Ozempic spike hits state taxpayers

When Gov. John Carney announced last week that his Fiscal Year 2025 budget proposal included more than $93 million in additional spending for health care plan costs for state employees and retirees, he didn’t mention that a significant portion of that is attributed to an exploding issue: weight-loss drugs.

Delaware officials budgeted about $2 million in the current fiscal year to cover the cost of a new wave of injectable weight-loss drugs.

So far, the state has been spending about $2.5 million a month on the drugs – total health plan spending over the first six months is about $15 million. That adds to higher health care claims overall for an aging covered population, and the state now faces a health plan fund deficit unless premiums are raised next fiscal year.

While covered workers contribute anywhere from 4% to 13% of plan cost under the state government’s Group Health Insurance Plan (GHIP), the remainder of the plan funding is paid by state taxpayers via the state’s General Fund.

In 2021, the U.S. Food & Drug Administration approved a formulation of Ozempic, a drug made by the Danish manufacturer Novo Nordisk known as a GLP-1, or glucagon-like peptide-1 that have long treated type 2 diabetes, for use in weight loss. The drugs mimic a hormone that targets areas of the brain that regulate appetite and food intake, reducing a patient’s perceived hunger and allowing them to lose weight.

But GLP-1s require a patient to remain on the drug for at least four to five months to be most effective, according to the FDA, and the average monthly cost of the drugs runs around $1,000 without insurance.

Ozempic, also known as Wegovy in its higher dosage, weight-loss form, is among the most prescribed medicines for state workers, according to data from the Delaware Department of Human Resources, which oversees the GHIP.

The number of GLP-1 prescriptions written for covered state workers or family members rose 28% in the five months from July to December. With additional drugs vying for FDA approval and increased data on and awareness of the drugs’ impact, it’s likely those numbers will continue to grow.

The increase in weight-loss drug usage has also spurred another expensive consequence: a rise in bariatric weight-loss surgeries. Over the first six months of the fiscal year, the state has seen an 18% increase in bariatric surgeries – that’s due in part because use of weight-loss drugs like Ozempic have allowed more patients to qualify for the procedure.

While health experts agree that use of the drugs to lower obesity rates and associated factors like high blood pressure, diabetes, cardiovascular disease and more will ultimately lower lifetime health care costs for affected patients, states are struggling to deal with an explosion of upfront costs. Other states like Connecticut, Tennessee and North Carolina are changing how they approach their coverage of them in lieu of those costs.

Last year, Connecticut changed its plan to require any GLP-1 prescriptions to be made through a specific telehealth service, reducing the ability of patient’s family doctors to prescribe a drug like Ozempic off-label. Tennessee chose to stop covering GLP-1 prescriptions unless a patient showed an existing diagnosis of diabetes. Meanwhile, North Carolina chose this month to drop coverage of GLP-1 drugs altogether after being buried in more than $100 million in costs last year

Delaware, which chose to cover the drugs last March, is now reassessing whether to make changes to its own coverage of GLP-1 drugs.