Treasurer Folwell Calls on Novo Nordisk to Lower the Unfair Cost of Weight Loss Drugs
(Raleigh, N.C.) Treasurer Dale R. Folwell, CPA, is calling today for the State Health Plan (Plan) Board of Trustees to end coverage of popular GLP-1 drugs like Wegovy and Saxenda for the purpose of weight loss until the drugs' manufacturer, Danish multinational Novo Nordisk, prices the drugs fairly.
"It defies logic that Novo Nordisk can sell the exact same product in the Netherlands for $296 per month and in the United States for more than $800 per month," Treasurer Folwell said. "They should be investigated by the Federal Trade Commission for unfair and deceptive business practices."
Because of financial pressures, the State Health Plan's Board of Trustees is considering removing coverage for the popular drugs. Currently, the Plan faces a $4.2 billion budget gap over the next five years. The recently enacted budget from the state legislature funded the Plan by $240 million less than was requested over the next two years.
The Plan has attempted to remain financially solvent by capping or reducing its costs as much as possible and by implementing strategic initiatives that seek to maintain or lower dependent premiums to attract younger members and families.
The weight-loss medications are currently used by more than 23,000 members on the Plan with a net cost of more than $800 per member per month. Plan spending on the two medications is projected to exceed $170 million in 2024 jumping to more than $1 billion over the next six years.
Novo Nordisk recently reported a 32% increase in global operating profit for the first six months of 2023 relative to the first six months of 2022. Within that report, Novo Nordisk said Wegovy sales in North America increased by 344% during the same period while Saxenda increased by 27%. Total North American sales for both products were reported as 14,159 million Danish kroners or $2.02 billion U.S. dollars.
The Plan spent $52.3 million on these two medications during the first half of 2022 accounting for 2.6% of the manufacturer's entire North American profits on these products. During those same six months, Plan members in North Carolina accounted for approximately 2% of the prescriptions filled each month for these medications in the United States.
The Plan's staff estimates that continuing to cover this class of drugs for weight loss will result in a premium increase of $48.50 per subscriber per month doubling the premium for individual subscribers. Additionally, the cost of these drugs alone equates to a .5% pay raise for every state employee. Maintaining the current benefit structure for these medications will significantly impact the Plan's strategic financial goals, reduce its solvency, and halt the Plan's ability to lower member and family premiums.
"We are not questioning the efficacy of the drugs, but we simply can't afford these medications at the manufacturer's current price point," said Treasurer Folwell. "It's price gouging. We just want to pay the same price that Novo Nordisk charges its customers in their home region. "
The State Health Plan, a division of the Department of State Treasurer, provides health care coverage to more than 740,000 teachers, state employees, retirees, current and former lawmakers, state university and community college personnel, and their dependents.
Phone: (919) 814-3820
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