Why Should Delaware Care?
Delaware began to cover commercial weight-loss drugs like Ozempic and Wegovy for state employees as part of its health insurance plan in 2023. Now, as the cost of covering the drug has increased, officials implemented a new elevated copay.
Delaware state employees who for years have enjoyed a relatively cheap price for blockbuster GLP-1 drugs will soon see their copays rise nearly seven-fold in the coming year. The new copays will not apply to employees using the drugs for diabetes.
The State Employee Benefits Committee (SEBC), a board responsible for managing Delaware’s state employee health insurance plans, met Monday morning to finalize coverage changes for employees currently using weight-loss drugs.
Under the state’s new coverage guidelines, state employees using drugs for weight-loss purposes will now have to pay a $200 copay for a 30-day supply, beginning July 1. Before Monday, a monthly supply was $32.
Those sums will impact more than 100,000 state employees, retirees, and their family members who are covered by the Delaware General Health Insurance Plan.
The change comes as state officials have had to reconcile the rising cost of covering GLP-1 medications with supporting an increased number of state employees who use the drug for its weight-loss properties.
Delaware passed the elevated copay for weight-loss prescriptions with a plan to broadcast the change and promote cost-saving programs run by Novo Nordisk, the Danish manufacturer that makes two of the world’s most popular GLP-1s utilized by state employees.
Drugs like Ozempic, Wegovy, Mounjaro and Zepbound that were originally intended to treat type 2 diabetes 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 retails for about $1,000 without manufacturer rebates – and are now among the largest pharmaceutical expenditures for the state insurance plan.
One board member, Jeff Taschner, executive director of the Delaware State Education Association, the state’s teachers union, initially proposed a motion to the committee that would have increased the copay to $132, but that motion failed.
He proposed the $132 copay because it would help to address the budget strain created by the weight-loss prescriptions while also relieving some of the added costs on patients.
When that motion failed, Taschner and many of the committee members who initially voted with him, voted against the measure to implement the $200 copay.
Taschner based his “No” vote on the cost the new copays would have on state employees, who would see their annual costs increase $2,016 without copay assistance. Taschner added that if copay assistance is available, employees would still see that cost increase by $816 a year.
“I really struggle with them being the only ones, quite frankly, who are bearing the cost of this action,” he said during the meeting.
In the moments after the committee passed the new copays, members also passed new monthly insurance premiums, which will increase by 2.2% for Fiscal Year 2027.
Jessica Perrine, a state employee who spoke during public comment, called the new copays “disappointing.” Perrine, who said she is a mother of two who makes $40,000 a year, said the drugs have helped her.
She said as someone who’s tried dieting and continues to exercise every day, GLP-1s do more than just support her physical health.
“This helps people as a whole, not just, ‘Oh, I lost weight, I’m skinny now,’” Perrine said. “It’s something that affects your mental health all the way around.”
Lt. Gov. Kyle Evans Gay, who sits on the SEBC and voted in favor of the $200 copay, acknowledged the financial impact of the committee’s decision, and the hundreds of dollars it will cost annually for some state employees. But the committee also has a responsibility to other members with conditions that are costly, she said.
Still, Gay said she was not happy with the options put before her, and hopes the committee will work to find new cost-effective solutions for the state that also lessen the costs to patients.
“I will move forward with the understanding that the cost is still too high and that we need to do something to ensure that medications that change lives are getting to the people that need them,” Gay said.
Big pharma battle
Delaware’s reckoning with its spending on weight-loss drugs comes as states across the country 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.
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.
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.
Legislation to bring down state spending
Separately, lawmakers introduced legislation last week that would dramatically impact how health care providers negotiate with insurers and how expensive care can be, with some provisions aimed specifically at the state’s health plan.
Senate Bill 1, filed ahead of lawmakers’ return this week for the remainder of this year’s legislative session, quickly drew the ire of Delaware’s powerful and litigious hospital apparatus.
Introduced by Senate Majority Leader Bryan Townsend (D-Newark/Glasgow), the bill is, on the surface, an attempt to bolster primary care in Delaware and better compensate providers proactively working to improve Delawareans’ health outcomes.
But under the bill’s hood, it is a referendum on hospital pricing in a state that has some of the highest costs in the country. If passed as is, SB 1 could deal a major blow to hospitals’ bottom lines.
Within the bill are changes that would regulate the rate at which insurers carrying plans for state employees and some commercial plans regulated by the Department of Insurance can reimburse hospitals for covered services.
Health care providers generally earn the bulk of their revenues by negotiating with insurers who represent large groups of patients. The negotiations determine how much money the insurer will pay for the health care services, and in turn what costs will later be passed onto patients.
Delaware rates are currently regulated with some growth caps limiting how high they can increase year over year, but SB 1 represents a step toward stricter price-setting measures.
Brian Frazee, CEO of the Delaware Healthcare Association, a trade group that represents the state’s hospitals, said his organization has “major concerns” with Senate Bill 1. He homed in on the rate-setting, saying it would cut hospital funding and “severely” limit resources.
“Put simply, it threatens health care quality and access in our state,” Frazee said. “We have been doing the real work in good faith to improve access and develop value-based solutions that lower costs without sacrificing quality and access.”
Through Senate Bill 1, Townsend said he hopes further investments in primary care would help sustain a health care business model that treats people effectively before they become sick and need complex and expensive care.
“They have become addicted to a framework that involves high costs after people are already sick,” Townsend said. “That is not sustainable. It is not moral. We have to change it.”