Why Should Delaware Care?
Delaware began to cover commercial weight-loss drugs like Ozempic and Wegovy for state employees in 2023 as part of the state health plan. Now, claims for the drug have skyrocketed, and administrators are considering changes.
As state spending on blockbuster weight-loss drugs continues to skyrocket, employees currently covered under the state’s health plan could soon pay much more out-of-pocket to get their weight-loss prescriptions or be uncovered altogether.
Drugs like Ozempic, Wegovy, Mounjaro and Zepbound have exploded in popularity in America as they have proven to aid weight loss, which results in both short-term and long-term health benefits. But the drugs are expensive – a 30-day supply of Ozempic is about $1,000 without manufacturer rebates – and are now among the largest pharmaceutical expenditures for those covered by the state’s Group Health Insurance Plan.
The State Employee Benefits Committee (SEBC), a board responsible for managing Delaware’s state employee health insurance plans, met on Friday to discuss at what level the state would fund the drugs going into 2027. The Group Health Insurance Plan covers state employees, retirees, and their eligible family members.
They heard multiple different options that could save the state money, but they would pass costs onto consumers using the drugs in the form of higher co-pays, almost four or five times higher than the current rate.
According to a presentation at the meeting, members pay $32 for a 30-day supply of the drug or $64 for a 90-day supply. If new copays are added to the state plan, those numbers would jump to $120 and $200, respectively.
Another option would be to completely eliminate coverage of the drugs for state employees who use them for weight loss, which officials suspect would save the state $179 million over the next three years.
If the state continues its coverage as is, the SEBC estimates it would cost nearly $211 million by 2029.
Get involved
SEBC members are set to make a decision on new coverage levels at 9 a.m. Monday, Feb. 23, at Delaware Department of Human Resources 841 Silver Lake Blvd., Suite 100 in Dover. Information about virtual attendance can be found here.
‘What’s wrong with the pharmaceutical business’
Members of the board were left with a bad taste in their mouths as they heard the potential options that would guide the future of state spending on weight-loss drugs that have since grown into the tens of millions of dollars each year.
Their options essentially boiled down to doing nothing, taking away coverage, implementing boosted copays, or removing guardrails around coverage in exchange for a lower net cost on the drug.
One board member, Jeff Taschner, executive director of the Delaware State Education Association, expressed his frustration with the options. And for the options that would put higher copays onto employees he said it was “unconscionable.”
“Like I said before, that’s going to result in $1,000 more, or $2,000 more for some of our employees who make $25,000 a year,” Taschner said. “So these freaking drug companies can open up the market?”
Brian Maxwell, who chairs the board and is also the director of the Office of Management and Budget, recoiled at an option presented that would remove prior-authorization requirements on the weight-loss drugs.
“We’ll be giving these things out like Tic Tacs,” Maxwell said.
If the state were to pursue that option, a consultant hired by the board said the pharmaceutical companies could increase their drug rebates to the state, bringing down the pinch taxpayers feel on the drug.
But removing those barriers could also open the door for people not clinically fit to take the drug being able to get a prescription without any outside oversight.
Another member of the board Bill Oberle, a former state representative, said this option works in the favor of pharmaceutical companies by lowering the cost to consumers, but increasing the volume of drugs they sell to the state.
The question is whether we treat a chronic disease early or pay far more for its complications later.
Christina Tarabicos
Christina Tarabicos, a member of the public, said the state should not adjust its coverage to the weight-loss drugs, saying eliminating them would delay further costs associated with separate health complications.
Tarabicos echoed the idea that putting inflated copays onto consumers is not something most state employees could manage without financial strain.
“The question before this committee is not whether we cover a lifestyle drug,” Tarabicos said. “The question is whether we treat a chronic disease early or pay far more for its complications later.”
Delaware Health Secretary Christen Linke Young said the state should work to increase the rebates it receives from the drug companies.
She based her position on a patent for a key ingredient in Ozempic and Wegovy set to expire this year in Canada, opening the door for competitors to enter the market.
“I would like us to be thinking about opportunities to negotiate supplemental rebates if we have that kind of authority, or to otherwise strengthen our rebate position and achieve a lower price,” Young said.
That is the reality for the state’s commercial insurance plans, or those that cover the employees of private companies or individual consumers. Delaware Insurance Commissioner Trinidad Navarro, reported late last year that the cost of GLP-1s was virtually offset by rebates provided by pharmaceutical manufacturers on those plans.
However, his office was unable to understand the impact on the state’s budget, because it doesn’t have access to full data from the state’s pharmacy benefit manager.
Delaware fighting to lower prices
Delaware’s reckoning with its spending on weight-loss drugs comes as states nationwide have pulled back on coverage.
In 2021, the U.S. Food & Drug Administration approved a formulation of Ozempic – a drug that has long treated type 2 diabetes – for use in weight loss. The drug mimics a hormone that targets the appetite-regulating area of the brain, reducing a patient’s perceived hunger.
In 2023, the Delaware state employee health care plan began to cover most of those costs for weight-loss patients. Officials initially budgeted about $2 million in the 2024 fiscal year, but the actual price tag reached more than $14 million that year and has continued to grow since.
Workers on the state’s health plan pay anywhere from 4% to 13% of the cost out of pocket. The remainder is paid by taxpayers through the state’s General Fund.
In early 2024, Spotlight Delaware first reported that commercial weight-loss drugs, such as Ozempic and Wegovy, were among the most prescribed and expensive medicines for state workers.
Delaware also recently filed a lawsuit against multiple pharmaceutical juggernauts in January, accusing them of conspiring to artificially inflate insulin and GLP-1 drug prices at the expense of patients.
The lawsuit, filed by Attorney General Kathy Jennings’ office in the Delaware Court of Chancery, targets both pharmaceutical manufacturers like Novo Nordisk and Eli Lilly, as well as pharmaceutical middlemen – better known as pharmacy benefit managers (PBMs) – who negotiate drug prices between manufacturers and insurers, like CVS Caremark and Express Scripts.
At the center of the 141-page complaint is an accusation that both drug manufacturers and PBMs have profited from artificially inflated drug prices and kickbacks secured through exclusionary practices.
According to the complaint, manufacturers have dramatically increased the price of insulin and other diabetes drugs in recent years, despite a decrease in the cost of production.
“Despite this decrease in production costs and no new research and development, the reported price of the at-issue drugs has risen astronomically over the last 15 years,” the complaint said.
The lawsuit also claims that PBMs work in tandem with manufacturers to exclude competitors by giving preferential treatment to those that pay the PBMs the largest share of profits generated by those artificially inflated prices.
Through this practice, the lawsuit says cheaper and more affordable formulas are often excluded from prescription coverage, leaving patients with fewer options.
The lawsuit said diabetes costs Delaware $1.1 billion each year, and that many rely on daily insulin injections, as well as the use of GLP-1s, naming Ozempic as one of the medications included in the alleged price-gouging scheme.
