The health service provider, Cigna Group, has recently sealed agreements with obesity treatment manufacturers, Eli Lilly & Co. and Novo Nordisk A/S. These agreements aim to expand the coverage of obesity treatments while restricting how much employer-sponsored health insurance plans have to pay for these treatments. These collaborations are billed as the first of their kind in the market, offering a financial safeguard on spending hikes related to GLP-1s, a class of drugs including Novo’s Wegovy and Lilly’s Zepbound. Read more.
This strategy stands to increase access to these crucial treatments that are in high demand while giving companies apprehensive about the high cost of GLP-1 treatments, a sense of surety that these will not overwhelm their healthcare budgets. These agreements by Cigna’s pharmacy benefits manager are their appeal to employers who are concerned about the surging costs for new popular weight-loss treatments.
Adam Kautzner, head of Cigna’s Express Scripts pharmacy benefit manager unit, notes that the demand for these weight-loss treatments are uncommonly high, causing employers to seek cost-effective solutions. He revealed that some of their clients are witnessing a 40-50% annual increase in spending on these drugs.
Although the specifics of the contracts with Lilly and Novo have not been disclosed, Kautzner described them as ‘unique agreements’ that enabled Express Scripts to offer clients financial guarantees. Consequently, Express Scripts becomes the entity that assumes the risk associated with these guarantees.
Currently, the weight-loss treatments have a price range of $1,060 for Zepbound to $1,349 for Wegovy for a monthly supply. This pricing does not take into account any rebates or other agreements that can reduce net costs, an aspect where pharmacy benefit managers can sometimes retain a portion.
While some insurers have urged obesity drug manufacturers to reduce prices, progress towards achieving this has been slow. For instance, Brian Thompson, the CEO of UnitedHealth Group Inc.’s insurance subsidiary, mentioned in October that the company aims to agree on ‘outcomes and adherence levels’ based contracts with drugmakers but has yet to achieve such deals.
Despite the rising costs, some organizations have not backed down from covering weight-loss treatments. For example, North Carolina recently ceased covering weight-loss drugs for state employees, citing soaring costs.
In addition to these agreements, Cigna also recently revised its target for long-term, average annual adjusted earnings per share (EPS) growth from the range of 10%-13% to 10%-14%, affirming its 2024 guidance of at least $28.25 in adjusted earnings per share.