UnitedHealth Group aims to reduce the cost of GLP-1 drugs like Ozempic and Wegovy but seeks cooperation from drug manufacturers. CEO Andrew Witty emphasizes the need for lower drug prices to enhance accessibility, given that U.S. prices are roughly ten times higher than in Western Europe. Pharmaceutical companies are encouraged to engage in negotiations for value-based contracts. GLP-1 drugs are primarily used for diabetes but also weight loss, with their high costs posing a challenge. UnitedHealthcare allocates spending, and employers’ views on drug coverage vary. The company is optimistic about developing affordable pricing models.
UnitedHealth Group is actively pursuing a strategy to reduce the costs associated with GLP-1 drugs such as Ozempic and Wegovy, but this endeavor relies on the cooperation of pharmaceutical companies, according to statements made by company executives.
During a recent investor call on October 13th, UnitedHealth Group CEO Andrew Witty emphasized the necessity of lowering the prices of these drugs to improve accessibility for a broader population. Witty expressed optimism about the potential benefits of these drugs in helping individuals manage their weight. However, he pointed out that the list prices for these products in the United States are currently approximately ten times higher than those in Western Europe, posing a significant financial challenge for both the company and its clients.
To address this issue, Witty stressed the importance of pharmaceutical manufacturers engaging in negotiations to establish more affordable pricing through value-based contracts or alternative arrangements. He emphasized that UnitedHealth Group is open to exploring various models to make this happen.
GLP-1 drugs, including Ozempic, Trulicity, Victoza, and Mounjaro, originally approved for treating Type 2 diabetes, are frequently prescribed off-label for weight loss. Wegovy and Saxenda, produced by Novo Nordisk, are specifically approved for weight loss. Nevertheless, the high cost of these drugs, which can exceed $10,000 annually without insurance coverage, presents a considerable barrier. Some employers cover the expense of weight-loss drugs for their employees, while others are discontinuing such coverage due to the exorbitant prices. Research indicates that patients must take these drugs indefinitely to sustain weight loss.
It is important to note that federal law prohibits Medicare from covering the cost of weight loss drugs. UnitedHealthcare, a subsidiary of UnitedHealth Group, currently allocates approximately 80 percent of its spending on GLP-1 drugs to treating Type 2 diabetes and the remaining 20 percent to weight loss treatments, a distribution that the company considers “confident and comfortable” as it approaches 2024, according to UnitedHealthcare CEO Brian Thompson.
Thompson indicated that employers’ attitudes toward these drugs vary, with some expressing interest in expanding coverage for weight-loss medications, while others are hesitating due to the high prices. UnitedHealthcare is actively collaborating with pharmaceutical manufacturers to establish value-based contracts for these drugs, which would base pricing on outcomes and patient adherence levels or even full-risk contracts based on utilization rates. Thompson acknowledged that they haven’t reached their desired outcome yet but expressed optimism about overcoming the pricing challenge.