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Dale Folwell says North Carolina is “under siege” by drugmakers Novo Nordisk and Eli Lilly.
The North Carolina treasurer said the sky-high costs of popular weight loss drugs — Wegovy and Saxenda, from Novo Nordisk, and Zepbound, from Eli Lilly — have financially strained the state’s health insurance plan for its more than 750,000 teachers, state employees and retirees, forcing it to stop providing coverage for the drugs earlier this year.
According to the state treasurer’s office, last year, North Carolina paid for weight loss drugs for almost 25,000 state employees, costing it more than $100 million — about 10% of its total spending on prescription drugs and more than the plan spent on all cancer treatments combined.
The weight loss drugs were projected to cost North Carolina another $600 million-plus within the next five years. That ballooning expense prompted the state’s health plan board of trustees in January to vote to stop covering them on the state’s health care plan.
That’s not how Folwell wanted it to go.
Last fall, in a last-ditch effort to reduce the state’s spending on weight loss drugs, Folwell, working alongside the state’s pharmacy benefit manager CVS Caremark, initiated drug pricing negotiations with Novo Nordisk, later followed by Eli Lilly. The negotiations are ongoing.
“I don’t recall of any time since I’ve been the keeper of the public purse in the last eight years where we’ve tried to have direct conversations with the manufacturers of any drugs,” he said.
Novo Nordisk charges a monthly list price of around $1,350 each for Wegovy and Saxenda, while Lilly charges about $1,060 a month for Zepbound. North Carolina gets a rebate from the drugmakers that lowers those prices by a few hundred dollars; even so, the state says the drugs are too expensive for it to afford.
“The cost of this drug can be anywhere from $10 to $70 to manufacture it, and it’s being sold for retail for well over $1,000,” Folwell said. “I don’t know what word in the Webster’s Dictionary would best describe it other than being gouged.”
Folwell is also proposing that the state health plan raise the minimum body mass index, or BMI, threshold to qualify for the drugs, reserving it for people with severe obesity. The Food and Drug Administration approved the medications for patients with a BMI of 30 or above, which is characterized as obesity, not severe obesity. He also wants to limit the amount of time people can stay on the drugs if they aren’t effective.
Folwell is coming to the negotiating table with one number in mind: $300. That’s around the price, he said, that people pay in Denmark, where Novo Nordisk is based.
“When we’re being gouged on the price of this drug versus what it costs in the home country of where this company is headquartered, we have to take action,” he said.
In separate statements, Novo Nordisk and Eli Lilly said that they are committed to working on potential solutions to provide coverage to North Carolina patients.
But Nicole Ferreira, a Novo Nordisk spokesperson, said in the company’s statement that the state “rejected multiple, workable options presented to them.”
“Denying patients insurance coverage for important and effective FDA-approved treatments is simply irresponsible,” she said.
If the state had continued to cover the drugs under the current deal, monthly premiums for all state employees on the plan would’ve likely doubled, Folwell said. Depending on their plan, people typically pay a monthly premium of $25 or $50.
Ferreira said, “we stand committed to finding meaningful solutions to manage costs.”
In a statement, an Eli Lilly spokesperson said, “We remain committed to expanding access and are continuing to explore different approaches with PBMs, health plans, and employers,” referring to pharmacy benefit managers, which act as a middleman between drugmakers and insurers.
“We remain cautiously optimistic that ongoing negotiations with CVS Caremark and the drug manufacturers will result in affordable costs of these medications,” a spokesperson for the state treasurer’s office said.
North Carolina isn’t the only state plan that has covered weight loss drugs and was forced to make a change.
Connecticut recently limited the weight loss drugs to state employees who also agreed to follow lifestyle, diet and exercise changes, a move that Sean Scanlon, the state’s comptroller, said has helped lower costs.
Asked about negotiating with the drugmakers, Scanlon said he’s watching what’s happening in other states.
“But in my experience, these drugmakers that make this have a lock and are making a ton of money and don’t have too much of an incentive to do that,” he said. “So we’re not sitting around and waiting for large drug companies to start being altruistic.”
The ongoing negotiations are of little comfort to North Carolina state employees who lost coverage for drugs at the beginning of April.
Leanne Owens, a primary care provider in Hillsborough, North Carolina, treats patients enrolled in the state’s health plan. In recent weeks, she’s gotten panicked calls from patients on the drugs about what to do next.
“My patients had a lot of fear about going off of these medicines, the weight gain, their relationships with food,” she said.
One of her patients, Skylar Hackney, a 26-year-old state employee who works for public schools, was prescribed Wegovy a year ago and has since lost 50 pounds.
Skylar had prediabetes, and says that her condition could develop into diabetes, allowing her to get access to semaglutide again. Semaglutide is the active ingredient in both Wegovy and Novo Nordisk’s diabetes drug Ozempic, which is often used off-label for weight loss. North Carolina is not cutting off access to diabetes drugs.
She took her last shot of Wegovy last Thursday. If she can’t get more, she’ll be forced to quit.
“I really would like to not start over again,” Hackney said. “Just because anything you put in your body new or that you’ve been off for a while, you have some side effects that aren’t great. But I’ve like gotten to a point where I’m at the highest dose on the Wegovy, that I’ve like leveled out. And it’s been wonderful.”
CORRECTION (April 25, 2024, 9:18 a.m. ET): A previous version of this article misstated how many people are on North Carolina’s state employee health insurance plan. It is more than 750,000 people, not 700,000 people. The article also misstated what people pay as monthly premium. It is $25 or $50, not $37.
Berkeley Lovelace Jr. is a health and medical reporter for NBC News. He covers the Food and Drug Administration, with a special focus on Covid vaccines, prescription drug pricing and health care. He previously covered the biotech and pharmaceutical industry with CNBC.
Erin McLaughlin is an NBC News correspondent.
Jason Kane is a producer in the NBC News Health & Medical Unit.
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