2 huge employers just said they're dumping Wegovy from their health plans. It's a sign of a crackdown on popular weight-loss drugs.

• Ascension and the University of Texas System are set to stop paying for workers' weight-loss drugs.
• It could be the beginning of a crackdown on insurance coverage of injections such as Wegovy.
• Demand for weight-loss medications has soared, but employers and insurers say they cost too much.

Jenny started taking the popular weight-loss injection Wegovy in February and saw results almost immediately.

Her appetite dissolved, the intense "food noise" in her head went silent, and she shed 8 pounds in the first week. She felt lucky that she didn't experience any unpleasant side effects. Plus, Jenny, a nurse at Ascension, one of the largest hospital systems in the country, was able to get the notoriously expensive Wegovy for just $25 a month with her job-based insurance.

But her luck ran out when she went to refill her prescription this month. The pharmacy told her that instead of that small copay, Wegovy would now cost her an impossible $1,600 a month, she said. Insider is identifying Jenny by her first name to protect her privacy.

The problem was that Ascension had joined the league of companies refusing to pay for their employees' weight-loss prescriptions.

Companies, private insurers, and government programs such as Medicare are facing immense pressure from patients, drugmakers, doctors, and obesity advocacy organizations to open up access to the new and effective weight-loss drugs that have become household names in the past year. But employers and insurers say the cost of covering the drugs will tank their budgets, eat into their profits, and drive up health-insurance premiums for everybody.

The crackdown on insurance coverage for weight-loss drugs may be just beginning. Companies that provide health coverage to their workers are making decisions right now about which benefits they'll pay for in 2024, and they're wrestling with what to do about weight-loss drugs and their exorbitant price tags.

Renee Rayburg, a consultant at Pharmaceutical Strategies Group who helps companies manage their spending on prescription drugs, said she hadn't seen many employers retreat completely from covering weight-loss drugs, as Ascension is doing.

But she said a couple of other companies PSG worked with had already scaled back their coverage of the medications. One company, for instance, began restricting the drugs to only people with a body-mass index of at least 35, she said, even though some drugs are approved to treat people with less-severe obesity or those who are overweight.

A hospital system and a university are stripping workers of their Wegovy coverage

According to an online notice, Ascension's health plan for employees began excluding expensive shots such as Wegovy, as well as cheaper anti-obesity pills, from coverage on July 1. That means workers and their dependents must shoulder the cost of the prescriptions themselves, or look for a coupon from a drugmaker, the notice said. Any weight-loss drugs that hit the market in the future would also be excluded.

Ascension did not comment on or answer questions about what drove its benefit to change. The healthcare provider, which operates hospitals in 19 states, employs nearly 140,000 people.

The University of Texas System, on the other hand, laid out exactly why it would stop paying for Wegovy and another, less-effective weight-loss drug, Saxenda, starting in September. This month, it told workers that its costs for the prescriptions skyrocketed to $5 million a month in May from about $1.5 million a month a year and a half ago.

The drugs cost the UT System's health plans more than medications used to treat cancer, and continuing to pay for them would cost the plans an extra $73 million a year and drive up premiums by 2.5% to 3% for all employees, UT said. A spokesperson for the university system declined to comment.

Dr. Angela Fitch, a cofounder of the weight-management startup Knownwell and the president of the Obesity Medicine Association, said she feared more companies would scale back their coverage of weight-loss drugs because of high costs, which would leave only wealthy people or those who work for employers with generous benefits able to afford the prescription obesity treatments.

"We are literally setting ourselves back like 10 years because of cost," Fitch said.

Companies don't want to pay for weight-loss drugs because of high costs

Demand for a new class of drugs known as GLP-1 agonists has surged in the past year or so, following the Food and Drug Administration's approval of Novo Nordisk's Wegovy in June 2021. Similar drugs include Ozempic, also from Novo Nordisk, and Eli Lilly's Mounjaro. Ozempic and Mounjaro are approved to treat type 2 diabetes only, but doctors can prescribe them "off label" to help with weight loss.

About 5.6 million prescriptions were written for GLP-1 drugs for people without diabetes in the first five months of 2023, compared with 7 million prescriptions for all of 2022 and 2.8 million in 2021, according to the data-analytics company Komodo.

But even as prescriptions mount, insurance coverage of the drugs is spotty and not improving. A survey by the Pharmaceutical Strategies Group, which helps companies design their pharmacy benefits, found that 41% of employers polled covered weight-loss medications for their workers.

Tracy Spencer, a leader in the consultancy Aon's pharmacy practice, said many of the employers covering weight-loss drugs today were doing so based on a prior decision to cover older, lower-cost obesity medication. Some of these companies didn't even realize they were paying for expensive options such as Wegovy until they discovered that their costs had increased.

These companies are considering new ways to ensure that only people who qualify for GLP-1 drugs get them, and some are looking at requiring their workers on weight-loss drugs to participate in behavioral-change, diet, and exercise programs, Spencer said.

The cost of covering the drugs is the biggest issue. The shots have high price tags — they typically range from $900 to $1,300 a month — and people likely must take them long-term to sustain weight loss. Plus, many people could qualify to take them — about 42% of American adults have obesity.

Drugmakers insist that companies could save money by covering the drugs because the weight loss spurred by the injections would help their workers avoid grave, costly problems such as heart attacks. But insurers and employers say there's no evidence for that.

The University of Texas System said as much to its workers. Its health plans haven't seen reduced costs for other health conditions from the 3,100 plan members using Wegovy or Saxenda, it said.

"These savings are not being realized due to the excessive cost the drug manufacturer charges for the weight loss medication," UT said.

The UT System added that less than half of its members who were prescribed the drugs kept taking them. Patients who stop taking drugs like Wegovy can regain some or all of the weight they lost.

Changing jobs to get Wegovy coverage

Jenny, the Ascension nurse, said she's desperate to keep taking Wegovy and disappointed that a hospital system that promoted getting and staying healthy would take away something that helped her do that.

Since February, she's gone from 215 pounds to 180. Her blood pressure and cholesterol levels have improved, her back and joints don't ache as much, and she generally feels better about herself, she said.

When Ascension wouldn't pay for her latest Wegovy refill, she found a Novo Nordisk coupon that helped lower her cost to $900 at the pharmacy counter, but that's not a price she can afford to pay every month.

She said she's even considering finding a new employer that would pay for the drug: "It means that much to me that I'm willing to change jobs for it."