A new class of diabetes and weight loss drugs is putting pressure on drug benefits plans

Everyone, it seems, can sing the Ozempic song from the TV commercial. And, even though Canadian ad regulations prevent an advertiser from saying what a particular drug is for if the brand name is mentioned, everyone has a pretty good idea of what it’s supposed to do.

Or wait. Maybe not. 

I attended an information session recently, and this was a hot topic, particularly when it comes to drug plans and our role as benefits management professionals. When I got back, I started doing some research and reading whatever I could find on the subject.

The question of what this class of drugs is for is still somewhat controversial, especially when it comes to coverage by government and private drug plans. (There are several versions of the drug now available, and they are called GLP-1 agonists.)

But let’s back up a bit. Ozempic, which has the generic name semaglutide, was developed to help treat type 2 diabetes – this is essentially the type of diabetes developed over time by adults, when their bodies’ ability to use the insulin they naturally produce is compromised. It is not for type 1 diabetes, in which the body stops producing its own insulin.

The semaglutide-type drugs, including Ozempic, work to lower blood sugar and increase natural insulin production. It is administered by once-weekly injection.

After successful clinical trials, it was approved in both Canada and the United States for the treatment and management of type 2 diabetes.

So far so good.

But during the clinical trials, and afterward when it became available by prescription to the public, it was also documented that participants were losing a significant amount of extra weight. 

Naturally, the word got around very quickly. Patients, including many who were not diagnosed with the type 2 diabetes for which the drug was approved, started asking their doctors to prescribe them the drug so that they could lose weight.

That’s where “off-label prescribing” comes into the picture, as explained by the Health Canada website. Even though semaglutide is not approved by Health Canada for weight loss, doctors have wide discretion within the practice of medicine to prescribe and administer any approved drug for any purpose. 

In other words, it’s not approved for weight loss, but doctors are allowed to prescribe it for weight loss if they feel it is medically appropriate for their patients.

The cost of the drug, according to CBC News, runs about $200 to $300 per month (and many are now paying up to $400). Most patients are paying for it out-of-pocket and, despite the cost, demand is so high that there have been shortages in the supply this summer.

And that’s where drug plans face a dilemma. The public Ontario Drug Benefit, of ODB, covers semaglutide prescriptions for type 2 diabetes, but not for weight loss. 

Private drug plans are taking a similar view – semaglutide may be covered by drug plans, depending on the terms of individual plan contracts, if it is prescribed for the Health Canada approved indication, type 2 diabetes. And insurers are now requiring prior authorization before they will accept new claims – claims, it should be stressed, for the type 2 diabetes indication only.

They are not covering costs for off-label, or weight-loss prescriptions for semaglutide.

That, I think is pretty much where we stand today. But this is a rapidly changing area of medicine – and benefits. There are a couple of factors that I think will dominate how this story will play out over the coming months and years.

First, there are several other, similar drugs either in the pipeline or already approved – and some of them are specifically indicated for weight loss.

Wegovy is a similar drug – a GLP-1 agonist – made by Novo Nordisk, the same company that developed Ozempic. It is specifically indicated for weight loss, but only under defined circumstances. It’s for patients with a body mass index of 30 or over, who are considered obese, or patients with a body mass index of 27 or higher, if they have additional health problems, such as high blood pressure, type 2 diabetes, or sleep apnea.

Other semaglutide-type drugs include the following.

Rybelsus. This is administered in pill form and is approved by Health Canada for type 2 diabetes. It is also seen as a potential weight-loss drug but, like Ozempic, is not at this time approved by Health Canada for weight loss.

Bydureon, which has a generic name of exanatide. It is intended to be used along with diet and exercise, to control type 2 diabetes.

Trulicity. Also known as dulaglutide, and approved for type 2 diabetes.

The second issue that we may – or may not – hear about is concern over possible side effects. This in itself is not surprising. Every drug has some side effects, and the clinical trials leading to approval are designed to identify and assess any possible side effects that occur. However, once a drug is in widespread use, it is possible that other, perhaps rarer, side effects may emerge.

In the case of the semaglutides, Health Canada, as well as regulatory bodies in Britain and Europe, are conducting reviews focused on reports of possible suicidal ideation and possible thyroid cancers.

Also, there are known side-effects, such as stomach and intestinal upset, that may affect some patients. They Mayo clinic lists possible side effects, medical conditions or family history that rule out prescribing the drug, and possible side effects that need to be reported to the prescribing physician immediately if they occur.

I think a lot of factors still have to shake out before we know where this class of drugs will fit into the drug benefits picture in the long run. Cost is certainly a factor – someone needs to pay for this, somewhere along the line. Safety is certainly a factor. But I think it will eventually be settled on the basis of cost-benefit analysis: how much the health of patients will be improved in the long run, and how much demand for coverage plan sponsors will hear from their members.


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I really appreciate comments, ideas, suggestions or just observations about the blog or any other topics in benefits management. I always look forward to hearing from readers. If there’s anything you want to share, please email me at bill@penmorebenefits.com.

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