There's no shortage of headlines and hypotheticals about the blockbuster drug class of GLP-1s. Stephen Klasko, MD, argues we're asking the wrong questions about GLP-1s.
For health system leaders, the real work comes down to focusing on the right things. This was the premise for an Aug. 1 webinar hosted by Becker's Healthcare, "GLP-1s: The questions health systems should be asking." Dr. Klasko joined Becker's Molly Gamble to discuss the most substantial and meaningful issues facing health systems when it comes to drugs like Ozempic, Mounjaro, Wegovy and Trulicity.
After serving as president and CEO of Philadelphia-based Jefferson Health for eight years, Dr. Klasko has spent a great deal of time and energy on GLP-1 strategy in his role as a special advisor to General Catalyst.
Dr. Klasko's remarks paint a picture of how the takeoff of GLP-1s can represent the best and the worst of the U.S. healthcare system. What follows is an excerpted summary of the 60-minute conversation, which readers can access here in full for an on-demand viewing. (The webinar was not sponsored.)
1. Why was the U.S. healthcare system unprepared for the rise of GLP-1 medications? GLP-1s surged in popularity in 2021, driven by social media, celebrity endorsements and widespread intrigue around the drugs' weight loss benefits. But as Dr. Klasko reminded attendees, GLP-1s didn't fall from the sky. The FDA approved Ozempic in 2017, for instance.
"So how was the overall American health system so flat-footed in response to what was clearly going to be a game-changing drug that we knew would be part of spiraling high prices?" Dr. Klasko remarked. "Nobody thought that these companies were going to say, 'You know what? Let's just do it for $35. We're not interested in profits.' And then at the same time, if you go on every website of every health system and pretty much every payer, it's about health equity, health equity, health equity, health equity."
It's important to note that the rapid adoption of GLP-1s coincided with a particularly challenging period for health system finances. The year 2022 was recognized as the worst financial year for hospitals and health systems since the onset of the COVID-19 pandemic.
Although it may still be early days, the U.S. healthcare system has already lost valuable time in proactively addressing how the GLP-1 drug class could be used to lower the combined $600 billion annual costs of diabetes and obesity, and to mitigate the disproportionate impact of these conditions on underserved communities. Moving forward, it's crucial to reflect on what could have been done to avoid this flat-footedness, so that the system is better prepared if and when another blockbuster drug comes to market.
2. Will health systems extend coverage for GLP-1 medications to their employees? This is one of the most pressing questions facing health systems as employers. Becker's has closely followed health systems' decisions to either stop covering or add restrictions for GLP-1 coverage for their workforce.
For self-insured health systems, the decision to cover employees' GLP-1 medications requires a careful balance between the short-term costs and the potential long-term benefits, as Dr. Klasko suggests. The challenge of employee turnover further complicates this calculation.
"If I knew every one of my employees was going to stay with me for 40 years, I can do that equation really, really well," Dr. Klasko said. "It's a no-brainer." However, if a system covers the $18,000 a year cost for GLP-1s, but the employee later moves to a company that doesn't cover it, he expresses concern given the issue of weight regain after stopping the medication.
Dr. Klasko also highlighted the opportunity cost associated with GLP-1 investments as health system finances remain a mixed bag. While margins are stabilizing overall, the gap between low- and high-performing systems is only widening.
3. What opportunities do health systems have when negotiating GLP-1 coverage with insurers? Insurance covers some of the costs for GLP-1 drugs for weight loss for around 1 in 4 Americans. Most private health plans are not required to cover medications for weight loss, but some do so voluntarily and most cover drugs with the same active ingredients for diabetes treatment. Total Medicare Part D gross spending on three GLP-1s used to treat diabetes surged from $57 million in 2018 to $5.7 billion in 2022, according to KFF.
Given this context and the complex distribution of healthcare costs, health system leaders may be uncertain about when or how to prioritize GLP-1 coverage in negotiations with insurers. Dr. Klasko encouraged their attention to alternative payment models as contract negotiations unfold. "We should look at the areas where there is some creative payer-provider alignment, like ACOs and Medicare Advantage," Dr. Klasko said, emphasizing that health systems would be remiss not to bring this issue to the table and explore collaborative opportunities.
However, Dr. Klasko advises starting with an internal review. "I would say the place to think about for those who are health system leaders is in your self-insured TPA group, because in some respects that's the area where you're the payer, you're the provider, and you're the employer," he said. Health systems will be best positioned to align incentives here before stepping up to do the same for millions of patients under seven different insurers and eight different plans.
4. How should the impact of direct-to-consumer drug advertisements be addressed, as demonstrated by the prominence of GLP-1s? Pharmaceutical direct-to-consumer advertising has long been controversial, but GLP-1s make for a recent and defined case study. Last April, The Wall Street Journal devoted a story to GLP-1s advertisements growing "increasingly unavoidable in venues including podcasts, streaming TV and mass-transit hubs."
These advertisements, which often emphasize the benefits of weight loss without fully addressing the complexities or potential side effects, can create a demand among patients that drug supplies and providers are not prepared to meet. Such consumer-driven demand can lead to increased pressure on healthcare providers to prescribe these medications, sometimes before fully considering long-term outcomes or the financial implications for both patients and the health system.
"Basically, having direct-to-consumer advertising puts pressure on the totally layered messed up system," Dr. Klasko said, noting the bait-and-switch nature of many ads that leave patients' appetites whetted with directives to talk to their provider, who then holds the bag. "'Hey, I saw this commercial where I can just take a shot once a week and lose weight. I want to do it. Why aren't you covering it?'"
The pervasive nature of these ads can contribute to a perception that these drugs are a quick fix for obesity, potentially overshadowing the need for comprehensive, long-term lifestyle changes. "I think that we have to question why we allow things like direct-to-consumer advertising and what the purpose of it is, if it's really to educate patients," Dr. Klasko said.
5. How can health systems address health inequities when GLP-1s illustrate broader access and affordability challenges? As health systems confront the challenge of addressing health inequities, the rise of GLP-1 medications highlights broader issues of access and affordability that they do not bear direct control upon.
Fragmentation hinders health equity. Dr. Klasko pointedly remarked on this missed opportunity for the industry at large."How did we not, as we start to see these things develop, get everybody together — the health systems, insurers, the pharma companies that we knew were developing them, the president, Congress — and say, 'Hey, look, we are the richest country in the world. We haven't had great success in healthcare outcomes. This is a chance for us to do it. How can we do this in a way that preserves our capitalistic structure but is a game changer around health equity?' We didn't do that."
His critique reflects a significant oversight in harnessing the potential of these groundbreaking treatments. The need now is for a cohesive strategy that bridges gaps between stakeholders — health systems, policymakers, and industry leaders — to develop solutions that enhance equitable access to these advancements.
Interested in ongoing conversations about GLP-1s? Join Becker's 12th Annual CEO + CFO Roundtable this November for panels on the topic. Learn more and register here.