Diet drugs are bigger than ever, and in Michigan, Medicaid picks up the tab

• Demand for weight loss drugs continues, despite cost of $10,000 or more a year
• Insurers cover the drugs for people with Type 2 diabetes, but consumers might not be covered for weight loss only. There are exceptions
• Michigan is one of 16 states to extend Medicaid coverage for weight loss only, a decision that cost the state hundreds of millions of dollars

That big bag of Lay’s potato chips — her “addiction,” Sharon Bracey says, chuckling — just didn’t have the same pull as it once had, even though they remain an occasional delight.

“But when you look at food, you want it but you don't want as much. I just don’t have the taste for it anymore,” she said.

Thirty pounds down, the 65-year-old Southfield teacher is one of countless Michiganders now on new weight loss drugs. They cost her about $500 a month for her once-weekly Ozempic injections. 

Others aren’t so lucky. Michiganders face a confusing array of costs and coverage as interest soars for several drugs either recently approved by the U.S. Food and Drug Administration for weight loss — Wegovy, Saxenda, and Zepbound, or approved several years ago for Type 2 diabetes — Ozempic, Victoza, and others.

As demand has surged, so have costs.

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Michigan is one of just 16 states that, through its Medicaid program, covers the cost of the drugs for weight loss as well Type 2 diabetes. 

Last year, Michigan’s Medicaid program covered the drugs for more than 67,000 patients at a cost of just more than $393 million. That’s a jarring increase from just two years earlier, when 19,000 Michiganders were covered at a cost of about $89.5 million.

The trend is likely to continue.

In Michigan, 1 in 3 residents is considered obese — in line with much of the rest of the nation. And the National Health and Nutrition Examination Survey found that 42% of adults and 20% of children and adolescents were obese. The study covered 2017 to 2020.

All of this extra weight is a costly reality.

Obesity has been linked to 236 health conditions from cardiovascular disease and Type 2 diabetes to certain cancers, arthritis, infertility and depression and anxiety. 

And according to separate studies published in the New England Medical Journal, obesity drove an additional $260.6 billion in direct medical costs nationally in 2016 while inpatient costs are 46% higher and spending on prescription medications is 80% higher among people with obesity than among those without overweight or obesity.

The drugs are the reflection of the growing understanding of weight gain, said Dr. Kim Pfotenhauer, a family physician specially trained in diabetes and a professor at Michigan State University’s College of Osteopathic Medicine.

"We've been told for a really long time that it is simply lifestyle. It's 'calories in, calories out,' and when that's equally balanced, we all should be the weight that we want to be,” Pfotenhaurer said.

Doctors now understand that the ability to control or lose weight is as much about “signaling pathways” that differ from person to person, among other things. Two people can eat the same amount of food, but one is satisfied; the other is not, she said.

And that’s where the drugs come in.

The drugs are known as GLP-1 agonist drugs, because they mimic the effects of  a hormone called glucagon-like peptide 1, which helps people feel full. They slow digestion and target parts of the brain that process hunger and the feeling of being satiated.

And that means the drugs, despite the monthly costs upfront, could save the state big dollars in the long run, said Meghan Groen, who oversees the state’s Medicaid program.

For several years, Medicaid in Michigan has covered weight loss drugs for people with Type 2 diabetes. On Feb. 1, 2022, it began covering those who are clinically obese.

“You look (at the dangers of obesity) and say ‘What can the Medicaid program do?” Groen said.

Yet many of the rest of Michigan will go without the drugs for now, as commercial insurers wrestle with paying $1,000 or more a month for what could be a lifetime of drugs for some people.

“We as health plans, we as clinicians, we as doctors, we as patients, we as the community — we're figuring out: Where do these drugs now fit in our whole weight-conscious regimen?” said Dr. James Grant, senior vice president and chief medical officer at Blue Cross Blue Shield of Michigan,

Blue Cross covers the drugs in some circumstances. In January, it covered the costs for 30,000 people who were using the weight loss drugs to help control diabetes, but another 12,000 for weight loss, said Atheer Kaddis, vice president of pharmacy services and chief pharmacy officer at Blue Cross Blue Shield of Michigan.  

Even then, coverage can be confusing.

Blue Cross coverage may vary from plan to plan, depending on the contract between insurers and the employers who provide the coverage to their employees.

Moreover, there may be conditions for coverage — a doctor’s attestation, for example, that the patient has lost 5% of their body weight in the first four months.

“If the weight’s peeling off … we continue to cover it,” Blue Cross’ Grant said.

Other commercial insurers continue to cover the drugs to treat Type 2 diabetes, but haven’t yet extended coverage to drugs for weight loss, according to the Michigan Association of Health Plans, which represents most of Michigan’s other insurers.

And Medicare, while it may cover obesity screening, behavioral counseling, and bariatric surgery, generally does not cover weight loss drugs, unless they are for controlling Type 2 diabetes.

That’s not surprising, said Dr. Mark Fendrick, an internal medicine doctor and director of the Center for Value-Based Insurance Design at the University of Michigan, who called the drugs “amazingly effective.”

“Everyone understands that this is a budget impact on our health care spending, like maybe we've never seen.”

To rein in costs, he said, patients should not be given open-ended access to the drugs; rather, doctors need to closely monitor their weight loss and health. 

Once the patient’s weight loss plateaus or hits the goal, insurers should shift the patient into other types of weight loss management, helping them, for example, with managing behavior and diet, Fendrick said.

In Southfield, Bracey had to stop the drugs last fall after gallbladder surgery. But the 30 pounds she’d lost kept her motivated enough to skip the bag of chips and starchy foods she used to love, said Bracey.

She’s been able to maintain her weight so far.

The drugs, she said, put her on the road to a thinner self. The goal now is “being strong and resisting.”

Shelly Vondale never got that chance.Her plan denied her coverage, she said, putting weight loss drugs out of reach for her, despite what she said is an “almost 300-pound” frame.

She worked out and she has tried to eat well — normally a relatively healthy “200-pound-plus exerciser,” she said. But COVID kept her out of the gym, and the pounds added up.

She was thrilled when her doctor first prescribed Wegovy, then shocked at the denial letter, she said.

“You think you’re doing the right thing and then it’s denied,” said Vondale, 60, who works at a Grand Rapids-based nonprofit. “It’s depressing.”

'A miracle'

Lucy Ann Lance is among the lucky.

Lance, a radio show host, said she’s lost 120 pounds since April 1 on the drug Wegovy.

Lance’s Blue Cross coverage means she pays just under $30 a month for the once-weekly shots she gives herself in the arm.

“This drug is truly the miracle I truly never thought I'd see in my lifetime,” she said.

The costs, said Lance, 62, may be high to insurers.

“But what’s the cost to society in the long run when you're obese? … That has got to be much more expensive than paying for these drugs. I think they're well worth it.”