LAS VEGAS — MGM Resorts plans to stop covering GLP-1 weight loss shots for its employees next year, after it faced constraints in what it could do to manage soaring costs without losing crucial drug discounts, a top benefits director said.
The company, one of Nevada’s largest employers with 83,000 employees worldwide, considered a few ways to tamp down on pharmacy costs, such as narrowing the group of people who could qualify for drugs like Wegovy and Zepbound by covering only those with a higher body mass index. But its PBM, Optum Rx, said the company would lose all of its rebates for the drugs if it made that change, essentially raising the price of the drugs, Patrice Johnson, MGM’s director of wellbeing benefits, said during a panel discussion at the HLTH conference in Las Vegas on Monday.
It also looked at partnering with a weight loss company to help manage employees’ GLP-1 use, but it could choose from only one or two companies Optum Rx had selected — and those options had little data to prove a return on investment behind their programs, Johnson said. If it chose an unapproved weight loss partner, it also would have to forego rebates, she said.
Continuing to cover the drug would have required MGM to hike premiums substantially for its health plan members, which it was unwilling to do.
Three years since Novo Nordisk’s blockbuster Wegovy was approved, employers are still struggling with the high costs of paying for GLP-1s amid huge demand. Just a fifth of large employers cover the drugs for weight loss, according to one estimate, and some large companies have yanked coverage after facing similar restrictions as MGM.
North Carolina’s health plan for state employees and the University of Texas System, both stopped footing the bill for GLP-1 weight loss drugs after challenges lowering costs without losing their rebates. The rebates for the drugs can be substantial, with Wegovy fetching a discount of up to 50% of its $1,350 list price.
A spokesperson for Optum Rx said pharmaceutical manufacturers determine if rebates are provided and their conditions, such as the level of utilization management.
A spokesperson for Eli Lilly, the maker of Zepbound, said it works with healthcare, government and industry partners to help people access the drug, and that “the price of a medication is only a small part of the conversation about the value of treating chronic disease.”
Novo Nordisk did not respond to a request for comment by deadline.
Scott Honken, chief commercial officer at WeightWatchers, said during the panel on Monday that it’s common for companies to lose rebates for GLP-1s if they change the eligibility requirements from the FDA-approved label. But the labels for Wegovy and Zepbound are broad, indicated for patients with a BMI of 30 or those with a BMI of 27 who also have other health conditions. More than 50 million people with job-based health insurance could qualify for the drugs.
“There’s just not a lot of latitude today to say, I want to be a little bit more nuanced with where I’m covering these medications, and say I want to cover them at a BMI of 38 or 38.5,” he said.
Honken said he spoke with a national consulting firm recently that told him some employers have decided to go ahead with changing eligibility requirements for the drugs even though they’d lose rebates.
About 500 workers on MGM’s health plan, which covers 28,000 people, were using GLP-1s at the end of the third quarter, driving pharmacy costs up 15% over the last year, Johnson said. The company expected the drugs to increase costs another 10% to 15% next year if it continued to cover them for weight loss, she said.
Johnson said MGM will re-evaluate its weight loss coverage after the market stabilizes. Until then, employees have access to onsite health coaches, bariatric surgery, and other weight management tools and discounts. The decision to stop covering GLP-1s wasn’t an easy one, she said.
“It was hard, because if we think about our population, the majority frontline lower-wage workers who wouldn’t be able to afford the drug on their own, and it is effective and it’s been proven to manage other comorbidities,” she said. “But again, we would’ve had to increase our medical premiums for our entire population. Instead of doing that, it was more important to keep our costs flat.”
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Editor’s note: This article has been updated with a comment from Optum Rx and details about MGM’s pharmacy costs.