Foundation of Employee Benefit Plans.

How consumers can try to save in the meantime

Consumers whose companies don’t cover the drugs are in a tough position. Many will be forced to pay out of pocket, or lose out, said Brian O’Connell, an analyst who covers the insurance marketplace for InsuranceQuotes.com. “It really depends on your bank account. If you’re making $45,000 a year, have a mortgage and a child in college, there are limited options,” O’Connell said.

First, employees should find out from their employer what the benefits actually are, Wantuck said. In some cases, these drugs may be covered, but restrictions or requirements may apply, such as a BMI threshold to qualify, or the employee may have to participate in an exercise or dietary program.

Consumers with commercial insurance may be able to get assistance through the manufacturer if they are eligible for savings programs. The websites for Wegovy and Zepbound do lay out terms for discount manufacturer programs that may apply. For example, with Wegovy you must have a prescription and can’t be enrolled in a plan where the drug is covered. Consumers should read the restrictions carefully.  

Novo Nordisk says approximately 50 million adult Americans have coverage for anti-obesity medicines — 40 million through commercial insurance and 10 million through Medicaid — and approximately 80% of U.S. Wegovy patients with commercial coverage pay $25/month or less. For commercially insured patients who do not have insurance coverage, or pay cash for their prescriptions (but are not government beneficiaries), Novo Nordisk and Eli Lilly cite potentially significant savings off the full retail price: as much as $500, according to Novo Nordisk, and up to 50%, according to Eli Lilly, though monthly and annual caps on discounts apply.

“For consumers, it never hurts to look for manufacturer coupons or discounts and apply for them,” wrote Krutika Amin, associate director at health care policy, research and news organization KFF, in an email. “The answer may be no in certain cases but in other situations patients could stand to save several hundred dollars.”

Amin added that as more manufacturers enter the GLP-1 market, manufacturers may be offering competing discounts to try to get patients to pick their drug. “The market is still new but as demand stabilizes and there is more competition in the GLP-1 market, manufacturers may change prices to stay competitive. So even if the answer was no last time, it might be worth keeping an eye out,” she wrote.

Looking overseas, which some U.S. consumers do when it comes to high-priced drugs, is less likely to help out in this case, at least right now. While recent KFF research indicates that even with coupons and discounts, prices in the U.S. are higher than in other large, wealthy countries, Amin said that as countries have faced shortages for people using these drugs for diabetes it may not be possible to get these drugs abroad.

Meanwhile, benefits consultants expect the coverage problem will eventually resolve itself, given the need and long-term benefits these drugs may be able to provide.

“It’s a matter of time before most companies will be covering these drugs in some fashion,” Wantuck said. “There’s a lot of evidence that they help people lose weight and prevent really serious illnesses like stroke and heart attack. It’s going to be harder and harder not to cover these drugs because the benefits seem to be so great.”