(Bloomberg) -- Weight-loss drugs from Novo Nordisk A/S and Eli Lilly & Co. will lose coverage under many plans run by Michigan’s largest health insurer as companies grapple with whether the drugs are worth the cost.

Blue Cross Blue Shield of Michigan will drop coverage of GLP-1 obesity drugs in fully insured large group commercial plans starting in January, a spokesperson said, a move that will affect nearly 10,000 people on the medications. The insurer’s spokesperson cited consideration of the drugs’ effectiveness, safety and cost in reaching this decision, but did not respond to a question about what the safety concerns were.

GLP-1s such as Novo’s Wegovy and Lilly’s Zepbound are exploding in popularity. But with list prices of $1,000 a month or more for a single user, insurers are balking at cost and trying to limit how widely they’re used. The US Medicare health program for the elderly doesn’t cover them for obesity at all, although it covers similar drugs for diabetes.  

What Bloomberg Intelligence Says:

Novo and Lilly will dominate branded obesity-drug sales in 2030 with shares of 40% and 47%, respectively, our scenario shows, with scope for high-single to low-double-digit upside vs. consensus for the latter. Drugs by Amgen, Altimmune, Zealand-Boehringer, Innovent, Structure and Viking are set to make up the remainder of the $93 billion risk-adjusted total (vs. $6 billion in 2023), with 70% from the US and 84% from injectables.

— BI analyst Michael Shah

Read the research here. 

Some states’ Medicaid plans that cover low-income residents pay for GLP-1 drugs, but even that has been contentious. North Carolina’s health plan for state employees dropped coverage of the drugs for weight loss earlier this year after projecting a $1.5 billion loss by the end of the decade. Health plans offered through the Affordable Care Act Marketplace rarely cover the treatments for obesity, according to an analysis from health researcher KFF.

Blue Cross Blue Shield of Michigan is also adding new restrictions from August to December in order to limit the drugs’ use in large group plans which cover some 800,000 people. 

The new rules stipulate only adults can seek the new obesity drugs and must go see a prescriber in person, rather than via telehealth, and have a body-mass index, or BMI, of 35 or higher. The drugs are approved for use in children aged 12 and up as well as adults with a BMI of 30 or higher seeking treatment for obesity.

Novo is “disappointed” in the insurer’s decision to drop coverage, a spokesperson said, “as it is contrary to actions that many throughout our country are taking – which is to expand coverage for these important medicines.” About half of all commercial insurance plans cover Wegovy, the spokesperson said. 

A Lilly spokesperson said that denying coverage for obesity medications can harm health and lead to early death. 

--With assistance from Naomi Kresge.

(Updates with Eli Lilly comment in the last paragraph.)

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